Allowable Costs - Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.430 (g) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Compensation – Personal Services requires compliance with standards for documentation of personnel expenses which include the following: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Monthly certifications of time allocations for employees terminated during 2024 were not performed. One instance was noted where the pay rate utilized did not agree to the HRIS system but in all other instances these rates agreed. Evidence supporting the approval of the pay rates in the HRIS system could not be provided. Questioned costs: Total questioned costs are $37,125 and are shown by program below: • 93.959 $7,168 State of Connecticut, Department of Mental Health and Addiction Services $11,001 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $3,532 State of Louisiana, Department of Health $903 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $14,521 State of California, Department of Health Care Services Context: During our testing we identified 6 terminated employees whose time allocations were not documented through monthly certifications. We were able to substantiate through position descriptions and acceptance letters that two of these employees were fully chargeable to the grant and were not included in the questioned costs. Additionally we identified one employee in our testing whose pay rate utilized did not agree to the HRIS system, however, the difference was trivial and not included in the accumulation of questioned costs. Cause: Internal controls to certify time allocations by employees and their supervisors were put into place during 2024. Monthly certifications were prepared retroactive to January 2024, however certifications could not be completed for employees who were no longer employed by Shatterproof. Additionally, pay rates from the HRIS system were noted to be used in all but one instance, however, documentation of their approval was not retained. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-004 and 2023-005. Recommendation: We recommend Shatterproof ensure monthly certifications of time allocations by employees and their supervisors are performed and documented on a consistent basis. In addition, we recommend Shatterproof retain approval of the payrates entered into the HRIS and used to pay employees and ensure controls exist to ensure the proper rates are used. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs – Nonpayroll Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof changed credit card vendors after March 2024. Documentation of electronic approvals maintained by the prior vendor were not retained or accessible during the audit. Included in these transactions was one instance where supporting documentation for the transaction was not located. Questioned costs: Total questioned costs are $53,632 and are shown by program below: • 93.959 - $7,130 $3,539 State of Connecticut, Department of Mental Health and Addiction Services $1,773 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $155 State of Louisiana, Department of Health $1,663 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $46,502 State of California, Department of Health Care Services Context: Documentation of electronic approvals maintained by the prior credit card vendor were not retained or accessible during the audit. Documentation for 1 of 80 transactions tested could not be located. Cause: Approvals of credit card transactions are maintained electronically within the vendor’s system. When Shatterproof changed credit card vendors after March 2024 the electronic approvals maintained by the prior vendor were not retained and were no longer accessible by Shatterproof personnel. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-008 and 2023-009. Recommendation: We recommend Shatterproof ensure internal controls are in place and operating effectively so that when changes in vendors involved in the financial reporting process occur there is an evaluation of the electronic evidence of the performance of internal controls and other data to ensure needed documentation is retained or continues to be accessible in line with their record retention policies and requirements of the grant agreements. Views of responsible officials: There is no disagreement with the audit finding.
Cash Management Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof was unable to provide documentation to support the review and approval for 4 requests for reimbursement. Questioned costs: None Context: Documentation of the review and approval for 4 of 14 requests for reimbursements could not be provided. Cause: Controls over the performance and documentation of the review and approval of reimbursement requests were implemented in 2025. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-006 and 2023-007. Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review reimbursement requests to determine and document the request is properly supported and in compliance with the grant agreement. Views of responsible officials: There is no disagreement with the audit finding.
Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. Shatterproof should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted Shatterproof did not have adequate internal controls in place during 2024 to ensure vendors were not suspended or debarred. Questioned costs: None Context: During our testing, it was noted that Shatterproof was not reviewing vendors prior to entering into a contract with a vendor to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. We further noted that internal controls over compliance with the provisions of suspension and debarment were implemented in 2025. Cause: Internal controls over compliance with the provisions of suspension and debarment were not implemented during 2024. Effect: The auditor noted no instances of noncompliance with the provisions of suspension and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review potential contractors to determine and document they are not suspended or debarred. Views of responsible officials: There is no disagreement with the audit finding.
Procurement Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement. These provisions include the following under 2 CFR Part 200318 (a) General Procurement Standards Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. The grant agreement requires “Prior written authorization will be required before the Contractor enters into or is reimbursed for any subcontract for services costing $5,000 or more.” Shatterproof should have internal controls designed to ensure compliance with those provisions and maintain and use documented procedures for procurement transactions. Condition: During our testing, we noted Shatterproof did not have documented procurement procedures in place until 2025 and did not have adequate internal controls to ensure procurements were in compliance with the grant agreement. In addition the following items were noted: • A procurement should have been performed using a formal procurement method with open competition such as proposals, however, there was no documentation to evidence that this or a cost analysis was performed. • Two procurements within the small purchase thresholds had no evidence to support the performance of cost analysis. • For all seven procurements tested prior written authorizations as required in the grant agreement were not obtained. Questioned costs: None identified Context: • Shatterproof finalized their procurement policy in 2025, however these procedures were not in place during 2024 or in periods prior to 2024 when contracting occurred. • There was no policy or process in place to ensure the requirement under the grant agreement for prior written authorization was followed. • We noted that there was documentation of the process to vet and approve influencers although not fully compliant with the requirements of the Uniform Guidance. Cause: Internal controls over compliance with the provisions of procurement were not in place during 2024 or in periods prior to 2024 when contracting occurred. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No Recommendation: We recommend Shatterproof implement their procurement policy and ensure a compliant procurement process has been followed and documented for vendors, including influencers, with costs charged to federal awards. We further recommend a process be put in place to identify and ensure compliance with additional requirements in grant agreements. Specifically Shatterproof should put a process in place to ensure they comply with the requirement in the grant agreement to obtain prior written authorization for services costing $5,000 or more. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs - Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.430 (g) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Compensation – Personal Services requires compliance with standards for documentation of personnel expenses which include the following: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Monthly certifications of time allocations for employees terminated during 2024 were not performed. One instance was noted where the pay rate utilized did not agree to the HRIS system but in all other instances these rates agreed. Evidence supporting the approval of the pay rates in the HRIS system could not be provided. Questioned costs: Total questioned costs are $37,125 and are shown by program below: • 93.959 $7,168 State of Connecticut, Department of Mental Health and Addiction Services $11,001 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $3,532 State of Louisiana, Department of Health $903 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $14,521 State of California, Department of Health Care Services Context: During our testing we identified 6 terminated employees whose time allocations were not documented through monthly certifications. We were able to substantiate through position descriptions and acceptance letters that two of these employees were fully chargeable to the grant and were not included in the questioned costs. Additionally we identified one employee in our testing whose pay rate utilized did not agree to the HRIS system, however, the difference was trivial and not included in the accumulation of questioned costs. Cause: Internal controls to certify time allocations by employees and their supervisors were put into place during 2024. Monthly certifications were prepared retroactive to January 2024, however certifications could not be completed for employees who were no longer employed by Shatterproof. Additionally, pay rates from the HRIS system were noted to be used in all but one instance, however, documentation of their approval was not retained. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-004 and 2023-005. Recommendation: We recommend Shatterproof ensure monthly certifications of time allocations by employees and their supervisors are performed and documented on a consistent basis. In addition, we recommend Shatterproof retain approval of the payrates entered into the HRIS and used to pay employees and ensure controls exist to ensure the proper rates are used. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs – Nonpayroll Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof changed credit card vendors after March 2024. Documentation of electronic approvals maintained by the prior vendor were not retained or accessible during the audit. Included in these transactions was one instance where supporting documentation for the transaction was not located. Questioned costs: Total questioned costs are $53,632 and are shown by program below: • 93.959 - $7,130 $3,539 State of Connecticut, Department of Mental Health and Addiction Services $1,773 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $155 State of Louisiana, Department of Health $1,663 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $46,502 State of California, Department of Health Care Services Context: Documentation of electronic approvals maintained by the prior credit card vendor were not retained or accessible during the audit. Documentation for 1 of 80 transactions tested could not be located. Cause: Approvals of credit card transactions are maintained electronically within the vendor’s system. When Shatterproof changed credit card vendors after March 2024 the electronic approvals maintained by the prior vendor were not retained and were no longer accessible by Shatterproof personnel. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-008 and 2023-009. Recommendation: We recommend Shatterproof ensure internal controls are in place and operating effectively so that when changes in vendors involved in the financial reporting process occur there is an evaluation of the electronic evidence of the performance of internal controls and other data to ensure needed documentation is retained or continues to be accessible in line with their record retention policies and requirements of the grant agreements. Views of responsible officials: There is no disagreement with the audit finding.
Cash Management Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof was unable to provide documentation to support the review and approval for 4 requests for reimbursement. Questioned costs: None Context: Documentation of the review and approval for 4 of 14 requests for reimbursements could not be provided. Cause: Controls over the performance and documentation of the review and approval of reimbursement requests were implemented in 2025. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-006 and 2023-007. Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review reimbursement requests to determine and document the request is properly supported and in compliance with the grant agreement. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs - Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.430 (g) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Compensation – Personal Services requires compliance with standards for documentation of personnel expenses which include the following: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Monthly certifications of time allocations for employees terminated during 2024 were not performed. One instance was noted where the pay rate utilized did not agree to the HRIS system but in all other instances these rates agreed. Evidence supporting the approval of the pay rates in the HRIS system could not be provided. Questioned costs: Total questioned costs are $37,125 and are shown by program below: • 93.959 $7,168 State of Connecticut, Department of Mental Health and Addiction Services $11,001 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $3,532 State of Louisiana, Department of Health $903 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $14,521 State of California, Department of Health Care Services Context: During our testing we identified 6 terminated employees whose time allocations were not documented through monthly certifications. We were able to substantiate through position descriptions and acceptance letters that two of these employees were fully chargeable to the grant and were not included in the questioned costs. Additionally we identified one employee in our testing whose pay rate utilized did not agree to the HRIS system, however, the difference was trivial and not included in the accumulation of questioned costs. Cause: Internal controls to certify time allocations by employees and their supervisors were put into place during 2024. Monthly certifications were prepared retroactive to January 2024, however certifications could not be completed for employees who were no longer employed by Shatterproof. Additionally, pay rates from the HRIS system were noted to be used in all but one instance, however, documentation of their approval was not retained. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-004 and 2023-005. Recommendation: We recommend Shatterproof ensure monthly certifications of time allocations by employees and their supervisors are performed and documented on a consistent basis. In addition, we recommend Shatterproof retain approval of the payrates entered into the HRIS and used to pay employees and ensure controls exist to ensure the proper rates are used. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs – Nonpayroll Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof changed credit card vendors after March 2024. Documentation of electronic approvals maintained by the prior vendor were not retained or accessible during the audit. Included in these transactions was one instance where supporting documentation for the transaction was not located. Questioned costs: Total questioned costs are $53,632 and are shown by program below: • 93.959 - $7,130 $3,539 State of Connecticut, Department of Mental Health and Addiction Services $1,773 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $155 State of Louisiana, Department of Health $1,663 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $46,502 State of California, Department of Health Care Services Context: Documentation of electronic approvals maintained by the prior credit card vendor were not retained or accessible during the audit. Documentation for 1 of 80 transactions tested could not be located. Cause: Approvals of credit card transactions are maintained electronically within the vendor’s system. When Shatterproof changed credit card vendors after March 2024 the electronic approvals maintained by the prior vendor were not retained and were no longer accessible by Shatterproof personnel. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-008 and 2023-009. Recommendation: We recommend Shatterproof ensure internal controls are in place and operating effectively so that when changes in vendors involved in the financial reporting process occur there is an evaluation of the electronic evidence of the performance of internal controls and other data to ensure needed documentation is retained or continues to be accessible in line with their record retention policies and requirements of the grant agreements. Views of responsible officials: There is no disagreement with the audit finding.
Cash Management Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof was unable to provide documentation to support the review and approval for 4 requests for reimbursement. Questioned costs: None Context: Documentation of the review and approval for 4 of 14 requests for reimbursements could not be provided. Cause: Controls over the performance and documentation of the review and approval of reimbursement requests were implemented in 2025. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-006 and 2023-007. Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review reimbursement requests to determine and document the request is properly supported and in compliance with the grant agreement. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs - Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.430 (g) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Compensation – Personal Services requires compliance with standards for documentation of personnel expenses which include the following: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Monthly certifications of time allocations for employees terminated during 2024 were not performed. One instance was noted where the pay rate utilized did not agree to the HRIS system but in all other instances these rates agreed. Evidence supporting the approval of the pay rates in the HRIS system could not be provided. Questioned costs: Total questioned costs are $37,125 and are shown by program below: • 93.959 $7,168 State of Connecticut, Department of Mental Health and Addiction Services $11,001 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $3,532 State of Louisiana, Department of Health $903 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $14,521 State of California, Department of Health Care Services Context: During our testing we identified 6 terminated employees whose time allocations were not documented through monthly certifications. We were able to substantiate through position descriptions and acceptance letters that two of these employees were fully chargeable to the grant and were not included in the questioned costs. Additionally we identified one employee in our testing whose pay rate utilized did not agree to the HRIS system, however, the difference was trivial and not included in the accumulation of questioned costs. Cause: Internal controls to certify time allocations by employees and their supervisors were put into place during 2024. Monthly certifications were prepared retroactive to January 2024, however certifications could not be completed for employees who were no longer employed by Shatterproof. Additionally, pay rates from the HRIS system were noted to be used in all but one instance, however, documentation of their approval was not retained. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-004 and 2023-005. Recommendation: We recommend Shatterproof ensure monthly certifications of time allocations by employees and their supervisors are performed and documented on a consistent basis. In addition, we recommend Shatterproof retain approval of the payrates entered into the HRIS and used to pay employees and ensure controls exist to ensure the proper rates are used. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs – Nonpayroll Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof changed credit card vendors after March 2024. Documentation of electronic approvals maintained by the prior vendor were not retained or accessible during the audit. Included in these transactions was one instance where supporting documentation for the transaction was not located. Questioned costs: Total questioned costs are $53,632 and are shown by program below: • 93.959 - $7,130 $3,539 State of Connecticut, Department of Mental Health and Addiction Services $1,773 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $155 State of Louisiana, Department of Health $1,663 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $46,502 State of California, Department of Health Care Services Context: Documentation of electronic approvals maintained by the prior credit card vendor were not retained or accessible during the audit. Documentation for 1 of 80 transactions tested could not be located. Cause: Approvals of credit card transactions are maintained electronically within the vendor’s system. When Shatterproof changed credit card vendors after March 2024 the electronic approvals maintained by the prior vendor were not retained and were no longer accessible by Shatterproof personnel. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-008 and 2023-009. Recommendation: We recommend Shatterproof ensure internal controls are in place and operating effectively so that when changes in vendors involved in the financial reporting process occur there is an evaluation of the electronic evidence of the performance of internal controls and other data to ensure needed documentation is retained or continues to be accessible in line with their record retention policies and requirements of the grant agreements. Views of responsible officials: There is no disagreement with the audit finding.
Cash Management Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof was unable to provide documentation to support the review and approval for 4 requests for reimbursement. Questioned costs: None Context: Documentation of the review and approval for 4 of 14 requests for reimbursements could not be provided. Cause: Controls over the performance and documentation of the review and approval of reimbursement requests were implemented in 2025. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-006 and 2023-007. Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review reimbursement requests to determine and document the request is properly supported and in compliance with the grant agreement. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs - Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.430 (g) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Compensation – Personal Services requires compliance with standards for documentation of personnel expenses which include the following: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated;” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Monthly certifications of time allocations for employees terminated during 2024 were not performed. One instance was noted where the pay rate utilized did not agree to the HRIS system but in all other instances these rates agreed. Evidence supporting the approval of the pay rates in the HRIS system could not be provided. Questioned costs: Total questioned costs are $37,125 and are shown by program below: • 93.959 $7,168 State of Connecticut, Department of Mental Health and Addiction Services $11,001 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $3,532 State of Louisiana, Department of Health $903 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $14,521 State of California, Department of Health Care Services Context: During our testing we identified 6 terminated employees whose time allocations were not documented through monthly certifications. We were able to substantiate through position descriptions and acceptance letters that two of these employees were fully chargeable to the grant and were not included in the questioned costs. Additionally we identified one employee in our testing whose pay rate utilized did not agree to the HRIS system, however, the difference was trivial and not included in the accumulation of questioned costs. Cause: Internal controls to certify time allocations by employees and their supervisors were put into place during 2024. Monthly certifications were prepared retroactive to January 2024, however certifications could not be completed for employees who were no longer employed by Shatterproof. Additionally, pay rates from the HRIS system were noted to be used in all but one instance, however, documentation of their approval was not retained. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-004 and 2023-005. Recommendation: We recommend Shatterproof ensure monthly certifications of time allocations by employees and their supervisors are performed and documented on a consistent basis. In addition, we recommend Shatterproof retain approval of the payrates entered into the HRIS and used to pay employees and ensure controls exist to ensure the proper rates are used. Views of responsible officials: There is no disagreement with the audit finding.
Allowable Costs – Nonpayroll Disbursements Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof changed credit card vendors after March 2024. Documentation of electronic approvals maintained by the prior vendor were not retained or accessible during the audit. Included in these transactions was one instance where supporting documentation for the transaction was not located. Questioned costs: Total questioned costs are $53,632 and are shown by program below: • 93.959 - $7,130 $3,539 State of Connecticut, Department of Mental Health and Addiction Services $1,773 Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs $155 State of Louisiana, Department of Health $1,663 State of Oklahoma, Department of Mental Health and Substance Abuse Services • 93.243 $46,502 State of California, Department of Health Care Services Context: Documentation of electronic approvals maintained by the prior credit card vendor were not retained or accessible during the audit. Documentation for 1 of 80 transactions tested could not be located. Cause: Approvals of credit card transactions are maintained electronically within the vendor’s system. When Shatterproof changed credit card vendors after March 2024 the electronic approvals maintained by the prior vendor were not retained and were no longer accessible by Shatterproof personnel. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-008 and 2023-009. Recommendation: We recommend Shatterproof ensure internal controls are in place and operating effectively so that when changes in vendors involved in the financial reporting process occur there is an evaluation of the electronic evidence of the performance of internal controls and other data to ensure needed documentation is retained or continues to be accessible in line with their record retention policies and requirements of the grant agreements. Views of responsible officials: There is no disagreement with the audit finding.
Cash Management Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name / Assistance Listing Number / Pass-Through Agency(ies) / Pass-Through Number(s): • Block Grants for Prevention and Treatment of Substance Abuse, 93.959 o Passed through the State of Connecticut, Department of Mental Health and Addiction Services, 24MHA1009 o Passed through the Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs, 4100089071 o Passed through the State of Louisiana, Department of Health, 2000758195 o Passed through the State of Oklahoma, Department of Mental Health and Substance Abuse Services, B08TI083962 & B08TI084602 • COVID-19 - Substance Abuse and Mental Health Services Projects of Regional and National Significance, 93.243 o Passed through the State of California, Department of Health Care Services, 21-10299 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200.303 (a) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award, Internal Controls requires that the recipient must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Shatterproof should have internal controls designed and effectively operating to ensure compliance with those provisions. Condition: Shatterproof was unable to provide documentation to support the review and approval for 4 requests for reimbursement. Questioned costs: None Context: Documentation of the review and approval for 4 of 14 requests for reimbursements could not be provided. Cause: Controls over the performance and documentation of the review and approval of reimbursement requests were implemented in 2025. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance and questioned costs. Repeat Finding: The finding is a modified repeat of findings in the immediately prior year. Prior year finding numbers were 2023-006 and 2023-007. Recommendation: We recommend Shatterproof implement controls to ensure an adequate review process is in place to review reimbursement requests to determine and document the request is properly supported and in compliance with the grant agreement. Views of responsible officials: There is no disagreement with the audit finding.