Audit 370326

2024 – 002 Federal Agency: U.S. Department of Health and Human Services State Passthrough Agency: Department of Mental Health and Addiction Services Federal Program Name: Opioid STR and How Can We Help 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: CTHRA’s prescribed controls is to review payroll records and ensure the payroll system is operating effectively in accordance with the Organization’s policies and procedures as well as their prescribed rates. Condition: The Organization and payroll provider miscalculated retroactive wages. Questioned costs: Not material. Context: Of the five employees chosen for testing, one employee’s retroactive earnings were not properly calculated for a payroll period during the year, which resulted in the employee being overpaid by $27 during the current year. Effect: The effect is that expenses charged to the federal awards in excess of actual allocated expenses incurred. Cause: Manual error and insufficient review of payroll review controls. Repeat Finding: No Recommendation: We recommend proper review control procedures to be established by management. Views of Responsible Officials: Management concurs with the finding. See separate corrective action plan

2024 – 001 Type of Finding: • Significant Deficiency in Internal Control over Financial Reporting Criteria or Specific Requirement: Generally accepted accounting principles (GAAP) requires the recording of expenditures in the period that they were incurred. Condition: There were two invoices for 2024 services that were not originally accrued for at year-end prior to the audit. Questioned costs: No questioned costs as the expenditures were allowable in accordance with the grant and within the grant period. Context: Both expenditures were for third party transit homeless outreach services that occurred in 2024 and were invoiced in 2025. The actual expenditures are allowable costs and within the grant period, however, the expenditures were not recorded in the Organization’s financial statements as required by GAAP. Cause: The two invoices were not received until January and March 2025 for the service period of October through December 2024. Management submits invoices when requesting grant reimbursements and therefore did not accrue the missing invoices until the annual audit. Effect: Prior to recording the audit adjustment, grant expenditures and the related accrual, and the corresponding grant revenue and receivable for 2024 were understated. However, the net impact to the changes in net assets for 2024 was not material. Repeat Finding: No Recommendation: Management should review invoices received subsequent to year-end and/or obtain estimates with vendors that typically bill in arrears in order to ensure that material expenditures (ad related grant revenue if applicable) are recorded in the financial statements as required by GAAP. Views of Responsible Officials: While Management does not agree with the finding, Management recorded the necessary audit adjustment.