Audit 372829

Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: U.S. Department of the Treasury Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds AL #: 21.027 Award #: 202300279, 202300281, 202300280 Award Period: July 1, 2022 – June 30, 2023 Questioned Costs: None Statement of Condition Heading Home does not appear to have controls in place for the review and timely submittance of the Project and Expenditure Reports that are required to be filed on a recurring basis. Context During our testing of internal controls over compliance we noted the following: • Two of 13 reports reviewed were not signed by an appropriate individual. • Three of 13 reports tested were two months late being filed Criteria Auditors are required to assess the compliance with the reporting requirements for the major program tested. These requirements require a Project and Expenditure Report to be filed on a regular, recurring basis. The reporting frequency and deadlines vary by type of recipient and total allocation amount. Cause Heading Home did not have procedures in place to ensure these required reports were submitted on time and signed by an appropriate individual. Effect Heading Home is not in compliance with Federal Award requirements as they were delinquent in turning in a number of required reports and a few were turned in incomplete. Failing to obtain and document appropriate signatures increases the risk of misstatement and the risk of fraudulent disbursements and disbursements made in error. Failure to submit reports in a timely manner could result in a misstatement going undetected and uncorrected. Recommendation Ensure documentation is organized and readily available to fulfill Federal Award compliance. Develop and implement internal control policies and procedures to ensure that required reports are reviewed and approved prior to filing and that evidence of this approval is maintained. Additionally, ensure timing of filing the report is made a priority. View of Responsible Official and Corrective Action Plan Heading Home management is in agreement with this finding. After years of turnover in key management positions steps have been taken to address staffing challenges and these positions have been successfully staffed with high-quality individuals who bring extensive knowledge and expertise to their roles. These positions include a new Chief Executive Officer, Director of Operations, Chief Financial Officer, and Director of Human Services. To address challenges in accounting and finance Heading Home had contracted with a local CPA firm specializing in nonprofit accounting and financial reporting to assist the CFO with daily accounting tasks, the monthly close, financial reporting to management and the board of directors, and to facilitate and ensure audits are completed timely each year. The new management group is committed to maintaining a skilled and competent team in key financial roles. Due to the backlog of billings at the opening of FY23, the billing submissions and quarterly reports for the first quarter were submitted late. With the new staff and assistance, these billings and quarterly reports were brought current as quickly as possible. They are now current and being submitted in a timely manner. Management’s corrective action plan was fully implemented by June 30, 2025 and anticipate that there will be no further issues. Personnel responsible for ensuring implementation include Connie Chavez, Executive Director, and Debbie Brickman, Chief Financial Officer.

2024-002 (2023-006) – LATE DATA COLLECTION FORM Type of Finding: (G) –Instance of Non-Compliance Related to Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition Heading Home submitted the data collection form after the required due date. Context Heading Home was required to submit its data collection form for the year ended June 30, 2024, by March 31, 2025. Criteria The audit shall be completed, and the data collection form and reporting package shall be electronically transmitted within the earlier period of 30 days after receipt of the auditor's reports, or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day (2 CFR 200.512(a)). Cause Heading Home did not submit the June 30, 2024, data collection form and reporting package by the due date due to significant program expansion and a backlog created within the administrative team. T Effect Heading Home is not in compliance with Federal Award data collection form requirements and could jeopardize future federal funding. Recommendation Heading Home should implement procedures and controls to ensure that all future audit reports and data collection forms are completed promptly. View of Responsible Official and Corrective Action Plan Heading Home management is in agreement with this finding. After years of turnover in key management positions steps have been taken to address staffing challenges and these positions have been successfully staffed with high-quality individuals who bring extensive knowledge and expertise to their roles. These positions include a new Chief Executive Officer, Director of Operations, Chief Financial Officer, and Director of Human Services. To address challenges in accounting and finance Heading Home has contracted with a local CPA firm specializing in nonprofit accounting and financial reporting to assist the CFO with daily accounting tasks, the monthly close, financial reporting to management and the board of directors, and to facilitate and ensure audits are completed timely each year. The new management group is committed to maintaining a skilled and competent team in key financial roles. The FY23 audit was completed in May 2025 and the Headin Home accounting team anticipates the FY24 audit to be completed by November 2025. While this will once again result in a late filing, the new management team has made significant strides in a short amount of time and anticipates that the 2025 and all future audits will be submitted on or before the March 31st due date. Management anticipates the above corrective action plan to be fully implemented by November 30, 2025. Personnel responsible for ensuring implementation include Connie Chavez, Executive Director and Debbie Brickman, Chief Financial Officer.