Audit 384402

FINDING 2023-003 – Reporting: Significant Deficiency over Internal Controls over Compliance Federal Assistance Listing Number Federal Agency/Pass-through Entity – Program Name Award Year Questioned Costs 64.033 VA Supportive Services for Veteran Families Program 2023 $0 Criteria: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The VA Data Guide (the Guide) and the contract agreements provide instruction on the frequency and data requirements due during the award period. Condition/Context: In a representative sample of monthly, quarterly, and annual reports due during the year ended December 31, 2023, auditors noted six of the six tested annual financial reports did not agree to the underlying profit and loss detail for the related grants. In addition, the certified authorized official was not an employee of the Organization and there was a lack of documentation for how the certifying official was deemed appropriate. In the sample of quarterly reports, the Organization had contradicting responses related to whether reimbursement requests reflect actual spending of designated Supportive Services for Veteran Families (SSVF) funding. Effect: Reporting requirements of the awards were not accurate for certain line items. Cause: There was turnover in the Organization which caused the inability to produce or find supporting documentation on how values were created or how certifying officials outside the Organization were provided authority to certify such reports submitted. Repeat finding: This is not a repeat finding. Recommendation: The Organization should have knowledgeable personnel review and approve reports for completeness and accuracy, including comparing to source documentation and any reconciliations between source data to final reporting. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has developed a corrective action plan to address the finding.

FINDING 2023-004 – Cash Management: Significant Deficiency over Internal Controls over Compliance Assistance Listing Number Federal Agency/Pass-through Entity – Program Name Award Year Questioned Costs 64.033 VA Supportive Services for Veteran Families Program 2023 $0 Criteria: Regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 ((2 CFR section 200.302(b)(6)). Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). The reimbursement payment method is the preferred payment method if (a) the non-federal entity cannot the meet the requirements in 2 CFR section 200.305(b)(1) for advance payment, (b) the federal awarding agency sets a specific condition for use of the reimbursement or (c) if requested by the non-federal entity (2 CFR sections 200.305(b)(3) and 200.208). Condition/Context: The Organization draws down funds based on a profit and loss report to signify the excess expenses incurred over the grant revenue. The Organization operates on a reimbursement basis. The request for reimbursements are not reviewed to ensure amounts have been paid with the Organization’s funds prior to the reimbursement request because certain expense codes do not relate to expenses paid but rather expenses incurred. Additionally, the frequency of draws during mid-months creates potential for errors when the reporting period has not been reconciled and therefore coded expenses are subject to change. Effect: Certain expenses included on the draw down total have not been paid for with Organization funds prior to the request or within 3 days of receipt of federal fund. Cause: There is no review to ensure the total only included expenses paid. Repeat finding: This is not a repeat finding. Recommendation: The Organization should reconcile program expenditures and requests for federal funds to ensure the total draw down is not in excess of disbursements paid by the Organization. Management should implement a review and approval process for reimbursement requests to verify that amounts drawn are supported by paid expenditures and appropriate documentation. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has developed a corrective action plan to address the finding.

FINDING 2023-005 – Allowable Costs: Significant Deficiency over Internal Controls over Compliance Assistance Listing Number Federal Agency/Pass-through Entity – Program Name Award Year Questioned Costs 64.033 VA Supportive Services for Veteran Families Program 2023 $0 Criteria: The time and effort reporting or compensation of personal services 2 CFR section 200.430 notes a non-federal entity must have written policies surrounding time and effort reporting that are consistently applied to both federal and non-federal activities. The actual percentage of employees’ time must be recorded and documented per funding source and not by budgets. Documentation must be maintained to support allocations for non-payroll and payroll disbursements charged to the grant. 2 CFR section 200.405 relates to allocable costs. A cost is allocable to a federal award if the goods and services involved are chargeable to that award in accordance with relative benefits received. Costs are allocable if they: • Are incurred specifically for the federal award • Benefit both the federal award and other work of the non-federal entity and can be distributed in reasonable proportion to the benefits received; or • Are necessary to the overall operation of the non-federal entity and are assignable in part to the federal award. Condition/Context: In a sample of 25 payroll disbursements, 11 salaried employees lacked adequate documentation to support the allocation of time and effort to federal programs. Additionally, 4 out of 25 non-payroll disbursements lacked a documented methodology or supporting evidence to justify the allocation of costs between programs. Effect: Expenses charged to the grant are not supported by records. Cause: There was turnover in the Organization which caused the inability to produce or find supporting documentation on how allocations are created inside the system. Repeat finding: This is not a repeat finding. Recommendation: The Organization should have written policies surrounding time and effort reporting and ensure the methodology is supported by source documents for all transactions. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has developed a corrective action plan to address the finding.