FINDING 2025-004 – Payroll Allocations Federal Program: Continuum of Care Program Federal Identifying Number: Direct funding grants - IL0395L5T102214, IL0395L5T102315, IL0184L5T102316, IL0184L5T102417, IL1790H5T102200, IL1791H5T102200, IL1792H5T102200; Passed- through grants -IL1759D5T102201, IL1878D5T102300, IL1759D5T102202, and 8567-D Federal Assistance Listing Number: 14.267 Passed Through: All Chicago Making Homeless History and Aids Foundation of Chicago Federal Agency: U.S. Department of Housing and Urban Development Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) require Inner Voice, Inc. to ensure federal expenditures to be consistent with the standards set forth in the Uniform Guidance at 2 CFR part 200, subpart E. B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.430(g)(1)(i) Standards for Documentation of Personnel Expenses states the following, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. C. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following, “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: Our audit procedures over expenditures revealed the following: 1) For one (1) of forty (40) expenditure transactions tested, The Inner Voice, Inc. did not adequately track or review time and effort documentation for accuracy. For this selection, the time study applied to allocate salary and actual hours reported and paid did not agree. Questioned Costs: None. Context: The Inner Voice, Inc. expended a total of $5,207,762 of federal awards in fiscal year 2025. The Inner Voice, Inc. expended a total of $3,992,341 of federal awards in fiscal year 2025 under the Continuum of Care program. Effect: The Inner Voice, Inc. is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200.426 as it relates to activities allowed or unallowed and allowable costs/cost principles requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: The Inner Voice, Inc.’s implementation of internal controls is inconsistent in the 1) review of time study against payment and 2) review and approval of payroll salaries transactions. Recommendation: We recommend that The Inner Voice, Inc. establish and maintain effective internal control over federal awards to ensure expenditures are supported as required by 2 CFR 200.430(g)(1)(i). This includes: a. Conducting a formal time and effort study to support payroll allocations; b. Enhancing policies and procedures surrounding time and effort documentation and review and approval of payroll expenditures. Management’s Response: See Corrective Action Plan.
FINDING 2025-005 – Procurement, Suspension and Debarment (Partially Repeated from Prior Year Finding 2024-002) Federal Program: Continuum of Care Program Federal Identifying Number: Direct funding grants - IL0395L5T102214, IL0395L5T102315, IL0184L5T102316, IL0184L5T102417, IL1790H5T102200, IL1791H5T102200, IL1792H5T102200; Passed- through grants -IL1759D5T102201, IL1878D5T102300, IL1759D5T102202, and 8567-D Federal Assistance Listing Number: 14.267 Passed Through: All Chicago Making Homeless History and Aids Foundation of Chicago Federal Agency: U.S. Department of Housing and Urban Development Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.318(a) General Procurement Standards states the following, “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.” B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.319 Competition states the following, “All procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” C. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 180.300 states a participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: a. Checking SAM Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. D. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following, “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: For fourteen (14) out of fourteen (14) procurement and suspension and debarment transactions tested we noted the following: 1) The Inner Voice, Inc. did not complete the appropriate procurement process; 2) The Inner Voice, Inc. did not maintain appropriate documentation to support the procurement method utilized (if any); and 3) The Inner Voice, Inc. did not provide or maintain documentation that suspension and debarment searches were performed. Questioned Costs: None. Context: The Inner Voice, Inc. expended a total of $5,207,762 of federal awards in fiscal year 2025. The Inner Voice, Inc. expended a total of $3,992,341 of federal awards in fiscal year 2025 under the Continuum of Care program. The procurement, suspension and debarment transactions we selected for testing totaled $1,180,252 or 29.6% percent of program expenditures. Effect: The Inner Voice, Inc. is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 as it relates to procurement, suspension and debarment requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: 1. The Inner Voice, Inc.’s procurement policy provides limited guidance on procurement methods, documentation of procurement process, and references to Uniform Guidance procurement categories and definitions. Additionally, policy does not include processes pertaining to suspension and debarment checks. 2. Where policies are in place, they are not being followed. Recommendation: We recommend that The Inner Voice, Inc.: a. Enhance policies and procedures surrounding procurement, suspension and debarment. b. Communicate and reinforce its policies and procedures to ensure compliance with applicable requirements. Management’s Response: See Corrective Action Plan.