Audit 409144

Finding No. 2024-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Significant Deficiency in Internal Control over Compliance (Cost Allocation Plan) Federal Program Name: All Pass-through Entity: All Federal Assistance Listing Number: All Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be adequately documented, allowable, and allocated to programs based on relative benefits received. Organizations allocating shared or indirect costs among multiple funding sources are required to maintain a reasonable, consistently applied, and current cost allocation methodology. Condition The Organization’s cost allocation plan (“CAP”) has not been formally reviewed or updated in several years and does not reflect the current structure of awards and programs. As a result, the Organization could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questioned Costs None. Context The Organization's cost allocation plan had not been formally reviewed or updated since 2015. The outdated plan was utilized during the audit period to allocate shared costs among multiple funding sources and programs. Effect Without a current and formally maintained CAP, there is an increased risk that costs charged to federal awards may not be properly allocated, may not reflect relative benefits received, or may not be consistently applied in accordance with federal requirements. Cause The Organization does not have established procedures requiring periodic review and update of the CAP to ensure it remains current with changes in operations and funding sources. Repeat Finding No Recommendation We recommend that the Organization formally document its cost allocation methodology and establish procedures for periodic review and update of the CAP to ensure it reflects current operations and funding sources. The CAP should be formally approved by governance and retained as support for allocation of shared costs to federal programs. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.

Finding No. 2024-003: Activities Allowed or Unallowed and Allowable Costs/Cost Principles –Significant Deficiency in Internal Control over Compliance (Payroll) Federal Program Name: All Pass-through Entity: All Federal Assistance Listing Number: All Criteria In accordance with 2 CFR §200.430(i), charges to federal awards for salaries and wages are required to be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives. Condition The Organization allocates employees’ payroll costs to grants based on an estimate. Although the payroll allocation is periodically reviewed and revised, differences from actual time and effort can result due to an estimate being used. Questioned Costs Unknown. Context The Organization allocated payroll costs to multiple funding sources based on estimates during the audit period and did not maintain formal documentation to support allocations based on actual time and effort. Effect The employee time and payroll costs that are charged to the grant could differ from the actual time and payroll costs expended in support of the grant activities. Cause The Organization does not have established procedures to ensure that salaries and wages charged to federal awards are supported by records that accurately reflect the work performed. Documentation of personnel expenses should support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Repeat Finding No Recommendation We recommend that management strengthen processes over payroll cost allocations to ensure amounts charged to funding sources are supported by documented actual time and effort. This may include implementing a formal methodology for allocating payroll costs, establishing procedures for employees to track or otherwise document time spent by program or funding source, and performing periodic reviews and adjustments based on actual activity. In addition, management should ensure that sufficient documentation is maintained to support how payroll costs are allocated and that such processes are consistently applied. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.

Finding No. 2024-004: Reporting and Annual Audit Submission – Noncompliance Federal Program Name: All Pass-through Entity: All Federal Assistance Listing Number: All Criteria As set forth in 2 CFR §200.512 - Report Submission, the audit must be completed and the Data Collection Form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report, or nine months after the end of the audit period. The due date for the audit and reporting package submission was June 30, 2025. Condition The Organization did not submit the audit, Data Collection Form, and reporting package by the required deadline of June 30, 2025. Questioned Costs None. Context The Data Collection Form and reporting package were required to be submitted by June 30, 2025. The audit was not completed and submitted by the required deadline due to delays in the preparation of financial reporting information and supporting schedules. Effect The Organization was not in compliance with the reporting requirements of 2 CFR §200.512, as the audit, Data Collection Form, and reporting package were not submitted by the required deadline. Cause Significant delays in the audit process resulted in the late filing. Repeat Finding No Recommendation We recommend that the Organization implement procedures to ensure that financial statements, supporting schedules, and Single Audit requirements are prepared and completed on a timely basis to support compliance with federal reporting deadlines. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.

Finding No. 2024-005: Reasonable Rental Rates – Significant Deficiency in Internal Control over Compliance Federal Program Name: Continuum of Care Pass-through Entity: All Federal Assistance Listing Number: 14.267 Criteria In accordance with 24 CFR §578.49(b)(1), Continuum of Care grant recipients must ensure that rents charged are reasonable in relation to rents for comparable unassisted units. Rent reasonableness determinations must be performed and documented at initial occupancy and when rents are increased, and must be supported by appropriate documentation, including comparable market data. Supporting documentation must be maintained in participant files to demonstrate compliance with program requirements. Condition Supporting documentation, including lease agreements and eligibility forms, within tenant files was not always sufficient to demonstrate compliance with program requirements. The rent reasonableness determinations lacked evidence of approval or audit trail to substantiate the timing or completion of the review. Questioned Costs Unknown. Effect Documentation supporting rent reasonableness determinations and tenant eligibility files was incomplete and not consistently maintained in a manner that clearly demonstrated compliance with HUD requirements, including evidence of timely performance and review of required procedures. Cause The Organization did not have formalized procedures to ensure consistent preparation, review, retention, and organization of rent reasonableness documentation and tenant file records, including clearly defined responsibility for maintaining complete and accessible documentation. Repeat Finding No Recommendation We recommend that the Organization implement formal procedures to ensure rent reasonableness determinations are properly documented, including identification of preparer and reviewer. In addition, the Organization should strengthen tenant file maintenance procedures to ensure all required supporting documentation is complete, current, and readily available, and that responsibilities for file maintenance and review are clearly assigned and consistently followed. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.