Audit 415506

2025-002 –ALN 93.623 Basic Center Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Compliance Requirement: Allowable Activities and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance; Noncompliance Criteria: Under Uniform Guidance, costs charged to a federal award must be necessary, reasonable, and allocable to the federal program. Costs must be assigned to federal awards in proportion to the relative benefits received. Additionally, Uniform Guidance requires recipients to maintain financial management systems that provide accurate, current, and complete financial information supported by appropriate accounting records. Condition: During our testing of expenditures charged to the Basic Center Program (ALN 93.623), we were unable to reconcile the population of program expenditures provided by management to the Organization's general ledger. As discussed in the financial statement findings section, the Organization did not consistently apply an allowable cost allocation methodology and was unable to provide sufficient documentation supporting its allocation process. Consequently, we were unable to determine whether all costs included in the expenditure population were properly allocated to the Basic Center Program in accordance with federal cost principles. Questioned Costs: $0 Cause: Management did not establish or maintain effective controls to ensure that shared costs were allocated using an allowable methodology, adequately documented, and reconciled to the accounting records prior to charging costs to the federal award. Effect: The Organization cannot demonstrate that expenditures charged to the Basic Center Program were properly allocated and supported in accordance with Uniform Guidance. As a result, there is an increased risk that unallowable or unallocable costs may have been charged to the federal award. Recommendation: See the recommendation for finding 2025-002 in the financial statement findings section of this schedule.

2025-004 –ALNs 93.550 Transitional Living & 93.623 Basic Center Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Compliance Requirement: Allowable Activities and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance; Noncompliance Criteria: In accordance with Uniform Guidance and Chapter 10.650, costs charged to a federal award or state project must be necessary, reasonable, adequately documented, and consistently treated. Additionally, Uniform Guidance and Chapter 10.650 requires charges to federal awards for salaries and wages to be based on records that accurately reflect the work performed and are supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated. Further, Uniform Guidance and Chapter 10.650 requires recipients to maintain effective financial management systems and internal controls over federal awards. Condition: During testing of payroll expenditures charged to Assistance Listings 93.550 and 93.623, the Organization was unable to provide sufficient documentation to support employee pay rates for several payroll transactions selected for testing. Specifically: • For Assistance Listing 93.550, 20 of the 20 payroll transactions selected for testing lacked sufficient supporting documentation. • For Assistance Listing 93.623, 12 of the 12 payroll transactions selected for testing lacked sufficient supporting documentation. Questioned Costs: $0 Cause: Management did not maintain adequate controls to ensure payroll documentation, including employee pay rate authorizations, was retained and remained accessible during the audit period. Effect: The Organization was unable to demonstrate that payroll costs charged to the federal awards and state projects were adequately supported as required by Uniform Guidance and Chapter 10.650. As a result, there is an increased risk that unsupported or unallowable payroll costs could be charged to federal awards or state projects without timely detection. Recommendation: See the recommendation for finding 2025-004 in the financial statement findings section of this schedule.

2025-005 –ALN 93.623 Basic Center Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Compliance Requirement: Allowable Activities and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance; Noncompliance Criteria: In accordance with Uniform Guidance and Chapter 10.650, costs charged to a federal award or state project must be necessary, reasonable, adequately documented, and consistently treated. Additionally, Uniform Guidance and Chapter 10.650 requires recipients to maintain financial management systems and internal controls that provide for the accurate identification, support, and accountability of expenditures charged to federal awards and state projects. Condition: During testing of expenditures charged to the Basic Center Program (ALN 93.623), we noted that 1 of the 10 disbursements selected for testing lacked sufficient supporting documentation. As a result, we were unable to verify that the expenditure was adequately supported and allowable under the federal award. This condition is further described in the financial statement findings section of this schedule. Questioned Costs: $0 Cause: Management did not consistently maintain documentation sufficient to support expenditures charged to the federal award and state project or implement effective review procedures to ensure supporting documentation was retained and available for audit. Effect: Because adequate supporting documentation was not maintained, the Organization was unable to demonstrate that the expenditure complied with Uniform Guidance and Chapter 10.650 requirements. As a result, there is an increased risk that unallowable or unsupported costs could be charged to the federal award or state project without timely detection. Recommendation: See the recommendation for finding 2025-005 in the financial statement findings section of this schedule.