Audit 42283

Item: 2022-002 Assistance Listing Number: 14.231 Programs: COVID-19 - Emergency Solutions Grant ? Homeless Street Outreach Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 154962-0 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? September 30, 2022 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ? 200.405 - Allocable costs ? a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost is incurred specifically for the Federal award, benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods and is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in subpart E. Condition: In fiscal year 2022, the Organization did not have an adequate process to review and approve employee cell phone costs charged to the program resulting in non-program costs being charged to the program. One employee's phone bill continued to be charged to the grant after they stopped working on the program. Questioned Costs: $1,051 Context: In a population of 75 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted 4 selections included an allocation of cell phone charges for an employee who did not work on the program. Additionally, we noted 1 of the same 40 selections did not have the proper review and approval before being paid. As a result of our sampling error, we reviewed all twelve cell phone charges for this employee charged to the program during the fiscal year ended September 30, 2022 and noted that cell phone charges were improperly charged to the program for the period from November 2021 through August 2022 for a total questioned costs of $1,051. This is deemed to be a material weakness in internal control over compliance. Effect: Non-payroll costs totaling $1,051 were inappropriately charged to the federal program. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to properly review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to adequately review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.

Item: 2022-003 Assistance Listing Number: 14.241 Programs: Housing Opportunities for Persons with AIDS Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 144347 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ? 200.405 - Allocable costs ? a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost is incurred specifically for the Federal award, benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods and is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in subpart E. Condition: In fiscal year 2022, the Organization did not have an adequate process to review and approve employee cell phone costs charged to the program resulting in non-program costs being charged to the program. Questioned Costs: $869 Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted 1 selection included an allocation of cell phone charges for two employees who did not work on the program. As a result of our sampling error, we reviewed all twelve cell phone charges for these two employees charged to the program during the fiscal year ended September 30, 2022 and noted that cell phone charges were improperly charged to the program for the period from November 2021 through August 2022 for a total questioned costs of $869. This is deemed to be a material weakness in internal control over compliance. Effect: Non-payroll costs totaling $869 were inappropriately charged to the federal program. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to properly review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to adequately review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.

Item: 2022-004 Assistance Listing Number: 14.241 Programs: Housing Opportunities for Persons with AIDS Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 144347 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: Under cost principles established by 2 CFR 200.430, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Condition: In our sampling of payroll expenditures charged to the program, we noted one employee's wage rate charged to the grant was not updated consistent with the employee's wage rate increase paid in their payroll. As a result, the incorrect amount of payroll costs was charged to the program (undercharged). Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted 2 of 40 payroll selections did not reflect the correct pay rate charged to the program. We noted the program was charged with an old wage rate that was lower than the actual paid rate. As a result, the program was undercharged. This is deemed to be a material weakness in internal control over compliance. Effect: The program was undercharged payroll costs totaling approximately $9. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.

Item: 2022-002 Assistance Listing Number: 14.231 Programs: COVID-19 - Emergency Solutions Grant ? Homeless Street Outreach Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 154962-0 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? September 30, 2022 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ? 200.405 - Allocable costs ? a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost is incurred specifically for the Federal award, benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods and is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in subpart E. Condition: In fiscal year 2022, the Organization did not have an adequate process to review and approve employee cell phone costs charged to the program resulting in non-program costs being charged to the program. One employee's phone bill continued to be charged to the grant after they stopped working on the program. Questioned Costs: $1,051 Context: In a population of 75 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted 4 selections included an allocation of cell phone charges for an employee who did not work on the program. Additionally, we noted 1 of the same 40 selections did not have the proper review and approval before being paid. As a result of our sampling error, we reviewed all twelve cell phone charges for this employee charged to the program during the fiscal year ended September 30, 2022 and noted that cell phone charges were improperly charged to the program for the period from November 2021 through August 2022 for a total questioned costs of $1,051. This is deemed to be a material weakness in internal control over compliance. Effect: Non-payroll costs totaling $1,051 were inappropriately charged to the federal program. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to properly review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to adequately review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.

Item: 2022-003 Assistance Listing Number: 14.241 Programs: Housing Opportunities for Persons with AIDS Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 144347 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ? 200.405 - Allocable costs ? a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost is incurred specifically for the Federal award, benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods and is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in subpart E. Condition: In fiscal year 2022, the Organization did not have an adequate process to review and approve employee cell phone costs charged to the program resulting in non-program costs being charged to the program. Questioned Costs: $869 Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted 1 selection included an allocation of cell phone charges for two employees who did not work on the program. As a result of our sampling error, we reviewed all twelve cell phone charges for these two employees charged to the program during the fiscal year ended September 30, 2022 and noted that cell phone charges were improperly charged to the program for the period from November 2021 through August 2022 for a total questioned costs of $869. This is deemed to be a material weakness in internal control over compliance. Effect: Non-payroll costs totaling $869 were inappropriately charged to the federal program. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to properly review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to adequately review and approve non-payroll expenses to ensure only costs associated with employees who worked on the program were charged to the major federal program. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.

Item: 2022-004 Assistance Listing Number: 14.241 Programs: Housing Opportunities for Persons with AIDS Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 144347 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: Under cost principles established by 2 CFR 200.430, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Condition: In our sampling of payroll expenditures charged to the program, we noted one employee's wage rate charged to the grant was not updated consistent with the employee's wage rate increase paid in their payroll. As a result, the incorrect amount of payroll costs was charged to the program (undercharged). Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted 2 of 40 payroll selections did not reflect the correct pay rate charged to the program. We noted the program was charged with an old wage rate that was lower than the actual paid rate. As a result, the program was undercharged. This is deemed to be a material weakness in internal control over compliance. Effect: The program was undercharged payroll costs totaling approximately $9. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.