Audit 54391

U.S. Department of Health and Human Services The Substance Abuse and Mental Health Services Administration Block Grants for Prevention and Treatment of Substance Abuse ? Recovery Community Organization Grant Assistance Listing # 93.959 2022-001 MATERIAL WEAKNESS Inadequate Segregation of Duties Criteria: In an Organization such as Sunrise Community for Recovery and Wellness, Inc., with a limited number of personnel for certain functions, there are inherent limitations on the effectiveness of certain controls due to the lack of segregation of duties among personnel. Condition: Inadequate segregation of duties was noted to exist in the following areas: (1) Bank reconciliations are reviewed and approved by an individual that is not involved in the preparation of the bank reconciliation but there is no formal documentation to indicate the review and approval. (2) Bank statements are reviewed by the Board Treasurer but there is no formal documentation to indicate such review. (3) Journal entries, auto drafts, and ACH payments are not formally reviewed and approved by an individual that is not involved in the preparation and posting of journal entries. (4) While payroll rate changes are approved they are not formally documented in each employee?s personnel file. (5) There are no formalized accounting policies and procedures. Effect: Sunrise Community for Recovery and Wellness, Inc. runs the risk of employees and contractors committing potential fraud. Cause: Financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible. Recommendation: We encourage the Organization to restructure job responsibilities when possible to further segregate incompatible job functions. We realize that the financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible, but any actions taken to further segregate incompatible job functions will benefit the Organization. We further recommend that management and the Board formalize its policies and procedures and implement formal sign offs to indicate review and approval for the monitoring process that is crucial for internal control. Views of responsible officials and planned corrective actions: Management of Sunrise Community for Recovery and Wellness, Inc. agrees with this finding. Management of Sunrise Community for Recovery and Wellness, Inc. will continue to further segregate incompatible job functions that will benefit the Organization. An accounting assistant has been hired and some duties will be delegated to her that will also assist with segregation of incompatible job functions. In addition, review and approval processes will be formalized by documentation of review and approval. Policies and procedures will be formalized as well.

U.S. Department of Health and Human Services The Substance Abuse and Mental Health Services Administration Block Grants for Prevention and Treatment of Substance Abuse ? Recovery Community Organization Grant Assistance Listing # 93.959 2022-004 MATERIAL WEAKNESS Uniform Guidance Policies Criteria: When spending federal grant and loan award funds, non-federal entities are required to adopt written Uniform Guidance policies that conform to applicable federal law and the Uniform Guidance (various sections of 2 C.F.R. 200). Condition: Sunrise Community for Recovery and Wellness, Inc. did not have written policies and procedures to comply with the Uniform Guidance standards and federal awards were received and expended during the year ended December 31, 2022. Effect: Sunrise Community for Recovery and Wellness, Inc. could be noncompliant with Uniform Guidance policies. Cause: Employees were unaware of the Uniform Guidance policy requirements. Recommendation: We recommend that Sunrise Community for Recovery and Wellness, Inc. implement written policies and procedures to ensure compliance with the Uniform Guidance. Views of responsible officials and planned corrective actions: Management of Sunrise Community for Recovery and Wellness, Inc. agree with this finding. Management at Sunrise Community for Recovery and Wellness, Inc. will formalize and implement written policies that comply with Uniform Guidance standards and will present the policies to the Board of Directors to be approved and adopted.

U.S. Department of Health and Human Services The Substance Abuse and Mental Health Services Administration Block Grants for Prevention and Treatment of Substance Abuse ? Recovery Community Organization Grant Assistance Listing # 93.959 2022-001 MATERIAL WEAKNESS Inadequate Segregation of Duties Criteria: In an Organization such as Sunrise Community for Recovery and Wellness, Inc., with a limited number of personnel for certain functions, there are inherent limitations on the effectiveness of certain controls due to the lack of segregation of duties among personnel. Condition: Inadequate segregation of duties was noted to exist in the following areas: (1) Bank reconciliations are reviewed and approved by an individual that is not involved in the preparation of the bank reconciliation but there is no formal documentation to indicate the review and approval. (2) Bank statements are reviewed by the Board Treasurer but there is no formal documentation to indicate such review. (3) Journal entries, auto drafts, and ACH payments are not formally reviewed and approved by an individual that is not involved in the preparation and posting of journal entries. (4) While payroll rate changes are approved they are not formally documented in each employee?s personnel file. (5) There are no formalized accounting policies and procedures. Effect: Sunrise Community for Recovery and Wellness, Inc. runs the risk of employees and contractors committing potential fraud. Cause: Financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible. Recommendation: We encourage the Organization to restructure job responsibilities when possible to further segregate incompatible job functions. We realize that the financial outlay necessary to employ additional persons to segregate all incompatible duties is not currently economically feasible, but any actions taken to further segregate incompatible job functions will benefit the Organization. We further recommend that management and the Board formalize its policies and procedures and implement formal sign offs to indicate review and approval for the monitoring process that is crucial for internal control. Views of responsible officials and planned corrective actions: Management of Sunrise Community for Recovery and Wellness, Inc. agrees with this finding. Management of Sunrise Community for Recovery and Wellness, Inc. will continue to further segregate incompatible job functions that will benefit the Organization. An accounting assistant has been hired and some duties will be delegated to her that will also assist with segregation of incompatible job functions. In addition, review and approval processes will be formalized by documentation of review and approval. Policies and procedures will be formalized as well.

U.S. Department of Health and Human Services The Substance Abuse and Mental Health Services Administration Block Grants for Prevention and Treatment of Substance Abuse ? Recovery Community Organization Grant Assistance Listing # 93.959 2022-004 MATERIAL WEAKNESS Uniform Guidance Policies Criteria: When spending federal grant and loan award funds, non-federal entities are required to adopt written Uniform Guidance policies that conform to applicable federal law and the Uniform Guidance (various sections of 2 C.F.R. 200). Condition: Sunrise Community for Recovery and Wellness, Inc. did not have written policies and procedures to comply with the Uniform Guidance standards and federal awards were received and expended during the year ended December 31, 2022. Effect: Sunrise Community for Recovery and Wellness, Inc. could be noncompliant with Uniform Guidance policies. Cause: Employees were unaware of the Uniform Guidance policy requirements. Recommendation: We recommend that Sunrise Community for Recovery and Wellness, Inc. implement written policies and procedures to ensure compliance with the Uniform Guidance. Views of responsible officials and planned corrective actions: Management of Sunrise Community for Recovery and Wellness, Inc. agree with this finding. Management at Sunrise Community for Recovery and Wellness, Inc. will formalize and implement written policies that comply with Uniform Guidance standards and will present the policies to the Board of Directors to be approved and adopted.