Audit 8675

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

SECTION II - FINANCIAL STATEMENT FINDINGS Finding No. 2022-001: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting of its financial information. Condition During the audit, there were several errors which were not discovered during the financial close process or review of the financial reports. Adjustments were needed to correctly reconcile beginning net assets to the prior year audit, to correct accounts payable and various accruals, to tie intercompany balances, to adjust the allowance, and to correct depreciation expense. This resulted in multiple adjustments proposed by Marcum and approved by HRDI’s management that took place between June 2023 and December 2023 to correct and reconcile the balances as of June 30, 2022. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its financial reporting. This hindered HRDI’s ability to perform the necessary monthly and year-end reconciliations and review of the accounts in a timely manner, thus resulting in a delayed financial reporting audit in the current year. Effect This could lead to inaccurate financial information, on the basis of which HRDI’s decisions are made. In addition, it is not allowing HRDI to complete its financial reporting audit in a timely manner and by the due date required by the Uniform Guidance, which is nine months after HRDI’s year end. Recommendation We recommend that, as part of the system of internal control over the monthly closing process, accounting staff be assigned to review the detailed schedules of liability and asset account reconciliations for accuracy and completeness and that any unusual balances, such as long-outstanding balances or negative balances, should be reviewed, reconciled and any required adjustments posted. We also recommend that HRDI implement any additional procedures needed to ensure that monthly reconciliations are a priority and are both completed and subsequently reviewed by an independent individual in a timely manner. Furthermore, we recommend that HRDI enhance its procedures to ensure that the evidence of review of schedules and other reconciliations, such as sign-offs by both the preparer and reviewer on the documents, are retained. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-002: Financial Close Process and Account Reconciliations – Material Weakness in Internal Control Over Financial Reporting U.S. Department of Housing and Urban Development, AL No. 14.267, Shelter Plus Care U.S. Department of Housing and Urban Development, AL No. 14.241, Housing Opportunities for Persons with AIDS Passed-through Alabama Department of Mental Health and Retardation, AL No. 93.778, Medicaid Cluster Medical Assistance Program The 2022-002 finding expands finding 2022-001 for the federal award program as it impacted the expenses charged to the federal awards above. Prior to the adjustments to correct the balances, the expenses reported on the SEFA for AL No. 14.267 were overstated by approximately $3,015 and the expenses reported on the SEFA for AL No. 14.241 were overstated by approximately $37,649. In addition, the expenses reported on the SEFA for AL No. 93.778 were overstated by approximately $456,701. Repeat Finding Yes Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.