Bay Cove Human Services, Inc. and Affiliates

Finding 2025-002 - Reporting - Significant Deficiency Name of Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: HS 2025-105, HS 2025-209, HS 2024-202. Program year is 2025. Name of Pass-through Entity (if applicable): City of Cambridge Department of Housing and Community Development Criteria: In accordance with §200.328, Financial Reporting, the recipient or subrecipient must submit financial reports as required by the Federal award. Additionally, in accordance with §200.329, Monitoring and Reporting Program Performance, the recipient or subrecipient must submit performance reports as required by the Federal award. Condition: The Agency did not have internal controls over its reporting compliance requirement under Uniform Guidance. Cause: The Agency did not have internal controls in place to ensure that reporting requirements were prepared, reviewed and submitted on a timely basis. Effect or Potential Effect: Failure to perform reporting procedures in accordance with the Uniform Guidance could result in the reports being inaccurate or not filed on a timely basis. Questioned Costs: Not applicable. Context: For 100% of reports selected (total of 4), management did not provide adequate supporting documentation of the controls in place for the preparation, review and timely submission of the reports. Identification as a Repeat Finding: This is a repeat finding (see prior year finding number: 2024-002) Recommendation: We recommend that the Agency establish internal controls over its reporting compliance requirements to ensure that the Agency is in compliance with Uniform Guidance. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that supports accurate and timely financial reporting in future periods.

Finding 2025-003 - Procurement - Significant Deficiency Name of Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: HS 2025-105, HS 2025-209, HS 2024-202. Program year is 2025. Name of Pass-through Entity (if applicable): City of Cambridge Department of Housing and Community Development Criteria: In accordance with §200.318(a), General Procurement Standards, a nonfederal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the nonfederal entity must maintain records sufficient to detail the history of the procurement. Condition: During our testing, we noticed that the Agency did not have a written procurement policy that complied with federal requirements. The Agency could not provide adequate supporting documentation which was completed at the time of the procurement transaction. Cause: The Agency did not have adequate internal controls to ensure that they complied with federal procurement standards. Effect or Potential Effect: Failure to perform procurement procedures in accordance with a written policy that complies with the Uniform Guidance could result in the procurement being disallowed. Questioned Costs: Not applicable. Context: For 100% of the procurement population (total of 1), management could not provide supporting documentation which was completed at the time of the procurement transaction. Identification as a Repeat Finding: This is a repeat finding (see prior year finding number: 2024-003). Recommendation: We recommend that the Agency establish written procurement policies and internal controls around procurement. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that complies with procurement requirements.

Finding 2025-004 - Cash Management and Special Tests and Provisions - Material Weakness Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for Persons with Disabilities Assistance Listing Number: 14.181 Federal Award Identification Number and Year: 023-HH-018, 023-EH-343, 023-HD-154, 023-HD-025. Program year is 2025. Name of Pass-through Entity (if applicable): Not applicable Criteria: In accordance with §891.400(e), Use of Project Funds, the owner shall maintain a separate interest bearing project fund account in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and shall deposit all tenant payments, charges, income and revenues arising from project operation or ownership to this account. All project funds are to be deposited in Federally insured accounts. Additionally in accordance with §891.405, Replacement Reserve, the owner shall make monthly deposits to the replacement reserve in an amount determined by HUD. Condition: During our testing, we noticed that the Agency did not have proper internal controls in place to review bank reconciliations timely. Additionally, during our testing, we noticed that the Agency did not deposit tenant payments into their separate interest bearing project fund account from the management agents account in a timely manner. Lastly, during our testing, we noticed that there were 7 months of replacement reserve deposits that were not made timely. Cause: The Agency did not have adequate internal controls to ensure that they complied with federal requirements. Effect or Potential Effect: Failure to deposit tenant payments and replacement reserve deposits into the designated bank account in a timely manner resulted in noncompliance with cash management and special tests and provisions requirements under Uniform Guidance. Questioned Costs: Not applicable. Context: 14 out of 25 of the population had deposits of tenant payments that were not timely. Additionally, 7 out of 12 months had replacement reserve deposits that were not timely. Lastly, 100% of the population did not have appropriate controls over bank reconciliations. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Agency establish proper internal controls around timely deposits and bank reconciliations. Views of Responsible Officials: Management acknowledges that certain internal controls did not operate effectively during the year ended June 30, 2025. Management is in the process of implementing additional controls to ensure a stable control environment that supports compliance with cash management and special tests and provisions requirements.

Finding 2024-002 - Reporting - Significant Deficiency Name of Federal Agency: Department of the Treasury and Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds and Certified Community Behavioral Health Clinic Expansion Grants Assistance Listing Number: 21.027 and 93.696 Federal Award Identification Number and Year: HS 2024-105, HS 2024-209, HS 2024-202 and 1H79SM086628-01. Program year is 2024. Name of Pass-through Entity (if applicable): Department of Housing and Community Development Criteria: In accordance with §200.328, Financial reporting, the recipient or subrecipient must submit financial reports as required by the Federal award. Additionally, in accordance with §200.329, Monitoring and reporting program performance, the recipient or subrecipient must submit performance reports as required by the Federal award. Condition: The Agency did not have internal controls over its reporting compliance requirement under Uniform Guidance. Cause: The Agency did not have internal controls in place to ensure that reporting requirements were prepared, reviewed and submitted on a timely basis. Effect or Potential Effect: Failure to perform reporting procedures in accordance with the Uniform Guidance could result in the reports being inaccurate or not filed on a timely basis. Questioned Costs: Not applicable. Context: For 100% of reports selected (total of 4), management did not provide adequate supporting documentation of the controls in place for the preparation, review and timely submission of the reports. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Agency establish internal controls over its reporting compliance reporting requirements to ensure that the Agency is in compliance with Uniform Guidance. Views of Responsible Officials: Management agrees with the finding and is in the process of revising internal controls to address this issue.

Finding 2024-003 - Procurement - Significant Deficiency Name of Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: HS 2024-105, HS 2024-209 and HS 2024-202. Program year is 2024. Name of Pass-through Entity (if applicable): Department of Housing and Community Development Criteria: In accordance with §200.318(a), General Procurement Standards, a non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. Condition: During our testing, we noticed that the Agency did not have a written procurement policy that complied with federal requirements. The Agency could not provide adequate supporting documentation which was completed at the time of the procurement transaction. Cause: The Agency did not have adequate internal controls to ensure that they complied with federal procurement standards. Effect or Potential Effect: Failure to perform procurement procedures in accordance with a written policy that complies with the Uniform Guidance could result in the procurement being disallowed. Questioned Costs: Not applicable. Context: For 100% of the procurement population (total of 3), management could not provide supporting documentation which was completed at the time of the procurement transaction. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Agency establish written procurement policies and internal controls around procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of revising internal controls to address this issue.

Criteria: Allowable cost controls of the Agency require employee timesheets to be approved by their supervisors before payroll is processed. Condition: 1 employee timesheet was not approved by supervisor before payroll was processed. This was a recurring finding from fiscal year 2018. Cause: The Agency?s payroll software and pay cycle provide a very narrow window for approval to take place. In addition, the payroll software does not allow for retroactive approvals within the system. Effect: Employee?s timesheets and the related payroll may not be fully accurate before payroll is processed. Context: A sample of 25 employee pay periods was selected for audit from a population greater than 250 for the major program. The test found that 1 of the 25 samples selected did not have supervisor approval. Our sample was a statistically valid sample. Recommendation: The Agency should review their internal controls over the payroll process and take into consideration whether adjustments to the process, including lengthening the approval time allowed or providing alternative approval processes, may be warranted to mitigate the concern. The Agency does have additional controls in place to avoid a material misstatement related to this deficiency. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the finding, and notes that while this finding recurred, there was significant improvement over last as shown by the reduction in occurrences. Therefore, much of its corrective action will be to continue steps already taken. The Agency continues in the process of instituting additional audit controls and staff training to resolve the issues at the core of the finding. Additional staffing which was added temporarily last year to the Payroll department to supplement resources needed to review and secure approvals before payroll is submitted each week has been made permanent as of July 1, 2019. In addition, the Payroll Manager now reports directly to the VP - Controller, in order to give a higher level of immediate oversight to this and other ongoing payroll issues. Lastly, and the Agency feels most notably, as of August 30, 2019 the Agency changed its workweek from a start of Monday and end of Sunday to a start of Saturday and end of Friday. The due date for Payroll staff to transfer the weekly payroll files to payroll vendor did not change. Therefore, this change gives managers two additional days to approve staff's time. The Agency hopes that this change dramatically reduces the number of unapproved shifts. Regarding wage allocations, the Agency believes that it has adequate controls in place to ensure that wages are correctly allocated to all programs. The Agency believes that concerns over allowable costs are largely mitigated by other controls, including a thorough monthly review and partnership between the Accounts Receivable staff who complete billing and a team of Business Analysts who oversee budgets and contracts. Billing is routinely reviewed by the Analysts, who act as internal auditors for their assigned service areas and report up through a different supervisory chain than the Accounts Receivable staff. Allocations are updated regularly as contracts change. The Agency anticipates adding another Analyst in approximately January 2020 to further supplement these resources in response to Agency growth.

GSA_MIGRATION