BETTER HOUSING COALITIONNon-Profit

Federal Agencies: Department of Health and Human Services Federal Assistance Listing Number: 93.696 Program: Certified Community Behavioral Health Clinic Expansion Grants Award/Pass-Through Entity Identifying Number: H79SM086589 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that KMHS allocated payroll expenditures using budgeted allocation rates that were not trued up to actual. One out of 11 payroll selections used budgeted allocation rates that needed to be adjusted down to actual. Cause: KMHS did not have adequate policies/procedures in place to ensure fringe allocations are trued down to actual if applicable. KMHS relied heavily on manual processes that are more prone to error and did not have an adequate review process to identify and correct calculation errors. Effect or Potential Effect: Without adequate controls to detect calculation errors and ensure that costs allocated to federal programs are supported, KMHS could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement KMHS is entitled to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of KMHS’s compliance with specified requirements not using a statistically valid sample. Payroll costs including fringe benefits towards the program in 2024 were $861,659. The over-allocation of fringe benefits in excess of actuals is considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend implementing system improvements to compare budget to actual fringe expenditures and complete reconciliations when necessary. Views of Responsible Officials: Management agrees with the finding. Management is updating their written procedures to ensure that allowable costs and cost principles comply with §200.430 as well as enhancements to the allocation procedures.

2023-002 Submission of Data Collection Form Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-18-CA-1014/ S-SJTIP-18-CA-3035/S-SJTIP-20-CA-0026 Grant Award Period: October 1, 2018 through December 31, 2022; October 1, 2021 through September 30, 2024; July 1, 2022 through October 31, 2023 Criteria or Specific Requirement: In accordance with 2 CFR Section 200.512(a) Report Submission - General, the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Condition: The reporting package and data collection form for the year ended December 31, 2023, was not filed by the deadline of September 30, 2024 to the Federal Audit Clearinghouse. Cause: Due to turnover and reduction in staff, additional time was required to comply fully with reporting on, and audit of, compliance requirements of the federal award programs. Effect or Potential Effect: The reporting package and data collection form for the year ended December 31, 2023, was not submitted to the Federal Audit Clearinghouse in a timely manner. Questioned Costs: None Context: The reporting package and data collection form for the year ended December 31, 2023 will be submitted to the Federal Audit Clearinghouse after the due date of September 30, 2024. Repeat Finding: This is a repeat finding. Recommendation: We recommend the Fund continue refining policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. View of Responsible Officials: Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.

2023-003 - Reporting Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-20-CA-0026 Grant Award Period: July 1, 2022 through October 31, 2023 Criteria or Specific Requirement: In accordance with §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (the Schedule) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502, Basis for determining Federal awards expended”. The schedule must provide total Federal awards expended for each individual Federal program. Condition: During our review of grant agreements, we noted one Federal subaward that was improperly excluded from the original Schedule. This resulted in an understatement of total Federal awards expended as presented on the Schedule. Cause: The Fund experienced staffing constraints during the year-end closing and financial reporting time period, which limited management’s ability to prepare a complete Schedule. Effect or Potential Effect: The original Schedule provided excluded federal expenditures totaling $152,021 and as a result, the Schedule was not properly stated. Adjustments were recorded and approved by the Fund’s management for presentation in this report. Questioned Costs: None Context: Per review of the Fund’s grant agreements, we identified one grant that was improperly excluded from the Schedule. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Fund strengthen policies and procedures to ensure that all Federal awards and related expenses are reported accurately on the schedule of expenditures of federal awards. We recommend that individuals responsible for administering Federal programs within the Fund obtain training related to Federal grant requirements. View of Responsible Officials: Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.

2023-004 – Allowable Costs Relating to Time and Effort and Internal Controls Information on Federal Program(s) U.S. Department of State Name of Program: Program to End Modern Slavery Assistance Listing Number: 19.019 Grant Award Number: S-SJTIP-18-CA-1014/ S-SJTIP-18-CA-3035/S-SJTIP-20-CA-0026 Grant Award Period: October 1, 2018 through December 31, 2022; October 1, 2021 through September 30, 2024; July 1, 2022 through October 31, 2023 Criteria or Specific Requirement: In accordance with 2 CFR Section 200.430.8(i), charges to federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. Condition: For four salary transactions tested, the Fund could not provide supporting salary allocation schedules for charges made to the Federal awards. Cause: While the Fund has procedures and controls in place over payroll processing, the Fund was unable to provide the payroll cost allocation spreadsheet for two months during 2023. Effect or Potential Effect: Charges to Federal awards for salaries and wages may not reflect accurate time worked. Questioned Costs: None Context: We selected 10 salary transactions charged to the federal programs to test controls over allowable costs. For four out of 10 transactions tested, the cost allocation spreadsheet was not available for review. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Fund consistently enforce its internal controls over payroll processing and ensure that salary allocation schedules are completed and saved. View of Responsible Officials: Management agrees with the Federal award finding identified in the audit. The Fund’s response to this finding is described in the accompanying management’s corrective action plan.