Lincoln HallNon-Profit

Finding Number: 2024-001 Cost Allocations – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Children Program Contract Period: July 1, 2023 through June 30, 2024 Criteria: In accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that payroll and the related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system monthly. The finance team performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2024, financial statements. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2023-001 on the Summary Schedule of Prior Audit Findings. Cause: Certain non-personnel costs rely on the accurate allocation of personnel costs, which in turn depends on how employees are set up or assigned in ADP. However, there is no effectively established periodic review or assessment process to ensure the accuracy of these assignments throughout the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Regularly allocating these costs will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2024-002 Closing Process (Significant Deficiency) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Children Program Contract Period: July 1, 2023 through June 30, 2024 Criteria: The Uniform Guidance §200.303 requires entities to establish and maintain effective internal controls to provide reasonable assurance that entities are in compliance with Federal statutes, regulations, and terms and conditions of the Federal Award. Additionally, these internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (COSO). Condition: During our audit, we noted issues related to the timeliness of the financial statement close process, additional entries to finalize the trial balance and a lack of segregation of duties which led to journal entries being prepared, reviewed and posted by the same person in the general ledger system. These issues were driven by the Organization experiencing employee turnover. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2024 financial statements. Effect or Potential Effect: The findings identified impact the risks of fraud and management override. Due to the volume of transactions throughout the year there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Repeat Finding: This is a repeat finding from prior year. See Finding No. 2023-002 on the Summary Schedule of Prior Audit Findings. Cause: The findings noted surrounding controls for the financial statement closing process is mainly due to the turnover at Lincoln Hall. Recommendation: Untimely recording of journal entries along with inadequate segregation of duties, increases the risk of fraud and management override of controls. We recommend that management implement controls to ensure that the preparation, review and posting of journal entries are performed by separate individuals and that journal entries are timely recorded throughout the year. This will allow management to prevent, detect, and correct any misstatements on a timely basis. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2024-003 Allowable Costs; Cash Management (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Children Program Contract Period: July 1, 2023 through June 30, 2024 Criteria: In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracking of expenditures to establish that such funds have been used in accordance to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that certain payroll expenses and other than personnel service expenses are not being charged directly or allocated to the correct cost center in the accounting system monthly. Therefore, the amounts being drawn down during any given month may not be fully supported until the year-end when a reallocation of costs by function occurs. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with allowable costs and cash management. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. As a result, we were unable to obtain sufficient evidence to verify that certain costs were properly allocated to the program throughout the year to properly support drawdowns during any given month. Furthermore, as awards for this program are funded under the cost reimbursement method, this finding also impacts the cash management requirement to properly support any drawdowns that occur throughout the year. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2023-003 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, proper tracking and allocation of costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2024-004 Reporting (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Children Program Contract Period: July 1, 2023 through June 30, 2024 Criteria: In accordance with the Uniform Guidance §200.328 and §200.329, providers must submit Federal Financial Report (SF-425) and Program Progress Reports (SF-PPR) as required by the Federal Award, for which the instructions state that quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Additionally, in accordance with the Uniform Guidance §200.512, the Uniform Guidance report needs to be filed with the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the audit report or nine months after the end of the audit period. Condition: During our audit, we noted that one SF-PPR quarterly report, two SF-425 quarterly reports, the annual federal financial report and the Uniform Guidance report were not submitted on time. Also, one SF-PRR quarterly report tested was noted to have not been submitted. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2023-004 on the Summary Schedule of Prior Audit Findings. Cause: Timing and interpretation of the filing requirements were not met due to the turnover at Lincoln Hall. Recommendation: Management should submit reports timely as required by the Federal Award and the Uniform Guidance. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2024-005 Procurement and Suspension and Debarment (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Children Program Contract Period: July 1, 2023 through June 30, 2024 Criteria: The Uniform Guidance Section §200.317 states that the same policies and procedures used for procurements with non-federal funds must be followed when conducting procurement transactions under a federal award. Condition: During our audit, we noted that management’s method of allocating shared costs is performed after the fiscal year has ended, instead of performing timely allocations monthly throughout the fiscal year. Due to this allocation approach we were unable to obtain the procurement transactions that pertain only to the federal program during the year for our procurement policy testing population. Therefore, we selected ten samples from all transactions during the fiscal year based on Lincoln Hall’s procurement policy thresholds. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of procurement. Effect or Potential Effect: We were unable to identify the procurement transactions that pertain only to the federal program and therefore, we were unable to conclude whether awards for this program were used for purchases subject to the procurement policy in place. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2023-006 on the Summary Schedule of Prior Audit Findings. Cause: Bidding and procurement requirements were not met due to the turnover at Lincoln Hall as well as system limitations on allocations. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-001 Cost Allocations – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: In accordance with U.S. GAAP, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that payroll and the related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system monthly. The finance team performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023, financial statements. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-001 on the Summary Schedule of Prior Audit Findings. Cause: Certain non-personnel costs rely on the accurate allocation of personnel costs, which in turn depends on how employees are set up or assigned in ADP. However, there is no effectively established periodic review or assessment process to ensure the accuracy of these assignments throughout the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Regularly allocating these costs will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-002 Closing Process – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: The Uniform Guidance §200.303 requires entities to establish and maintain effective internal controls to provide reasonable assurance that entities are in compliance with Federal statutes, regulations, and terms and conditions of the Federal Award. Additionally, these internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (COSO). Condition: During our audit, we noted issues related to the timeliness of the financial statement close process, the quantity of entries to close the books, the reconciliation of the beginning trial balance to the prior year audited trial balance, and a lack of segregation of duties which led to journal entries being prepared, reviewed and posted by the same person in the general ledger system. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023 financial statements. Effect or Potential Effect: The findings identified impact the risks of fraud and management override. Due to the volume of transactions throughout the year there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Repeat Finding: This is a new finding in the current year. Cause: The findings noted surrounding controls for the financial statement closing process is mainly due to the turnover at Lincoln Hall. Recommendation: Untimely recording of journal entries along with inadequate segregation of duties, increases the risk of fraud and management override of controls. We recommend that management implement controls to ensure that the preparation, review and posting of journal entries are performed by separate individuals and that journal entries are timely recorded throughout the year. This will allow management to prevent, detect, and correct any misstatements on a timely basis. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-003 Allowable Costs; Cash Management – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracking of expenditures to establish that such funds have been used in accordance to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that certain payroll expenses and other than personnel service expenses are not being charged directly or allocated to the correct cost center in the accounting system monthly. Therefore, the amounts being drawn down during any given month may not be fully supported until the year-end when a reallocation of costs by function occurs. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with allowable costs and cash management. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. As a result, we were unable to obtain sufficient evidence to verify that certain costs were properly allocated to the program throughout the year to properly support drawdowns during any given month. Furthermore, as awards for this program are funded under the cost reimbursement method, this finding also impacts the cash management requirement to properly support any drawdowns that occur throughout the year. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-002 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, proper tracking and allocation of costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-004 Reporting – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.328 and §200.329, providers must submit Federal Financial Report (SF-425) and Program Progress Reports (SF-PPR) as required by the Federal Award, for which the instructions state that quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Additionally, in accordance with the Uniform Guidance §200.512, the Uniform Guidance report needs to be filed with the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the audit report or 9 months after the end of the audit period. Condition: During our audit, we noted that two SF-PPR quarterly reports and the Uniform Guidance report were not submitted on time. Additionally, for one of the SF-425 submitted during the year, we were unable to trace the amounts reported to accounting records and supporting documentation. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-003 on the Summary Schedule of Prior Audit Findings. Cause: Timing and interpretation of the filing requirements were not met due to the turnover at Lincoln Hall. Recommendation: Management should submit reports timely as required by the Federal Award and the Uniform Guidance. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-005 Activities Allowed or Unallowed; Allowable Costs/Cost Principles (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented, and there must be sufficient documentation. Condition: During our testing of personnel costs, we noted that management’s method of allocating shared personnel costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Additionally, out of the 60 payroll samples selected for testing, we were unable to obtain adequate documentation to support the approval of two employees’ pay rates. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of personnel costs. Effect or Potential Effect: We were unable to confirm the allowability, validity, and completeness of the expenses on a monthly basis. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-004 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and well-supported interim financial data to its funding sources. Additionally, maintaining proper tracking and allocation throughout the year will help prevent the need for significant cost reallocations by function at year-end. We also recommend that management maintain adequate documentation of employee pay rates to ensure the accuracy of personnel costs and the proper authorization of employee salaries. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-006 Procurement and Suspension and Debarment (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.317 states that the same policies and procedures used for procurements with non-federal funds must be followed when conducting procurement transactions under a federal award. Condition: During our audit, we noted that management’s method of allocating shared costs is performed after the fiscal year has ended, instead of performing timely allocations monthly throughout the fiscal year. Due to this allocation approach we were unable to obtain the procurement transactions that pertain only to the federal program during the year for our procurement policy testing population. Therefore, we selected 10 samples from all transactions during the fiscal year based on Lincoln Hall’s procurement policy thresholds. Additionally, out of the 10 vendors selected for testing, we noted that no bids were performed for one of the vendors who was contracted for projects costing over $5,000, which is the threshold that requires 2 bids per Lincoln Hall’s procurement policy. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of procurement. Repeat Finding: This is not a repeated finding. Cause: Bidding and procurement requirements were not met due to the turnover at Lincoln Hall as well as system limitations on allocations. Effect or Potential Effect: We were unable to identify the procurement transactions that pertain only to the federal program and therefore, we were unable to conclude whether awards for this program were used for purchases subject to the procurement policy in place. We were able to observe and conclude that Lincoln Hall did not comply with the procurement requirements for certain vendors contracted during the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Management should comply with the bidding and procurement policies in place for all vendors and contracts conducted. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Cost Allocations – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2021 through June 30, 2022 Criteria: In accordance with GAAP, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that payroll and the related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system on a monthly basis. The primary cause of this issue is the way in which the Paychex payroll system was set up, where bi-weekly payroll runs are not being allocated by the system itself. In January 2022, Lincoln Hall switched from Paychex to ADP which allows for employee cost centers to be mapped. While this improved the monthly allocation process, the finance team still performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2022 financial statements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not have formal cost allocations in place to properly allocate certain expenses throughout the year. As a result, certain expenses could not be properly allocated throughout the year.   Repeat Finding: This is a repeated finding from prior year. See Finding No. 2021-001 on the Summary Schedule of Prior Audit Findings. Cause: Certain other than personnel costs are dependent on the proper allocation of the personnel costs. The primary cause of this issue is the way in which the Paychex payroll system was set up, where bi-weekly payroll runs are not being allocated by the system itself. In January 2022, Lincoln Hall switched from Paychex to ADP which allows for employee cost centers to be mapped. While this improved the monthly allocation process, the finance team still performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Allowable Costs; Cash Management – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2021 - 6/30/2022   Criteria: In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that certain payroll expenses are not being charged directly or allocated to the correct cost center in the accounting system on a monthly basis. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with allowable costs and cash management. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not have cost allocations in place to properly allocate expenses throughout the year. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2021-002 on the Summary Schedule of Prior Audit Findings. Cause: The primary cause of this issue is the way in which the Paychex payroll system was set up, where bi-weekly payroll runs are not being allocated by the system itself. In January 2022, Lincoln Hall switched from Paychex to ADP which allows for employee cost centers to be mapped. While this improved the monthly allocation process, the finance team still performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Certain other than personnel costs are dependent on the proper allocation of the personnel costs. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Reporting – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2021 - 6/30/2022 Criteria: In accordance with the Uniform Guidance §200.327, providers must submit Federal Financial Report (SF-425) and Program Progress Reports (SF-PPR), for which the instructions state that quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Additionally, the Uniform Guidance report needs to be filed with the Federal Audit Clearinghouse within the shorter of 30 days of issuing the Uniform Guidance report or nine months after year-end. Condition: During our audit, we noted that two SF-PPR quarterly reports, two quarterly SF-425 reports, and the annual required financial reporting were not filed on time; certain of these reports did not follow the period reporting requirements of the grant (e.g., the October to December report requirement was reported using November to January). Further, the Uniform Guidance report was not submitted on time. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements, including using the appropriate basis of accounting. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2021-003 on the Summary Schedule of Prior Audit Findings. Cause: Timing and interpretation of the filing requirements were not met. Recommendation: Management should submit reports timely, ensure that the reports are prepared following the period required for each report, and use the correct (accrual) basis of accounting. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2021 - 6/30/2022 Criteria: The Uniform Guidance Section §200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented, and there must be sufficient documentation. Condition: During our testing of personnel costs, we noted that management’s method of allocating shared costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of personnel costs. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2021-004 on the Summary Schedule of Prior Audit Findings. Cause: The primary cause of this issue is the way in which the Paychex payroll system was set up, where bi-weekly payroll runs are not being allocated by the system itself. In January 2022, Lincoln Hall switched from Paychex to ADP which allows for employee cost centers to be mapped. While this improved the monthly allocation process, the finance team still performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Effect or Potential Effect: We were unable to confirm the allowability, validity, and completeness of the expenses. Recommendation: The inability to generate timely financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

"2021-001 ? Cost Allocations ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program U.S. Department of Health and Human Services Contract Period: 07/01/2020 - 6/30/2021 Criteria: In accordance with GAAP, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that for the period July 1, 2020 through March 31, 2021 the payroll and related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system on a monthly basis. The primary cause of this issue is the way in which the Paychex payroll system is presently setup, where bi-weekly payroll runs are not being allocated by the system itself. Beginning April 1, 2021 Lincoln Hall began monthly allocations. Due to the timing of this new process, this still required the finance team to manually calculate all allocations in Excel at the end of the fiscal year for the entire year. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall?s June 30, 2021 financial statements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not have formal cost allocations in place to properly allocate expenses monthly for the period July 1, 2020 through March 31, 2021. Due to the timing of this new process, this still required the finance team to manually calculate all allocations in Excel at the end of the fiscal year for the entire year. As a result, expenses could not be properly allocated throughout the year. Repeat Finding: This is a repeated finding from prior year. Cause: Certain other than personnel costs are dependent on the proper allocation of the personnel costs. The primary cause of this issue is the way in which the Paychex payroll system was setup, where bi-weekly payroll runs were not being allocated by the system itself. This requires the finance team to manually calculate all allocations in Excel at the end of the fiscal year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall?s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall has been taking several steps to address this issue. During fiscal year 2021 changes were made to the Paychex payroll system. These changes will allow Lincoln Hall to better present functionally accurate interim financial statements. As other-than-personnel cost allocations are in part driven by personnel allocation, more accurate salary allocations will result in overall more accurate financial statement presentation.

"2021-002 ? Allowable Costs; Cash Management ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program U.S. Department of Health and Human Services Contract Period: 07/01/2020 - 6/30/2021 Criteria: In accordance with the Uniform Guidance 200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance 200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easy with a high degree of accuracy. Additionally, Uniform Guidance 200.302 states that the non-federal entity?s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that payroll expenses are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system on a monthly basis for the period July 1, 2020 through March 31, 2021. While a new process was established from April 1, 2021 due to the timing of this new process, this still required the finance team to manually calculate all allocations in Excel at the end of the fiscal year for the entire year. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall?s compliance with allowable costs and cash management. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not have cost allocations in place to properly allocate expenses throughout the year. Repeat Finding: This is a repeated finding from prior year. Cause: The primary cause of this issue is the way in which the Paychex payroll system is presently setup, where bi-weekly payroll runs are not being allocated by the system itself. This requires the finance team to manually calculate all allocations in Excel at the end of the fiscal year. Certain other-than-personnel costs are dependent on the proper allocation of the personnel costs. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall's general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall's response to this finding is described in the accompanying management's planned corrective action plan."

"2021-003 ? Reporting ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program U.S. Department of Health and Human Services Contract Period: 07/01/2020 - 6/30/2021 Criteria: In accordance with the Uniform Guidance 200.327, providers must submit Federal Financial Report (SF-425) and Program Progress Reports(SF-PDR), for which the instructions state that, quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Condition: During our audit, we noted that one SF-PPR quarterly report, two quarterly SF-425 reports, and one final SF-425 report were not filed on time and that the annual report was presented using the incorrect basis of accounting. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall?s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements, including using the appropriate basis of accounting. Repeat Finding: Timing and interpretation of the filing requirements were not met. Cause: Timing and interpretation of the filing requirements were not met. Recommendation: Management should submit reports timely and using the correct (accrual) basis of accounting. Views of Responsible Officials: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall's response to this finding is described in the accompanying management's planned corrective actions."

"2021-004 ? Reporting ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program U.S. Department of Health and Human Services (DHS) Contract Period: 07/01/2020 - 6/30/2021 Criteria: The Uniform Guidance Section ?200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition: During our testing of personnel costs, we noted that 4 of the 60 transactions examined did not have supporting documentation to support amount allocated to the related major program. We also identified that management?s method of allocating shared costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Questioned Costs: Not determinable. Context: This is a condition identified per review of Lincoln Hall?s compliance with reporting requirements. Cause: The primary cause of this issue is the way in which the Paychex payroll system was setup, where bi-weekly payroll runs were not being allocated by the system itself. This requires the finance team to manually calculate all allocations in Excel at the end of the fiscal year. Effect or Potential Effect: We were unable to confirm the allowability, validity, and completeness of the four expenses. Recommendation: The inability to generate timely financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall?s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Official: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall?s response to this finding is described in the accompanying management?s planned corrective actions.

2020-002 ? Allowable Costs; Cash Management ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program Contract Period: 07/01/2019 - 6/30/2020 Criteria: In accordance with the Uniform Guidance 200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance 200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easy with a high degree of accuracy. Additionally, Uniform Guidance 200.302 states that the non-federal entity?s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that payroll and other than personnel service expenses are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system on a monthly basis. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall?s compliance with allowable costs and cash management. Effect: We were able to observe and conclude that Lincoln Hall did not have cost allocations in place to properly allocate expenses throughout the year. Cause: The primary cause of this issue is the way in which the Paychex payroll system is presently setup, where bi-weekly payroll runs are not being allocated by the system itself. This requires the finance team to manually calculate all allocations in Excel at the end of the fiscal year. Certain other-than-personnel costs are dependent on the proper allocation of the personnel costs. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall's general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall's response to this finding is described in the accompanying management's planned corrective action plan.

2020-003 ? Reporting ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program Contract Period: 07/01/2019 - 6/30/2020 Criteria: In accordance with the Uniform Guidance 200.327, providers must submit Federal Financial Report (SF-425), for which the instructions state that, quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Condition: During our audit, we noted that one quarterly SF-425 report, and one final SF-425 report were not filed on time and that the annual report was presented using the incorrect basis of accounting. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall?s compliance with reporting requirements. Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements, including using the appropriate basis of accounting. Cause: Timing and interpretation of the filing requirements were not met. Recommendation: Management should submit reports timely and using the correct (accrual) basis of accounting. Views of Responsible Officials: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall's response to this finding is described in the accompanying management's planned corrective actions.

2019-002 ? Allowable Costs; Cash Management ? (Material Weakness) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program Contract Period: 07/01/2018 - 6/30/2019 Criteria: In accordance with the Uniform Guidance 200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance 200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easy with a high degree of accuracy. Additionally, Uniform Guidance 200.302 states that the non-federal entity?s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that payroll and other than personnel service expenses are not being allocated by cost center in the Serenic Navigator accounting system on a monthly basis. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall?s compliance with allowable costs and cash management. Effect: We were able to observe and conclude that Lincoln Hall did not have cost allocations in place to properly allocate expenses throughout the year. Cause: The primary cause of this issue is the way in which the Paychex payroll system is presently setup, where bi-weekly payroll runs are not being allocated by the system itself. This requires the finance team to manually calculate all allocations in Excel at the end of the fiscal year. Certain other-than-personnel costs are dependent on the proper allocation of the personnel costs. Recommendation: The inability to generate financial statements that incorporate the federal and state agency mandated cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis and presented as recorded within Lincoln Hall's general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Views of Responsible Officials: Lincoln Hall agrees with the federal award finding identified in the audit. Lincoln Hall's response to this finding is described in the accompanying management's planned corrective action plan

2019-003 ? Information on Compliance Requirement: Procurement and Suspension and Debarment (Significant Deficiency) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program Contract Period: 07/01/18 - 06/30/19 Criteria: In accordance with ?200.318, Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Contracts will only be awarded to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. Condition: During our testing of procurement and suspension and debarment, we noted one (1) transaction where there was no evidence available to substantiate whether Lincoln Hall followed its procedures for verifying that the entity with which it entered into a covered transaction was not debarred, suspended, or otherwise excluded and thus ineligible. Questioned Costs: Not determinable Context: This matter was identified through our compliance testing of procurement and suspension and debarment. Effect: We were able to observe and conclude that Lincoln Hall was not in compliance with the procurement and suspension and debarment requirements prescribed under Uniform Guidance. Cause: Although Lincoln Hall has established appropriate policies and procedures to ensure compliance with Uniform Guidance procurement and suspension and debarment standards, Lincoln Hall did not consistently comply with the documented requirements to prove verification of non-debarment and suspension. Recommendation: We recommend that management ensure that Lincoln Hall?s procurement policy is strictly followed. View of Responsible Officials: Management agrees with the finding. See management?s corrective action plan.

2019-004 ? Allowable Costs/Cost Principles (Significant Deficiency) Information on Federal Program: CFDA: 93.676 ? Unaccompanied Alien Children Program Contract Period: 07/01/18 - 06/30/19 Criteria: Pursuant to Section 4.3.3 of the Office of Refugee Resettlement (ORR) Policy, care provider facilities must conduct a background investigation prior to hiring new staff to determine whether the applicant is suitable for employment with minors in a residential setting. Condition: During our testing of payroll expenses, we noted three (3) instances where Lincoln Hall could not provide evidence that a background check was performed prior to the employees? work commencement date. Additionally, we also noted twenty-two (22) instances where a background check had been performed but a copy of the background check had not been kept as part of the employee?s personnel records, in accordance with Lincoln Hall?s human resource policies and procedures. For these instances copies were subsequently provided by management upon the auditor?s request. Questioned Costs: Not determinable Context: This matter was brought to Lincoln Hall?s attention by ORR in November 2019. This matter was further identified through our internal control testing of payroll expenditures. Effect: Failure to comply with regulations could result in inaccurate reporting of expenses and possible disallowance of expenses within a grant award financial reporting period. Cause: Although Lincoln Hall has established policies and procedures to ensure compliance with ORR?s background check requirements, evidence that these policies and procedures were adhered to during the reporting period was not maintained. Recommendation: We recommend that Lincoln Hall?s management ensure that policies and procedures in place are strictly followed. View of Responsible Officials: Management agrees with the finding. See management?s corrective action plan.

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