JOSEPH'S HOUSE AND SHELTER, INC.Non-Profit

Finding 2024-002--Timely Submission of Single Audit Federal Agency: U.S. Department of Housing and Urban Development Federal Program: ALN 14.267 – Continuum of Care Program Grant Period: Year ended December 31, 2024 Condition: The single audit reports were not submitted to the federal audit clearinghouse prior to the September 30, 2025 deadline. Criteria: Single audits are required to be submitted to the Federal Audit Clearinghouse at the earlier of 30 days after issuance of the financial statements or nine months after the fiscal year has ended. September 30, 2025 would have been 9 months after the Organization’s fiscal year end of December 31, 2024. Cause: Due to delays in the receipt of the necessary audit documentation, the audit was not able to be completed within the required timeframe. Effect: The Organization was not in compliance with a significant clause of its federal grants and the audit requirements of Uniform Guidance. Context: This noncompliance related to all federal programs, because the submission of the single audit reports to the federal audit clearinghouse is performed at the entity wide level. The finding was identified as part of a statistical sample. Repeat Finding: Yes. A similar finding was reported in the prior year as finding 2023-001. Recommendation: The Organization should put in place policies and procedures to ensure that the books are closed and provided to the auditor in a timely manner that provides sufficient time for an audit to be completed prior to the single audit due date. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges that the single audit was not submitted by the required deadline. Corrective actions have been implemented to improve audit readiness, as stated in our response to finding 2024-001. These measures are expected to ensure timely completion and submission of the 2025 single audit.

Finding 2023-001--Timely Submission of Single Audit--Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. Federal Program: ALN 14.231 – Emergency Solutions Grant Program ALN 14.267 – Continuum of Care Grant Period: Year ended December 31, 2023 Condition: The single audit reports were not submitted to the federal audit clearinghouse prior to the September 30, 2024 deadline. Criteria: Single audits are required to be submitted to the Federal Audit Clearinghouse at the earlier of 30 days after issuance of the financial statements or nine months after the fiscal year has ended. September 30, 2024 would have been 9 months after the Organization’s fiscal year end of December 31, 2023. Cause: Significant turnover in key positions in early 2023 disrupted the financial management team responsible for maintaining the books and records for the December 31, 2023 fiscal year. This instability led to substantial delays in the monthly close process, ultimately preventing Josephs House from filing the single audit report on time. Effect: The Organization was not in compliance with a significant clause of its federal grants and the audit requirements of Uniform Guidance. Recommendation: The Organization should put in place policies and procedures to ensure that the books are closed and provided to the auditor in a timely manner that provides sufficient time for an audit to be completed prior to the single audit due date.

Finding 2023-003--General Oversight--Significant Deficiency Condition: During the year ended December 31, 2023, the Organization fell behind on vouchering and billing of grants as well as a delay in financial reporting due to lack of oversight of the contracted accounting services. This was identified as a Material Weakness in the December 31, 2022 audit. Criteria: A system of internal controls should be in place, including policies and procedures to ensure that maintenance of detail documentation, provide reasonable assurance transactions are recorded properly, and misstatements are prevented or detected in a timely manner. Management should provide oversight to ensure that the system of controls is being followed. Cause: The Organization relied too heavily on its contracted accounting service and did not provide adequate management oversight in the financial reporting process. Effect: The condition could allow improper recording of program expenses and revenues. For transactions related to federal grants, without proper documentation, costs may be disallowed. Recommendation: We recommend that the Organization create policies and procedures to ensure proper oversight of the financial reporting function. In addition, we would recommend the Organization to consider the costs and benefits of restructuring the finance department. This could include allocating additional resources to hire additional employees, reallocation of responsibilities within the organization and less reliance on the contracted accounting services.

Finding 2022-003--General Oversight--Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: ALN 14.231 ? Emergency Solutions Grant Program Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. ALN 14.267 ? Continuum of Care Grant Program Grant Period: Year ended December 31, 2022 Condition: During the year ended December 31, 2022, the Organization fell behind on vouchering and billing of grants which lead to cash flow issues as well as a delay in financial reporting due to lack of oversight of the contracted accounting services. This was identified as a Material Weakness in the December 31, 2021 audit. Criteria: A system of internal controls should be in place, including policies and procedures to ensure that maintenance of detail documentation, provide reasonable assurance transactions are recorded properly, and misstatements are prevented or detected in a timely manner. Management should provide oversight to ensure that the system of controls is being followed. Cause: The Organization relied too heavily on its contracted accounting service and did not provide adequate management oversight in the financial reporting process. Effect: The condition could allow improper recording of program expenses and revenues. For transactions related to federal grants, without proper documentation, costs may be disallowed. Recommendation: We recommend that the Organization create policies and procedures to ensure proper oversight of the financial reporting function. In addition, we would recommend the Organization to consider the costs and benefits of restructuring the finance department. This could include allocating additional resources to hire additional employees, reallocation of responsibilities within the organization and less reliance on the contracted accounting services. View of Responsible Officials and Planned Corrective Actions: The Executive Director has worked with the Director of Grants and Finance to review and revise the agency?s accounting policies and procures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. Beginning in Q1 2022, agency leadership took necessary action to begin restructuring the Finance Department following a change in staffing with the contracted accounting service. In Q2 2022, the agency promoted a long-tenured staff member to the newly-created Director of Grants and Finance position, which separated and removed all finance duties from the Director of Administration. To support the Director of Grants and Finance, a full time Grants and Finance Specialist staff position was created in Q3 of 2022. The organization has scaled back reliance on the contracted accounting service and has ensured that all claims, with the implementation of personnel time tracking systems, are submitted through our Finance Department. We continue to use a contracted accounting service for higher-level accounting duties and for on-going advisement that supplements, instead of replaces, the work of internal staff. We are confident these changes have improved the agency?s ability to provide adequate management oversight in the financial reporting process. This was completed in Q2 of 2023.

Finding 2022-004--Allowable Costs/Cost Principles--Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: ALN 14.231 ? Emergency Solutions Grant Program Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. ALN 14.267 ? Continuum of Care Grant Program Grant Period: Year ended December 31, 2022 Condition: The Organization did not maintain contemporaneous documentation to support the allocation of payroll and related expenses to individual programs. Criteria: Internal controls should be in place to ensure that the allocation of payroll and related expenses is based on detailed contemporaneous documentation that supports the allocation of payroll and related expenses to individual programs. In accordance with the Uniform Guidance section 200.430, charges to federal awards must be based on records that accurately reflect the work performed and include support for the distribution of time the employees work on one or more federal award. In addition, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Cause: The Organization?s time records record the amount of time worked per day, but do not break time spend on individual programs. The contracted accountant who was responsible for detailed allocation analysis spreadsheets that had traditionally been maintained left unexpectedly, and those records were unable to be reproduced. In addition, there was a lack of oversight to detect this in a timely manner. The Organization allocated payroll to programs based on the contract supported budget. Context: We selected a sample of 40 payroll disbursements to test internal controls. The sample was not considered to be statistically significant. The condition was noted in all of the sampled items. Effect: The current conditions create opportunity for misstatements or unallowable costs to be recorded, whether due to fraud or error, and potentially not be prevented, detected, or corrected, in a timely manner. For transactions related to federal grants, without proper documentation, costs may be disallowed. Questioned Costs: None. Repeat Finding: Yes Recommendation: The Organization should put in place policies and procedures necessary to maintain detailed contemporaneous documentation supporting the allocation of payroll and related expenses to individual programs in a manner that accurately reflects the work performed. Views of Responsible Officials and Planned Corrective Actions: The Executive Director worked with the Director of Grants and Finance to review and revise the agency?s accounting policies and procures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. One project of note was a collaborative effort undertaken by the Executive Director, a new Director of HR and Administration, the Human Resources Manager, and the Director of Grants and Finance to roll out a more detailed time keeping system that is used to track employee time spent per program. This data is then subsequently directly coded and uploaded into the accounting software. This process ensures on an ongoing basis that the allocation of payroll and related expenses will accurately reflect the work being performed and has significantly improved timely and precise grant claims. This was implemented in Q2 2023.

Finding 2021-003--Timely Submission of Single Audit -- Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. Federal Program: ALN 14.231 ? Emergency Solutions Grant Program Grant Period: Year ended December 31, 2021 Condition: The single audit reports were not submitted to the federal audit clearinghouse prior to the September 30, 2022 deadline. Criteria: Single audits are required to be submitted to the Federal Audit Clearinghouse at the earlier of 30 days after issuance of the financial statements or nine months after the fiscal year has ended. September 30, 2022 would have been 9 months after the Organization?s fiscal year end of December 31, 2021. Cause: The financial management team that was maintaining the books and records for the entirety of the December 31, 2021 fiscal year fell significantly behind in the monthly close process. In addition, there was significant turnover in key positions in early 2022. As a result, the Organization was unable to timely file the single audit report. Effect: The Organization was not in compliance with a significant clause of its federal grants and the audit requirements of Uniform Guidance. Recommendation: The Organization should put in place policies and procedures to ensure that the books are closed and provided to the auditor in a timely manner that provides sufficient time for an audit to be completed prior to the single audit due date. Views of Responsible Officials and Planned Corrective Actions: The Executive Director will work with the Director of Grants and Finance to review and revise the agency?s accounting policies and procures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. In addition to the previously noted turnover in the key positions, one of the agency?s funders has arranged for the agency to receive grant-funded technical assistance. Through a recommendation, linkage and grant funding via NYS OTDA, we have been receiving technical assistance from another CPA firm. This includes, but is not limited to, assistance with the following projects: an employee time tracking initiative, conversion to a more robust fund accounting system, automated AP and payments via a web-based platform, and throughout these conversions we will conduct a detailed review of grant funds, balances, and receivables. This is expected to automate a bulk of work of posting the financial transactions, and in turn will decrease the labor associated with these tasks allowing for focus on other required duties by staff in the Finance Department. Use of these new systems will be codified into an updated accounting policy and procedures document, and adherence to these procedures will allow the agency to both expedite the claiming process and to close its books in a timely fashion.

Finding 2021-004-- General Oversight ? Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. Federal Program: ALN 14.231 ? Emergency Solutions Grant Program Grant Period: Year ended December 31, 2021 Condition: During the year ended December 31, 2021, the Organization fell behind on vouchering and billing of grants which lead to cash flow issues as well as the delay of the overall audit of the financial statements due to lack of oversight of the contracted accounting services. Criteria: A system of internal controls should be in place, including policies and procedures to ensure that maintenance of detail documentation, provide reasonable assurance transactions are recorded properly, and misstatements are prevented or detected in a timely manner. Management should provide oversight to ensure that the system of controls is being followed. Cause: The Organization relied too heavily on its contracted accounting service and did not provide adequate management oversight in the financial reporting process. Effect: The condition could allow improper recording of program expenses and revenues. For transactions related to federal grants, without proper documentation, costs may be disallowed. Recommendation: We recommend that the Organization create policies and procedures to ensure proper oversight of the financial reporting function. In addition, we would recommend the Organization to consider the costs and benefits of restructuring the finance department. This could include allocating additional resources to hire additional employees, reallocation of responsibilities within the Organization and less reliance on the contracted accounting services. View of Responsible Officials: The Executive Director will work with the Director of Grants and Finance to review and revise the agency?s accounting policies and procedures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. Beginning in Q1 2022, agency leadership took necessary action to begin restructuring the Finance Department following a change in staffing with the contracted accounting service. In Q2 2022, the agency promoted a long-tenured staff member to the newly-created Director of Grants and Finance position, which separated and removed all finance duties from the Director of Administration. To support the Director of Grants and Finance, a full time Grants and Finance Specialist staff position was created in Q3 of 2022. The Organization has already scaled back reliance on the contracted accounting services and will ensure that all claims, with the implementation of personnel time tracking systems, are submitted through our Finance Department. We continue to use contracted accounting services for higher-level accounting duties and for on-going advisement that supplements, instead of replaces, the work of internal staff. We are confident these changes will improve the agency?s ability to provide adequate management oversight in the financial reporting process.

Finding 2021-005--Allowable Costs/Cost Principles--Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. Federal Program: ALN 14.231 ? Emergency Solutions Grant Program Grant Period: Year ended December 31, 2021 Condition: The Organization did not maintain contemporaneous documentation to support the allocation of payroll and related expenses to individual programs. Criteria: Internal controls should be in place to ensure that the allocation of payroll and related expenses is based on detailed contemporaneous documentation that supports the allocation of payroll and related expenses to individual programs. In accordance with the Uniform Guidance section 200.430, charges to federal awards must be based on records that accurately reflect the work performed and include support for the distribution of time the employees work on one or more federal award. In addition, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Cause: The Organization?s time records record the amount of time worked per day, but do not break time spend on individual programs. The contracted accountant who was responsible for detailed allocation analysis spreadsheets that had traditionally been maintained left unexpectedly, and those records were unable to be reproduced. In addition, there was a lack of oversight to detect this in a timely manner. The Organization allocated payroll to programs based on the contract supported budget. Context: We selected a sample of 40 payroll disbursements to test internal controls. The sample was not considered to be statistically significant. The condition was noted in all of the sampled items. Effect: The current conditions create opportunity for misstatements or unallowable costs to be recorded, whether due to fraud or error, and potentially not be prevented, detected, or corrected, in a timely manner. For transactions related to federal grants, without proper documentation, costs may be disallowed. Questioned Costs: None. Repeat Finding: No Recommendation: The Organization should put in place policies and procedures necessary to maintain detailed contemporaneous documentation supporting the allocation of payroll and related expenses to individual programs in a manner that accurately reflects the work performed. Views of Responsible Officials and Planned Corrective Actions: The Executive Director will work with the Director of Grants and Finance to review and revise the agency?s accounting policies and procedures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. It is regrettable that the agency?s internal controls became slightly relaxed during the extreme circumstances of the pandemic and the subsequent unusual staffing challenges that the agency faced, and we acknowledge a need for growth and increased sophistication within our processes. We are working to embrace a number of new technologies that will allow us to improve internal controls and oversight, tracking, and management of the agency?s finances. One particular project of note is a collaboration among the Executive Director, a new Director of HR and Administration, the Human Resources Manager, and the Director of Grants and Finance to roll out a more detailed time keeping system that will track employee time spent per program, which could then subsequently be directly coded and uploaded into the accounting software. This process will ensure that that the allocation of payroll and related expenses will accurately reflect the work being performed and will support timely and precise grant claims.