HOMELESS ASSISTANCE LEADERSHIP ORGANIZATION, INC.Non-Profit

#2025-002 – Wage Allocations Federal Agency: Department of Housing and Urban Development (HUD) Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Type of Finding: • Significant deficiency in internal control over compliance Criteria: Wages should be allocated to federal and state programs on the basis of time spent in each program. Condition: 1 out of 40 payroll transactions reviewed had differences between the wages that were charged to the grant and the wages that should have been charged to the grant based on the number of hours worked. Questioned Costs: $1,540. Cause: Payroll software coded manager time as admin time instead of the specific grant funding code. Effect: Wages could be charged to the wrong federal awards and not detected and corrected. Recommendation: We recommend that management review payroll software inputs and outputs for accuracy prior to completing grant claims. Response: HALO’s management concurs with this finding.

#2025-003 – Rent Reasonableness Federal Agency: Department of Housing and Urban Development (HUD) Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Type of Finding: • Noncompliance not resulting in an opinion modification • Significant deficiency in internal control over compliance Criteria: HUD requires that recipients ensure that rent is reasonable compared to similar unassisted units and maintain documentation supporting the determination; rent paid with CoC leasing funds may not exceed Fair Market Rent (FMR); and rent reasonableness determinations must be completed before providing assistance. Condition: During testing of rent reasonableness controls and documentation, the following exceptions were identified: • 4 of 4 rent reasonableness determinations lacked evidence of an independent review and approval. • There were 8 instances (2 units x 4 months) where rents exceeded HUD FMR limits. • 3 of 20 rent reasonableness determinations were not completed prior to the lease start date. Questioned Costs: $392. Cause: The Organization did not have sufficiently defined or consistently followed procedures for documenting independent review of rent reasonableness determinations, verifying rents against applicable FMR limits before authorizing payments, and ensuring determinations were complete prior to lease start dates. Effect: Units are approved and paid at non-compliant rent levels, federal funds are used for rents above allowable limits, and documentation does not meet HUD standards, potentially leading to questioned costs, required repayment, and findings in future monitoring or audits. Recommendation: We recommend that management establish a mandatory review and approval step for all rent reasonableness forms, require staff to verify current FMR limits before approving leasing amounts, and require rent reasonableness completion before any lease start date or payment authorization. Response: HALO’s management concurs with this finding

Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: Management's grant tracking of expenditures for the federal awards was not clearly classified during the year. Questioned costs: n/a Context: Management was not able to provide a schedule of government grants for a significant period of time after audit fieldwork started. Cause: Due to continued staff turnover, sufficient training for preparing grant tracking spreadsheets is still necessary for new staff and the details of the federal awards received during the year were not clearly defined. At the start of audit fieldwork, it was unknown as to what the actual expenditures for each program were for the year. Effect: Unallowable costs could be charged to federal awards and not be detected and corrected. Repeat Finding: Yes. Finding 2023-002. Recommendation: We recommend the Organization provide training to staff responsible for tracking federal and state awards and utilize another member of management to review and approve the grant tracking spreadsheets routinely. Additionally, we recommend reconciliations be performed monthly between the grant spreadsheets and the financial reporting software. A tracking of the federal expenditures needs to be kept and classified to the proper federal and state programs. Views of Responsible Officials: There is no disagreement with the audit finding.

Criteria or Specific Requirement: Wages should be allocated to federal and state programs on the basis of time spent in each program. Condition: Based on review of timesheets, there were discrepancies between wages that were charged to the grant and the wages that should have been charged to the grant based on the number of hours worked. Questioned costs: $1,187. Context: Of the 30 items in our payroll sample, 18 had differences between the wages that were charged to the grant and the wages that should have been charged to the grant based on the number of hours worked. The finding was specific to payroll costs. Payroll costs accounted for 11% of the total costs applied to the grant. Cause: Staff incorrectly coded their time to general case management instead of the specific grant funding code. Effect: Wages could be charged to the wrong federal awards and not be detected and corrected. Repeat Finding: No Recommendation: We recommend the Organization provide training to staff regarding time entry and utilize another member of management to review and approve the timesheets routinely. Views of Responsible Officials: There is no disagreement with the audit finding.

Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: Management’s grant tracking of expenditures for the federal awards was not clearly classified during the year. Cause: Due to continued staff turnover, sufficient training for preparing grant tracking spreadsheets is still necessary for new staff and only the federal awards received during the year were maintained and cleared defined. It is unknown as to what the actual expenditures for each program were for the year and it is assumed that all federal awards received were expensed. Effect or Potential Effect: Unallowable costs could be charged to federal awards and not be detected and corrected. Repeat Finding: Yes Recommendation: We recommend the Organization provide training to staff responsible for tracking federal and state awards and utilize another member of management to review and approve the grant tracking spreadsheets routinely. Additionally, we recommend reconciliations be performed monthly between the grant spreadsheets and the financial reporting software. A tracking of the federal expenditures need to be kept and classified to proper federal program. Views of Responsible Officials: Management agrees with the finding and will provide training and implement procedures to ensure the grant tracking spreadsheets are reviewed appropriately.

Finding 2022-003 Assistance Listing Number: 14.231 Name of Federal Program or Cluster: Emergency Solutions Grant Program Name of Federal Agency: Department of Housing and Urban Development Name of Pass-through Entities: Wisconsin Department of Administration and City of Racine Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: Management?s grant tracking spreadsheets for federal awards were not properly updated or reviewed during the year. Cause: Due to staff turnover during the year, sufficient training for preparing grant tracking spreadsheets was not provided for new staff and no monitoring of this process was performed to ensure it was completed in a timely manner. Effect or Potential Effect: Unallowable costs could be charged to federal awards and not be detected and corrected. Repeat Finding: No Recommendation: We recommend the Organization provide additional training to staff responsible for tracking federal and state awards and utilize another member of management to review and approve the grant tracking spreadsheets routinely. Additionally, we recommend reconciliations be performed monthly between the grant spreadsheets and the financial reporting software.

Finding 2022-004 Assistance Listing Number: 14.231 Name of Federal Program or Cluster: Emergency Solutions Grant Program Name of Federal Agency: Department of Housing and Urban Development Name of Pass-through Entities: Wisconsin Department of Administration and City of Racine Criteria or Specific Requirement: Management is responsible for establishing policies and procedures which follow the procurement and suspension and debarment requirements of 2 CFR 200.318. Condition: The Organization?s procurement policy lacks some of the requirements required by the Code of Federal Regulations. Cause: Due to the lack of availability of personnel time, the procurement policy has not been updated to include all the requirements for federal award agreements. Effect or Potential Effect: There is an increased risk of unallowable expenses and noncompliance with procurement and suspension and debarment requirements. Repeat Finding: No Recommendation: We recommend the Organization assign personnel to review and update the Organization?s procurement policy to meet the federal requirements.

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