New London Homeless Hospitality Center, Inc.Non-Profit

Finding # 2025-001 Reporting Allowable/Allocable Costs Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Pass-Through: Connecticut Department of Housing Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Continuum of Care Pass-Through: Connecticut Department of Housing Assistance Listing Number: 14.267 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria Grant expenditure reports submitted to funders must be supported by detailed accounting records. Condition There were variances between type and amount of expenses reported to grantors when compared to the expenses recorded in the grant cost center in QuickBooks. Costs reported on submitted grant reports did not consistently reconcile directly back to what was allocated in the underlying accounting records (general ledger). Questioned Costs None noted. Context Costs were not consistently allocated to the grant cost center in the underlying accounting records (general ledger). In some cases, timesheets did not support the time charged to specific grants. Instead, journal entries were used to allocate costs. Effect The amount of allocated costs reported and reimbursed by grantors could not be readily traced back to the underlying accounting records (general ledger) in some cases. Because the amounts reported to funders by expense category did not consistently agree to the underlying QuickBooks general ledger, the Center was unable, in some instances, to readily demonstrate that reported and reimbursed costs were fully supported by its accounting records. This reduces transparency, weakens audit trails, and increases the risk that costs reported to grantors may be misstated or deemed unsupported upon review. Cause The Center was not consistently recording expenses to grant cost centers in QuickBooks which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors. Repeat Finding Yes, repeat of prior year finding 2024-001. Recommendation The Center should strengthen its cost allocation and reconciliation procedures to ensure that all costs reported and submitted for reimbursement are fully supported by, and directly traceable to, the underlying accounting records. Specifically, the Center should: • Perform timely and documented reconciliations between the cost allocation plan outputs and the general ledger cost centers prior to submission of grant reimbursement requests. • Ensure that costs are consistently and accurately allocated to the appropriate grant cost centers in the general ledger. • Implement review and approval controls over grant cost allocations to verify consistency between reported amounts and underlying accounting records. • Provide periodic training to accounting and grants personnel on cost allocation requirements and reconciliation procedures. • Grant reports should undergo review by someone other than the preparer, prior to submission to the grantor agency. • Perform routine review of grant budget versus actual results to identify any variances timely so that corrections can be made. These actions will help ensure compliance with grant requirements and reduce the risk of unsupported or misstated costs being reported to grantors. Management’s Response/ Views of Responsible Officials Management agrees with this finding and has outlined its resulting actions in a separately issued corrective action plan.

Finding # 2025-002 Internal Controls over Allowable Costs Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria Title 2, Chapter 2, Part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves. Condition Although the Center has a written cost allocation plan in place, internal controls to ensure the plan was properly implemented and followed were not consistently applied. Questioned Costs None noted. Context The Center has made progress in implementing its corrective action plan. Most costs are now recorded in accordance with the Center’s cost allocation plan. However, inconsistencies remain in allocating costs to individual grant contract cost centers within the general ledger. Effect The Center incurs the risk of allocating disallowed costs to federal programs contrary to the Federal Regulations. Cause The Center was not consistently performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent. Repeat Finding Yes, repeat of prior year finding 2024-002. Recommendation The Center should strengthen internal controls over grant cost reporting to ensure that amounts reported to funders are fully supported by, and traceable to, the QuickBooks general ledger. Specifically, the Center should: • Perform documented reconciliations between grant reimbursement reports and QuickBooks cost center detail by expense category prior to submission to funders. • Record all allocation calculations, reallocations, and adjustments used for grant reporting as journal entries in QuickBooks so that the general ledger reflects the same amounts reported to grantors. • Implement a formal review and approval process to verify that reported payroll, fringe, indirect, guest support, and other direct costs agree to QuickBooks by cost center. • Retain reconciliation and review documentation to support reported costs and facilitate audit and grantor review. Management’s Response/ Views of Responsible Officials Management agrees with this finding and has outlined its resulting actions in a separately issued corrective action plan

Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria Costs reported and submitted for reimbursement should be based on a cost allocation plan and agree to the underlying accounting records. Condition Cost allocations included on submitted grant reports did not consistently reconcile directly back to what was allocated in the underlying accounting records (general ledger). Questioned Costs None noted. Context Indirect costs, fringe benefits and some direct costs were not consistently allocated to the grant cost center in the underlying accounting records (general ledger). Effect The amount of allocated costs reported and reimbursed by grantors could not be readily traced back to the underlying accounting records (general ledger) in some cases. Cause The Center was not consistently reconciling and adjusting the general ledger cost centers which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors. Repeat Finding Yes, repeat of prior year finding 2023-03. Recommendation The Center should implement controls to ensure all reporting and requests for reimbursement submitted to grantors reconcile with the underlying accounting records as allocated. Management’s Response/ Views of Responsible Officials Management agrees with this finding and has outlined its resulting actions in a separately issued corrective action plan.

Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria Title 2, Chapter 2, Part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves. Condition Although the Center has a written cost allocation plan in place, internal controls to ensure the plan was properly implemented and followed were not consistently applied. Questioned Costs None noted. Context The Center has made progress in implementing its corrective action plan. Many costs, include both direct and indirect expenses, are now recorded in accordance with the Center’s cost allocation plan. However, inconsistencies remain in allocating costs to individual grant contract cost centers within the general ledger. Effect The Center incurs the risk of allocating disallowed costs to federal programs contrary to the Federal Regulations. Cause The Center was not consistently performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent. Repeat Finding Yes, repeat of prior year finding 2023-04. Recommendation The Center should implement internal controls, such as periodic reconciliations and adjustments, to ensure accuracy and consistency in allocations and that the costs allocated to a grant contract within the general ledger reconciles to the amounts reported to funders in grant reports. Management’s Response/ Views of Responsible Officials Management agrees with this finding and has outlined its resulting actions in a separately issued corrective action plan

2023-003 REPORTING ALLOWABLE/ALLOCABLE COSTS Grantors: U.S Department of Housing and Urban Development Award Names: Emergency Solutions Grant /Community Development Block Grant /Continuum of Care Award Year: Various Award Numbers: Various Assistance Listing Numbers: 14.231 / 14.228 / 14.267 Criteria: Costs reported and submitted for reimbursement should be based on a cost allocation plan and agree to the underlying accounting records. Condition: During our audit testing, we noted cost allocations included on submitted grant reports did not reconcile directly back to what was allocated in the underlying accounting records (general ledger). Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors. Effect: The amount of allocated costs reported and reimbursed by grantors could not be readily traced back to the underlying accounting records (general ledger). Questioned Costs: None noted. Recommendation: The Center should implement controls to ensure all reporting and requests for reimbursements submitted to grantors reconcile with the underlying accounting records as allocated. Management’s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2023-004 INTERNAL CONTROLS OVER ALLOWABLE COSTS Grantor: Various Award Name: Various Award Year: Various Award Numbers: Various Assistance Listing Number: Various Criteria: Title 2, Chapter 2, part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves. Condition: During our audit procedures, we noted that although the Center maintains a cost allocation plan, there were no internal controls in place to ensure the plan was achieving the requirements referenced in the previous paragraph. The cost allocation plan was effectively existing and operating independently from the underlying accounting records. Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent. Effect: The Center incurs the risk of allocating disallowed costs to federal programs contrary to Federal Regulations. Questioned Costs: None noted. Recommendation: The Center should implement internal controls (periodic reconciliations, etc.) to ensure accuracy and consistency in allocations. Management’s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2022-003 REPORTING ALLOWABLE/ALLOCABLE COSTS Grantors: U.S Department of Housing and Urban Development / U.S. Treasury Award Names: Emergency Solutions Grant / Emergency Rental Assistance Award Year: Various Award Numbers: Various CFDA Numbers: 14.231 / 21.023 Criteria: Costs reported and submitted for reimbursement should be based on a cost allocation plan and agree to the underlying accounting records. Condition: During our audit testing, we noted cost allocations included on submitted grant reports did not reconcile directly back to what was allocated in the underlying accounting records (general ledger). Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors. Effect: The amount of allocated costs reported and reimbursed by grantors could not be readily traced back to the underlying accounting records (general ledger). Questioned Costs: None noted. Recommendation: The Center should implement controls to ensure all reporting and requests for reimbursements submitted to grantors reconcile with the underlying accounting records as allocated. Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2022-004 INTERNAL CONTROLS OVER ALLOWABLE COSTS Grantor: Various Award Name: Various Award Year: Various Award Numbers: Various CFDA Number: Various Criteria: Title 2, Chapter 2, part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves. Condition: During our audit procedures, we noted that although the Center maintains a cost allocation plan, there were no internal controls in place to ensure the plan was achieving the requirements referenced in the previous paragraph. The cost allocation plan was effectively existing and operating independently from the underlying accounting records. Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent. Effect: The Center incurs the risk of allocating disallowed costs to federal programs contrary to Federal Regulations. Questioned Costs: None noted. Recommendation: The Center should implement internal controls (periodic reconciliations, etc.) to ensure accuracy and consistency in allocations. Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-003 REPORTING ALLOWABLE/ALLOCABLE COSTSGrantor: U.S Department of Housing and Urban DevelopmentAward Name: Emergency Solutions GrantAward Year: VariousAward Numbers: VariousCFDA Number: 14.231Criteria: Costs reported and submitted for reimbursement should be based on a cost allocation plan and agree to the underlying accounting records.Condition: During our audit testing, we noted cost allocations included on submitted grant reports did not reconcile directly back to what was allocated in the underlying accounting records (general ledger).Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors.Effect: The amount of allocated costs reported and reimbursed by grantors could not be readily traced back to the underlying accounting records (general ledger).Questioned Costs: None noted.Recommendation: The Center should implement controls to ensure all reporting and requests for reimbursements submitted to grantors reconcile with the underlying accounting records as allocated.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-004 INTERNAL CONTROLS OVER ALLOWABLE COSTSGrantor: VariousAward Name: VariousAward Year: VariousAward Numbers: VariousCFDA Number: VariousCriteria: Title 2, Chapter 2, part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves.Condition: During our audit procedures, we noted that although the Center maintains a cost allocation plan, there were no internal controls in place to ensure the plan was achieving the requirements referenced in the previous paragraph. The cost allocation plan was effectively existing and operating independently from the underlying accounting records.Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent.Effect: The Center incurs the risk of allocating disallowed costs to federal programs contrary to Federal Regulations.Questioned Costs: None noted.Recommendation: The Center should implement internal controls (periodic reconciliations, etc.) to ensure accuracy and consistency in allocations.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-005 INTERNAL CONTROLS OVER THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND THE SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE.Grantor: VariousAward Name: VariousAward Year: VariousAward Numbers: VariousCFDA and CORE-CT Numbers: VariousCriteria: Non-profit organizations and other entities receiving federal and state assistance must have a process for identifying and tracking the source of such funds in order to adhere to the audit requirements of the Uniform Guidance and the Connecticut State Single Audit Act. To know when the respective audit requirements are effective, the organization must have the ability to prepare a schedule of expenditures of federal awards and a schedule of expenditures of state financial assistance at year end. These schedules must include all direct funding from the federal and state government as well as such funding passed through other agencies (indirect funding).Condition: During our audit procedures, we noted that aside from recording all receipts of grant funding, in a single revenue account, the Center cannot generate the required schedules of expenditures of these funds to determine if the Federal Single Audit threshold of $750,000 or State Single Audit threshold of $300,000 have been met. Furthermore, specific identification numbers (CFDA or CORE-CT) for each grant were not readily retrievable to identify and group major programs.Cause: No individuals at the Center were identifying and classifying the various grants received beyond their initial deposit.Effect: The Center does not currently have the ability to prepare separate schedules of expenditures of federal awards and expenditures of state financial assistance, and therefore, cannot identify if the requirement for a Federal Single Audit or State Single Audit has been met.Questioned Costs: None noted.Recommendation: The Center should implement internal controls to ensure all grant assistance is adequately identified and the expenditures thereof tracked to be sure Federal and State Single Audits are performed when required.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-003 REPORTING ALLOWABLE/ALLOCABLE COSTSGrantor: U.S. Department of Health and Human Services / U.S Department of Housing and Urban DevelopmentAward Name: Social Services Block Grant / Continuum of CareAward Year: VariousAward Numbers: 15DOH0101CD A3 / 17DOH0901CDCFDA Number: 93.667 / 14.267Criteria: Costs reported and submitted for reimbursement should be based on a cost allocation plan and agree to the underlying accounting records.Condition: During our audit testing, we noted certain payroll costs included on submitted grant reports did not match what was allocated in the accounting records.Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent with what was being reported to grantors.Effect: The amount of payroll costs reported and reimbursed by grantors was in excess of the actual amounts allocated in the cost allocation plan.Questioned Costs: $7,440 (CFDA 93.667) and $18,900 (CFDA 14.267)Recommendation: The Center should implement controls to ensure all reporting and requests for reimbursements submitted to grantors reconcile with the underlying accounting records as allocated.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-004 INTERNAL CONTROLS OVER ALLOWABLE COSTSGrantor: VariousAward Name: VariousAward Year: VariousAward Numbers: VariousCFDA Number: VariousCriteria: Title 2, Chapter 2, part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves.Condition: During our audit procedures, we noted that although the Center maintains a cost allocation plan, there were no internal controls in place to ensure the plan was achieving the requirements referenced in the previous paragraph. The cost allocation plan was effectively existing and operating independently from the underlying accounting records.Cause: No individuals at the Center were periodically performing reconciling and other activities which would have served to ensure the cost allocation plan and underlying accounting records were in line and consistent.Effect: The Center incurs the risk of allocating disallowed costs to federal programs contrary to Federal Regulations.Questioned Costs: None noted.Recommendation: The Center should implement internal controls (periodic reconciliations, etc.) to ensure accuracy and consistency in allocations.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

2020-005 INTERNAL CONTROLS OVER THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND THE SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE.Grantor: VariousAward Name: VariousAward Year: VariousAward Numbers: VariousCFDA Number: VariousCriteria: Non-profit organizations and other entities receiving federal and state assistance must have a process for identifying and tracking the source of such funds in order to adhere to the audit requirements of the Uniform Guidance and the Connecticut State Single Audit Act. To know when the respective audit requirements are effective, the organization must have the ability to prepare a schedule of expenditures of federal awards and a schedule of expenditures of state financial assistance at year end. These schedules must include all direct funding from the federal and state government as well as such funding passed through other agencies (indirect funding).Condition: During our audit procedures, we noted that aside from recording all receipts of grant funding, in a single revenue account, the Center cannot generate the required schedules of expenditures of these funds to determine if the Federal Single Audit threshold of $750,000 or State Single Audit threshold of $300,000 have been met. Furthermore, specific identification numbers (CFDA or CORE-CT) for each grant were not readily retrievable to identify and group major programs.Cause: No individuals at the Center were identifying and classifying the various grants received beyond their initial deposit.Effect: The Center does not currently have the ability to prepare separate schedules of expenditures of federal awards and expenditures of state financial assistance, and therefore, cannot identify if the requirement for a Federal Single Audit or State Single Audit has been met.Questioned Costs: None noted.Recommendation: The Center should implement internal controls to ensure all grant assistance is adequately identified and the expenditures thereof tracked to be sure Federal and State Single Audits are performed when required.Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.