SUBSTANCE ABUSE SERVICES, INC.Non-Profit

#2024‐001 – Significant Deficiency – Supporting Documentation Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.302(b)(3) states, “The recipient’s financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.” Condition During the course of the audit, we noted there was no approved source documentation for a recurring expense tested. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect The potential effects of not having supporting documentation on file could include over or undercharging expenses to the federal grants. Questioned Costs None Perspective Information The finding noted related to one (1) transaction examined when testing a sample of forty (40) non‐payroll cash disbursements. The transaction was a recurring monthly charge that was supported by an agreement approved by an employee who has since left the Organization. The Organization was unable to locate a copy of the signed agreement. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend having supporting documentation on file for all expenses charged to the Federal grants that shows approval of the expense from an appropriate member of management. View of Responsible Official The CEO has implemented a policy that all signed documents and contracts will be uniformly kept in a corresponding file, and the files will be stored in a locked filing cabinet at the corporate office. The Director of Operations will be responsible to ensure that the documents and contracts are filed in a timely fashion.

#2024‐002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted there was no documented review and approval of employee timesheets or the allocation methodology used to allocate salaries to the federal awards. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect The potential effects of not documenting the review and approval of the payroll allocation methodology could include an over or understatement of salary expenses allocated to the federal grants. A lack of proper approval of employee timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours and rates. Questioned Costs None Perspective Information The finding noted related to eighteen (18) employees whose time that was allocated between multiple programs based on test work performed for four (4) pay periods. Approval of employee timesheets was noted for payroll subsequent to May 15th, 2024, however, similar review and approval of the payroll allocation methodology was not noted subsequent to May 15th, 2024. Identification as a repeat finding A similar issue was noted in prior year findings #2023‐001 and #2023‐002. Recommendation We recommend having written documentation of the review and approval of the payroll allocation methodology on file, along with documentation of approval to support any modifications to this methodology occurring throughout the year. We recommend having documented review and approval of employee timesheets and biweekly payrolls by the appropriate supervisor/management. View of Responsible Official (This was implemented at the end of the 22/23 Audit, however, that audit was completed after the beginning of the next fiscal year. Therefore, the timing overlapped, and the changes implemented were not yet evident at the beginning of the new fiscal year.) Currently, based on the capacity of the Organization’s staffing pool, the most efficient and effective means of review and reconciliation of cash disbursements and payroll is the Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to payments being made. The Organization’s Director of Operations forwards the Board Chair and CEO a listing of cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask questions and formally “approve” or “disapprove” each transaction, prior to any disbursements. Once reviewed, the CEO will return the reviewed materials to the Director of Operations with the amounts to pay. Also, the Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank statement for all Organizational accounts, as well as the monthly credit card statements. The outsourced accountant does not have the ability to access the monthly bank statements or make purchases.

#2023-001 – Significant Deficiency – Segregation of Duties Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.303(a) states, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” A good internal control structure consists of proper segregation of duties where no one person is involved in all aspects of a given transaction. This includes proper segregation of the following functions: authorization of transactions, custody of assets, and recordkeeping. Condition During the course of the audit, we noted improper segregation of duties over cash disbursements and payroll: Cash Disbursements: During the year ended June 30, 2023, the bookkeeper had access to a signature stamp along with full access to the general ledger. During our audit, we noted that there is inconsistently documented approval of non-payroll expenses. Payroll: During our audit, we noted that there is no documented review and approval of the biweekly payrolls or timesheets. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect Without proper segregation of duties or proper approval processes over cash disbursements, funds could be misappropriated without detection by management or the Board. A lack of proper segregation over payroll controls such as review and approval of biweekly payrolls and timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours and rates. Questioned Costs None Perspective Information During the audit we gained an understanding of the Organization’s internal controls through inquiry and observation, and by examining one item from each of the three cycles: cash receipts, cash disbursements, and payroll. We also tested a sample of forty (40) non-payroll cash disbursements and identified four (4) with no authorization. The Organization does contract with an outside accounting firm who reviews all transactions and performs reconciliations of the accounting records. #2023-001– Significant Deficiency – Segregation of Duties (continued) Opioid STR Grant ALN 93.788 Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that the Organization implement policies and procedures, including reviews and reconciliations where necessary, which ensure that no one individual is involved in all aspects of the cash disbursements and payroll processes. The Organization should review these processes and segregate duties as much as considered practical. We recommend that all non-payroll expenses be approved before disbursement and that all time sheets and biweekly payrolls be reviewed and approved by the appropriate supervisor/management. We recommend that control of the signature stamp be moved to a different member of the Carlisle office who does not have edit access to the accounting software, and that it continues to only be used at the approval of the Board Chair. View of Responsible Official Currently, based on the capacity of the Organization’s staffing pool, the most efficient and effective means of review and reconciliation of cash disbursements and payroll is the Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to payments being made. The Organization’s bookkeeper forwards the Board Chair and CEO a listing of cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask questions and formally “approve” or “disapprove” each transaction, prior to any payments. Once reviewed, the CEO will contact the bookkeeper with the amounts to pay. Also, the Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank statement for all Organization accounts, as well as the monthly credit card statements. The outsourced accountant does not have the ability to access the monthly bank statements and make purchases. Going forward, the Organization’s Director of Communications will retain the Board Chair’s check stamp. The Director of Communication will only be allowed to use the Board Chair’s check stamp once the Board Chair and CEO approved payment.

Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.303(a) states, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” A good internal control structure consists of proper segregation of duties where no one person is involved in all aspects of a given transaction. This includes proper segregation of the following functions: authorization of transactions, custody of assets, and recordkeeping. Condition During the course of the audit, we noted improper segregation of duties over cash disbursements and payroll: Cash Disbursements: During the year ended June 30, 2023, the bookkeeper had access to a signature stamp along with full access to the general ledger. During our audit, we noted that there is inconsistently documented approval of nonpayroll expenses. Payroll: During our audit, we noted that there is no documented review and approval of the biweekly payrolls or timesheets. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect Without proper segregation of duties or proper approval processes over cash disbursements, funds could be misappropriated without detection by management or the Board. A lack of proper segregation over payroll controls such as review and approval of biweekly payrolls and timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours and rates. Questioned Costs None Perspective Information During the audit we gained an understanding of the Organization’s internal controls through inquiry and observation, and by examining one item from each of the three cycles: cash receipts, cash disbursements, and payroll. We also tested a sample of forty (40) non-payroll cash disbursements and identified four (4) with no authorization. The Organization does contract with an outside accounting firm who reviews all transactions and performs reconciliations of the accounting records. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that the Organization implement policies and procedures, including reviews and reconciliations where necessary, which ensure that no one individual is involved in all aspects of the cash disbursements and payroll processes. The Organization should review these processes and segregate duties as much as considered practical. We recommend that all non-payroll expenses be approved before disbursement and that all time sheets and biweekly payrolls be reviewed and approved by the appropriate supervisor/management. We recommend that control of the signature stamp be moved to a different member of the Carlisle office who does not have edit access to the accounting software, and that it continues to only be used at the approval of the Board Chair. View of Responsible Official Currently, based on the capacity of the Organization’s staffing pool, the most efficient and effective means of review and reconciliation of cash disbursements and payroll is the Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to payments being made. The Organization’s bookkeeper forwards the Board Chair and CEO a listing of cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask questions and formally “approve” or “disapprove” each transaction, prior to any payments. Once reviewed, the CEO will contact the bookkeeper with the amounts to pay. Also, the Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank statement for all Organization accounts, as well as the monthly credit card statements. The outsourced accountant does not have the ability to access the monthly bank statements and make purchases. Going forward, the Organization’s Director of Communications will retain the Board Chair’s check stamp. The Director of Communication will only be allowed to use the Board Chair’s check stamp once the Board Chair and CEO approved payment.

2023-002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. #2023-002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles (continued) Opioid STR Grant ALN 93.788 View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.

Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.

#2023-001 – Significant Deficiency – Segregation of Duties Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.303(a) states, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” A good internal control structure consists of proper segregation of duties where no one person is involved in all aspects of a given transaction. This includes proper segregation of the following functions: authorization of transactions, custody of assets, and recordkeeping. Condition During the course of the audit, we noted improper segregation of duties over cash disbursements and payroll: Cash Disbursements: During the year ended June 30, 2023, the bookkeeper had access to a signature stamp along with full access to the general ledger. During our audit, we noted that there is inconsistently documented approval of non-payroll expenses. Payroll: During our audit, we noted that there is no documented review and approval of the biweekly payrolls or timesheets. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect Without proper segregation of duties or proper approval processes over cash disbursements, funds could be misappropriated without detection by management or the Board. A lack of proper segregation over payroll controls such as review and approval of biweekly payrolls and timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours and rates. Questioned Costs None Perspective Information During the audit we gained an understanding of the Organization’s internal controls through inquiry and observation, and by examining one item from each of the three cycles: cash receipts, cash disbursements, and payroll. We also tested a sample of forty (40) non-payroll cash disbursements and identified four (4) with no authorization. The Organization does contract with an outside accounting firm who reviews all transactions and performs reconciliations of the accounting records. #2023-001– Significant Deficiency – Segregation of Duties (continued) Opioid STR Grant ALN 93.788 Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that the Organization implement policies and procedures, including reviews and reconciliations where necessary, which ensure that no one individual is involved in all aspects of the cash disbursements and payroll processes. The Organization should review these processes and segregate duties as much as considered practical. We recommend that all non-payroll expenses be approved before disbursement and that all time sheets and biweekly payrolls be reviewed and approved by the appropriate supervisor/management. We recommend that control of the signature stamp be moved to a different member of the Carlisle office who does not have edit access to the accounting software, and that it continues to only be used at the approval of the Board Chair. View of Responsible Official Currently, based on the capacity of the Organization’s staffing pool, the most efficient and effective means of review and reconciliation of cash disbursements and payroll is the Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to payments being made. The Organization’s bookkeeper forwards the Board Chair and CEO a listing of cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask questions and formally “approve” or “disapprove” each transaction, prior to any payments. Once reviewed, the CEO will contact the bookkeeper with the amounts to pay. Also, the Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank statement for all Organization accounts, as well as the monthly credit card statements. The outsourced accountant does not have the ability to access the monthly bank statements and make purchases. Going forward, the Organization’s Director of Communications will retain the Board Chair’s check stamp. The Director of Communication will only be allowed to use the Board Chair’s check stamp once the Board Chair and CEO approved payment.

Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.303(a) states, “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” A good internal control structure consists of proper segregation of duties where no one person is involved in all aspects of a given transaction. This includes proper segregation of the following functions: authorization of transactions, custody of assets, and recordkeeping. Condition During the course of the audit, we noted improper segregation of duties over cash disbursements and payroll: Cash Disbursements: During the year ended June 30, 2023, the bookkeeper had access to a signature stamp along with full access to the general ledger. During our audit, we noted that there is inconsistently documented approval of nonpayroll expenses. Payroll: During our audit, we noted that there is no documented review and approval of the biweekly payrolls or timesheets. Cause The Organization has made a reasonable effort to design proper controls, but has faced challenges in implementing them effectively, due to growth across multiple locations and frequent turnover. Effect Without proper segregation of duties or proper approval processes over cash disbursements, funds could be misappropriated without detection by management or the Board. A lack of proper segregation over payroll controls such as review and approval of biweekly payrolls and timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours and rates. Questioned Costs None Perspective Information During the audit we gained an understanding of the Organization’s internal controls through inquiry and observation, and by examining one item from each of the three cycles: cash receipts, cash disbursements, and payroll. We also tested a sample of forty (40) non-payroll cash disbursements and identified four (4) with no authorization. The Organization does contract with an outside accounting firm who reviews all transactions and performs reconciliations of the accounting records. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend that the Organization implement policies and procedures, including reviews and reconciliations where necessary, which ensure that no one individual is involved in all aspects of the cash disbursements and payroll processes. The Organization should review these processes and segregate duties as much as considered practical. We recommend that all non-payroll expenses be approved before disbursement and that all time sheets and biweekly payrolls be reviewed and approved by the appropriate supervisor/management. We recommend that control of the signature stamp be moved to a different member of the Carlisle office who does not have edit access to the accounting software, and that it continues to only be used at the approval of the Board Chair. View of Responsible Official Currently, based on the capacity of the Organization’s staffing pool, the most efficient and effective means of review and reconciliation of cash disbursements and payroll is the Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to payments being made. The Organization’s bookkeeper forwards the Board Chair and CEO a listing of cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask questions and formally “approve” or “disapprove” each transaction, prior to any payments. Once reviewed, the CEO will contact the bookkeeper with the amounts to pay. Also, the Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank statement for all Organization accounts, as well as the monthly credit card statements. The outsourced accountant does not have the ability to access the monthly bank statements and make purchases. Going forward, the Organization’s Director of Communications will retain the Board Chair’s check stamp. The Director of Communication will only be allowed to use the Board Chair’s check stamp once the Board Chair and CEO approved payment.

2023-002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. #2023-002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles (continued) Opioid STR Grant ALN 93.788 View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.

Opioid STR Grant ALN 93.788 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Cause The Organization’s internal controls do not include a process for adjustments to estimated percentages for charging employee time. Effect The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses could include an over or understatement of salary expenses allocated to the federal grant. Questioned Costs None Perspective Information The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant. Identification as a repeat finding There was a similar finding in the prior year. Recommendation We recommend the Organization develop a process to review the percentages used to charge employee time to the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s fiscal year to determine how each employee’s salary percentages should be allocated according to the grant contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year, as considered efficient, the Organization will implement a daily timesheet record, which requires each program service employee to classify their daily time between federal grant programs. At the end of each week, staff members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s outsourced accountant, will review these timesheets and determine the proper allocation needed to record each employee’s payroll activities in the accounting software by appropriate federal program. This process will allow for the allocation of actuals to each federal program by the end of the month.

Finding 2022-001: Allocation of Payroll U.S. Department of Health and Human Services ? Opioid STR (ALN #93.788) Activities Allowed or Unallowed, Allowable Costs/Cost Principles Condition: During the audit, it was noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. This methodology is allowable when an after- the ? fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Criteria: Per Uniform Guidance, 200.430 Compensation ? personal services (i) Standards for Documentation of Personnel Expenses, (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (c)the non- Federal entity?s system of internal control includes processes to review after-the ? fact interim charges made to a Federal award based on budget estimates. Cause: The Organization?s internal control does not include a process for adjustments to estimated percentages for charging employee time. Effect: There was approximately $56,000 in payroll expense charged to the program based on estimates established at the beginning of the fiscal year but not reviewed after- the ? fact. Recommendation: We recommend the Organization develop a process for reviewing the percentages used to charge employee time during the fiscal year and update accounting records accordingly. Views of Responsible Officials: Management agrees with the finding and is implementing a daily timesheet tracking system.

Finding 2021-001: Allocation of Payroll Condition: During the audit, it was noted that employee time charged to multiple programs was based on an estimated percentage of time established at the beginning of the fiscal year. This methodology is allowable when an after- the ? fact review of the estimate is completed to ensure the federal award is charged the proper amount. The Organization reviews and adjusts allocations annually but makes changes on a prospective basis. Criteria: Per Uniform Guidance, 200.430 Compensation ? personal services (i) Standards for Documentation of Personnel Expenses, (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (c)the non- Federal entity?s system of internal control includes processes to review after-the ? fact interim charges made to a Federal award based on budget estimates. Cause: The Organization?s internal control does not include a process for adjustments to estimated percentages for charging employee time. Effect: There was approximately $61,000 in payroll expense charged to the program based on estimates established at the beginning of the fiscal year but not reviewed after- the ? fact. Recommendation: We recommend the Organization develop a process for reviewing the percentages used to charge employee time during the fiscal year and update accounting records accordingly. Views of Responsible Officials: Management agrees with the finding and is implementing a daily timesheet tracking system.