Sonoran Prevention WorksNon-Profit

Finding Number: 2020-001 Repeat Finding: Yes ? 2019-001 Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed CRITERIA In accordance with 2 CFR Part 200.303, the Organization is required to establish and maintain internal control over the federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with 2 CFR Part 200.403(g) costs must be adequately documented. Management is responsible for establishing and maintaining internal controls over payroll, such that supporting documentation is retained and agrees to the underlying accounting records. CONDITION The Organization lacked adequate internal controls over its accounting of payroll costs to ensure that pay rates were properly supported. CAUSE Organization policies were not always followed. EFFECT The Organization was not in compliance with its own policies and federal requirements. CONTEXT During our review of payroll records, we noted the following errors: ? For one of 10 payroll records reviewed, there was no supporting documentation to substantiate the employee?s pay rate. ? For two of 10 payroll records reviewed, the offer letter/contract on file did not agree to the employee?s pay rate. The missing documentation for the two errors were pulled from the first part of 2020. However, the pay rates for the employees noted above were documented in the grant budget. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management should ensure that Organization policies and procedures are followed. Further, all pay rates should be accompanied by supporting documentation and that documentation should be retained in an employee file. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2020-002 Repeat Finding: Yes ? 2019-002 Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed CRITERIA In accordance with 2 CFR Part 200.303, the Organization is required to establish and maintain internal control over the federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with 2 CFR Part 200.403(g) costs must be adequately documented. Management is responsible for establishing and maintaining internal controls over non-payroll expenses and accounts payable. CONDITION The Organization lacked adequate internal controls over its accounting of non-payroll expenses and accounts payable to ensure that a) proper purchase authorization was obtained, b) receiving procedures were developed and followed, and c) non-payroll expenses are recorded in the proper fiscal year. CAUSE Organization policies were not always followed. In addition, management lacked a proper understanding related to recording non-payroll expenses and accounts payables in the proper period. EFFECT The Organization was not in compliance with its own policies and federal requirements. Audit adjustments were necessary to properly state the balances and activity related to non-payroll expenses and accounts payable in the Organization?s financial statements. CONTEXT During our review of non-payroll expense and accounts payable records, we noted the following errors: ? For 28 of 40 disbursements reviewed, purchase authorization documentation was not retained. ? The Organization was unable to provide supporting documentation to support when the good/services were received/provided. ? Non-payroll expenses for goods that were both eligible and obligated under the grant were recorded in fiscal year 2020 even though the expense was not incurred until fiscal year 2021 because the goods were not received until fiscal year 2021. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management needs to establish internal controls to ensure non-payroll expenses are recorded in the proper accounting period. Specifically, we recommend the Organization implement the use of receiving reports to document the date goods are received. Additionally, purchase authorization and receiving procedures should be formalized and supporting documentation should be retained. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan. Page

Finding Number: 2020-003 Repeat Finding: Yes ? 2019-003 Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting CRITERIA According to Amendment 9 of the Organization?s grant agreement with the Arizona Health Care Cost Containment System, the Organization is required to submit contractor expenditure reports (CER) within 15 days after the end of the month. Quarterly expenditure reports and programmatic reports are due within 30 days following the end of the quarter. CONDITION The Organization did not have proper internal controls in place over reporting requirements. Monthly CERs and quarterly expenditure and programmatic reports were not always submitted timely. CAUSE The Organization experienced significant turnover in key positions, including those responsible for the preparing and submitting the CERs and quarterly expenditure reports. The Organization?s internal controls were not designed to properly address the turnover in those positions. EFFECT The Organization was not in compliance with the reporting requirements and as a result did not receive reimbursement payments on a timely basis. CONTEXT Eleven of 25 CERs submitted by the Organization were not submitted timely. All CERs from July 2020 through December 2020 were submitted timely. In addition, the quarterly expenditure report and four of five programmatic reports were not submitted timely for the quarter ended June 30, 2020. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The Organization needs to ensure that all reports are prepared and submitted timely, to ensure timely reimbursement by the granting agency. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2019-001 Repeat Finding: No Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed CRITERIA In accordance with 2 CFR Part 200.303, the Organization is required to establish and maintain internal control over the federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with 2 CFR Part 200.403(g) costs must be adequately documented. Management is responsible for establishing and maintaining internal controls over payroll, such that supporting documentation is retained and agrees to the underlying accounting records. CONDITION The Organization lacked adequate internal controls over its accounting of payroll costs to ensure that a) time cards were approved by supervisors, b) pay rates were properly supported and c) costs charged to the grant were properly supported. CAUSE Organization policies were not always followed. In addition, the Organization did not have a process in place to review the amounts charged to the grant and ensure they agreed to the supporting documentation. EFFECT The Organization was not in compliance with its own policies and federal requirements. CONTEXT During our review of payroll records, we noted the following errors: ? For five of 11 payroll records reviewed, the employee?s time card was not approved by a supervisor. ? For two of 11 payroll records reviewed, there was no supporting documentation to substantiate the employee?s pay rate. ? For two of 11 payroll records reviewed, the offer letter did not agree to the employee?s pay rate. ? For one payroll record reviewed, the amount allocated to the grant did not agree to the supporting documentation by $228. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management should ensure that Organization policies and procedures are followed. Further, all pay rates should be accompanied by supporting documentation and that documentation should be retained in an employee file. Finally, the Organization needs to review all allocations to the grant to ensure the amounts are properly supported. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2019-002 Repeat Finding: No Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities Allowed or Unallowed, Period of Performance CRITERIA In accordance with 2 CFR Part 200.303, the Organization is required to establish and maintain internal control over the federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, in accordance with 2 CFR Part 200.403(g) costs must be adequately documented. Management is responsible for establishing and maintaining internal controls over non-payroll expenses and accounts payable. CONDITION The Organization lacked adequate internal controls over its accounting of non-payroll expenses and accounts payable to ensure that a) invoices were retained for all purchases, b) proper purchase authorization was obtained, c) receiving procedures were developed and followed, and d) non-payroll expenses are recorded are in the proper fiscal year. CAUSE Organization policies were not always followed. In addition, management lacked a proper understanding related to recording non-payroll expenses and accounts payables in the proper period. EFFECT The Organization was not in compliance with its own policies and federal requirements. Audit adjustments were necessary to properly state the balances and activity related to non-payroll expenses, accounts payable and beginning net assets in the Organization?s financial statements.CONTEXT During our review of non-payroll expense and accounts payable records, we noted the following errors: ? For 39 of 40 disbursements reviewed, purchase authorization documentation was not retained. ? The Organization was unable to provide supporting documentation to support when the good/services were received/provided. ? Non-payroll expenses totaling $1,985 related to the year ended December 31, 2018 were recorded in 2019. ? Non-payroll expenses totaling $4,400 related to the year ended December 31, 2019 were recorded in 2020. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION Management needs to establish internal controls to ensure non-payroll expenses are recorded in the proper accounting period. Additionally, purchase authorization and receiving procedures should be formalized and supporting documentation should be retained along with the vendor invoice. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2019-003 Repeat Finding: No Program Name/CFDA Title: Block Grants for Prevention and Treatment of Substance Abuse CFDA Number: 93.959 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: YH17-0048 Pass-Through Agency: Arizona Health Care Cost Containment System Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Reporting CRITERIA According to Amendment 9 of the Organization?s grant agreement with the Arizona Health Care Cost Containment System, the Organization is required to submit contractor expenditure reports (CER) within 15 days after the end of the month and quarterly expenditure reports within 30 days following the end of the quarter. CONDITION The Organization did not have proper internal controls in place over reporting requirements. Monthly CERs and quarterly expenditure reports were not always submitted timely. CAUSE During the year ended December 31, 2019, the Organization experienced significant turnover in key positions, including those responsible for the preparing and submitting the CERs and quarterly expenditure reports. The Organization?s internal controls were not designed to properly address the turnover in those positions. EFFECT The Organization was not in compliance with the reporting requirements and as a result did not receive reimbursement payments on a timely basis. CONTEXT Twenty-three of 37 CERs submitted by the Organization were not submitted timely. In addition, all four quarterly expenditure reports were not submitted timely. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The Organization needs to ensure that all reports are prepared and submitted timely, to ensure timely reimbursement by the granting agency. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.