THE THRESHOLDS AND AFFILIATED ORGANIZATIONS

Assistance Listing, Federal Agency, and Program Name - 93.493 U.S. Department of Health and Human Services, Congressional Directives - Community Project Funding/Congressionally Directed Spending - Construction Federal Award Identification Number and Year - 1 CE1HS47212 01 00, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The SF 425 Federal Financial Report instructions require recipients to indicate whether the report is prepared on the accrual basis of accounting or the cash basis of accounting and should follow an organization’s normal accounting basis. Condition The Agency’s controls in place for financial reporting submissions did not identify that the SF 425 Federal Financial Report (“FFR”) submitted for the annual reporting period ending August 31, 2023, indicated that the report was prepared on the accrual basis of accounting when the report was actually prepared on the cash basis of accounting. The report filed did not reflect the accrued expenditures for the program. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A – refer to context below for additional information. Context - During the annual period ended August 31, 2023, the Agency incurred $1,939,218 in matching expenditures for actual construction during the period. During the same period, the Agency made $1,308,829 in cash payments on invoices received from the general contractor for work performed on the project. The amount reported by the Agency on line 10.j—Recipient share of expenditures of the FFR was $1,308,829, which represents the amount of cash basis expenditures for the period. The Agency had indicated on the FFR that the report had been prepared on the accrual basis of accounting, which is consistent with the Agency’s normal financial reporting basis of account, and thus the $1,939,218 amount of actual expenditures incurred during the period should have been reported on line 10.j—Recipient share of expenditures. Cause and Effect - The total of construction invoices received from the general contractor for actual work performed through May 2023 amounted to $1,308,829, and all such invoices were paid prior to August 31, 2023. The construction invoice for work performed during the period from June 2023 through August 31, 2023 amounted to $630,439, and this invoice was received by the Agency in October 2023. Upon receipt, the invoice was recorded in the accounting records with an effective date of October 31, 2023. As the Agency prepared the FFR using the general ledger activity for construction invoices recorded with effective dates through August 31, 2023, the activity did not include the $630,439 invoice which was not received until October 2023 but which related to expenditures incurred during the reporting period. The result was line 10.j—Recipient share of expenditures was understated by approximately $630,000. Recommendation - We recommend that the Agency implement controls, including levels of review, to ensure that the basis of accounting indicated on required financial report submissions accurately reflects the basis of accounting used by the Agency. Views of Responsible Officials and Corrective Action Plan - The Agency agrees and will add additional review over future construction expenditures.

Condition: The Agency’s controls in place for financial reporting submissions did not identify that the SF-425 Federal Financial Report (“FFR”) submitted for the annual reporting period ending August 31, 2023, indicated that the report was prepared on the accrual basis of accounting when the report was actually prepared on the cash basis of accounting. The report filed did not reflect the accrued expenditures for the program. Planned Corrective Action: Thresholds current policy is as follows. For purposes of financial reporting on federal awards, financial reports will be prepared by the grant accountant (or other appropriate party) and reviewed by the Senior Director of Grants Accounting (or their designee). Unfortunately, this policy did not identify this mistake, because these payments came from a construction escrow account and did not go through the normal accounts payable process. We will add additional requirements for any accounting entry resulting from construction escrow payments. Namely, we will scrutinize and verify the accrual period(s) for such escrow expenditures before posting the accounting entry. Contact person responsible for corrective action: Al Shoreibah, Chief Financial Officer Anticipated Completion Date: 03/01/2025

Assistance Listing, Federal Agency, and Program Name - 93.493 U.S. Department of Health and Human Services, Congressional Directives - Community Project Funding/Congressionally Directed Spending - Construction Federal Award Identification Number and Year - 1 CE1HS47212 01 00, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The SF 425 Federal Financial Report instructions require recipients to indicate whether the report is prepared on the accrual basis of accounting or the cash basis of accounting and should follow an organization’s normal accounting basis. Condition The Agency’s controls in place for financial reporting submissions did not identify that the SF 425 Federal Financial Report (“FFR”) submitted for the annual reporting period ending August 31, 2023, indicated that the report was prepared on the accrual basis of accounting when the report was actually prepared on the cash basis of accounting. The report filed did not reflect the accrued expenditures for the program. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A – refer to context below for additional information. Context - During the annual period ended August 31, 2023, the Agency incurred $1,939,218 in matching expenditures for actual construction during the period. During the same period, the Agency made $1,308,829 in cash payments on invoices received from the general contractor for work performed on the project. The amount reported by the Agency on line 10.j—Recipient share of expenditures of the FFR was $1,308,829, which represents the amount of cash basis expenditures for the period. The Agency had indicated on the FFR that the report had been prepared on the accrual basis of accounting, which is consistent with the Agency’s normal financial reporting basis of account, and thus the $1,939,218 amount of actual expenditures incurred during the period should have been reported on line 10.j—Recipient share of expenditures. Cause and Effect - The total of construction invoices received from the general contractor for actual work performed through May 2023 amounted to $1,308,829, and all such invoices were paid prior to August 31, 2023. The construction invoice for work performed during the period from June 2023 through August 31, 2023 amounted to $630,439, and this invoice was received by the Agency in October 2023. Upon receipt, the invoice was recorded in the accounting records with an effective date of October 31, 2023. As the Agency prepared the FFR using the general ledger activity for construction invoices recorded with effective dates through August 31, 2023, the activity did not include the $630,439 invoice which was not received until October 2023 but which related to expenditures incurred during the reporting period. The result was line 10.j—Recipient share of expenditures was understated by approximately $630,000. Recommendation - We recommend that the Agency implement controls, including levels of review, to ensure that the basis of accounting indicated on required financial report submissions accurately reflects the basis of accounting used by the Agency. Views of Responsible Officials and Corrective Action Plan - The Agency agrees and will add additional review over future construction expenditures.

Condition: The Agency’s controls in place for financial reporting submissions did not identify that the SF-425 Federal Financial Report (“FFR”) submitted for the annual reporting period ending August 31, 2023, indicated that the report was prepared on the accrual basis of accounting when the report was actually prepared on the cash basis of accounting. The report filed did not reflect the accrued expenditures for the program. Planned Corrective Action: Thresholds current policy is as follows. For purposes of financial reporting on federal awards, financial reports will be prepared by the grant accountant (or other appropriate party) and reviewed by the Senior Director of Grants Accounting (or their designee). Unfortunately, this policy did not identify this mistake, because these payments came from a construction escrow account and did not go through the normal accounts payable process. We will add additional requirements for any accounting entry resulting from construction escrow payments. Namely, we will scrutinize and verify the accrual period(s) for such escrow expenditures before posting the accounting entry. Contact person responsible for corrective action: Al Shoreibah, Chief Financial Officer Anticipated Completion Date: 03/01/2025

Assistance Listing, Federal Agency, and Program Name - 93.498, U.S. Department of Health and Human Services (HHS), Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) Federal Award Identification Number and Year - N/A 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per the Provider Relief Fund General and Targeted Distribution Post Payment Notice of Reporting Requirements dated October 27, 2022, recipients may choose to apply PRF payments toward lost revenue using one of three options up to the amount: Option i: of the difference between actual patient care revenues; Option ii: of the difference between budgeted (prior to March 27, 2020) and actual patient care revenues; or Option iii: calculated by any reasonable methodology of estimating revenues Condition - The Agency's controls in place for reporting submissions did not identify Provider Relief Fund General and Targeted Distribution Post Payment Notice of Reporting Requirements guidelines were not followed related to the lost revenue calculations. The Period 4 reporting submission for lost revenue did not follow the acceptable options outlined by HHS. Additionally, the Period 2 reporting submission, completed in the previous year, did not follow the acceptable options. Questioned Costs - None Identification of How Questioned Costs Were Computed N/A, refer to context below for additional information. Context - The Agency was required to submit one portal submission (Period 4), which contained lost revenue amounts during 2023. The Period 4 portal submission for lost revenue did not follow the acceptable options provided by HHS, as noted in the criteria above. The Agency reported to HHS it used option ii (2020 Budgeted Revenue) to calculate its lost revenue included in its portal submissions. However, the budgeted amounts for patient care revenue relating the Agency's fiscal years for 2021, 2022, and 2023 were not approved prior to March 27, 2020; therefore, option ii was not available to be used. The Agency should have selected option iii in its portal submissions. The Agency used the same methodology for the Period 2 portal submission, even though the budgets related to that full Period of Availability were not approved prior to March 27, 2020. As of June 30, 2023, the Agency was only required to complete portal submissions for Period 2 and Period 4. Cause and Effect - Review of the reporting guidance was not effective and led to the selection of a lost revenue methodology that was not available. As a result, the Agency selected an incorrect methodology option (option ii) for reporting lost revenue. Recommendation - We recommend that the Agency implement controls, including levels of review, to ensure that reports are completed and submitted in accordance with the guidelines established by HHS. Views of Responsible Officials and Corrective Action Plan - The Agency agrees option iii should have been used for portal submissions and will implement additional reviews over future award applications.

Condition: The Organization's controls in place for reporting submissions did not identify Provider Relief Fund General and Targeted Distribution Post-Payment Notice of Reporting Requirements guidelines were not followed related to the lost revenue calculations. The Period 4 reporting submission for lost revenue did not follow the acceptable options outlined by HHS. Additionally, the Period 2 reporting submission, completed in the previous year, did not follow the acceptable options. Planned Corrective Action: Thresholds will have a second individual (Controller or SVP for Finance) review future award applications that are one-time or unusual in nature. We will pay particular attention to review the terms carefully so that Thresholds does not misunderstand things (such as the acceptable options, as in this case). Contact person responsible for corrective action: Al Shoreibah, Chief Financial Officer Anticipated Completion Date: April 1, 2024.

Assistance Listing, Federal Agency, and Program Name - 93.958 U.S. Department of Health and Human Services, Block Grants for Community Mental Health Services Crisis Care System 93.959 U.S. Department of Health and Human Services, Block Grants for Community Mental Health Services Crisis Care System Federal Award Identification Number and Year - 45CBB04275, 2023 Pass through Entity - Illinois Department of Human Services (IDHS) Finding Type - Material weakness Repeat Finding - No Criteria - In accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200.510(b)(3) the schedule of expenditures of federal awards must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number (ALN). Condition - An award passed through IDHS was not initially classified with the correct assistance listing number on the Schedule of Expenditures of Federal Awards (SEFA) by the Agency. The incorrect ALN was identified during audit procedures and corrected by the Agency. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A, refer to context below for additional information. Context - For one contract received from IDHS, $425,789 was shown as an expenditure under ALN 93.958 rather than ALN 93.959 as provided by IDHS in the confirmation sent to the Agency. Cause and Effect - Controls over review of the SEFA were not effective to identify the correct ALN. A correction was required for the SEFA to show the expenditure with the correct ALN to prevent the SEFA from showing expenditures under the incorrect ALN. Recommendation - We recommend the Agency review its controls over prepration of the SEFA to ensure all expenditures are shown with the correct ALN. Views of Responsible Officials and Planned Corrective Actions - The Agency agrees the expenditures were initially shown with the incorrect ALN and will implement additional review processes.

Condition: An award passed through IDHS was not initially classified with the correct assistance listing number on the Schedule of Expenditures of Federal Awards (SEFA) by the Agency. The incorrect ALN was identified during audit procedures and corrected by the Agency. Planned Corrective Action: Thresholds will have a colleague outside of the Grants team (Controller or SVP for Finance) review future SEFAs. We will pay particular attention to ensure all expenditures are shown with the correct ALN, dollar amounts, and other fields. Contact person responsible for corrective action: Al Shoreibah, Chief Financial Officer Anticipated Completion Date: April 1, 2024