CHICAGO RECOVERY ALLIANCE

Finding 2023-002 – Internal Control over Compliance (Material Weakness) Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 10 Employee files that were selected for verification disclosed 3 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2023, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2023. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2022 – December 31, 2022 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 5 Employee files that were selected for verification disclosed 4 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2022, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2022. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2022 – December 31, 2022 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 5 Employee files that were selected for verification disclosed 4 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2022, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2022. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.

Questioned Cost: None Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Context: 13 Employee files were selected for verification disclosed 10 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Recommendation: Offer letters or employee change of status forms should be maintained on file. Views of Responsible Official: Personnel files were not maintained while CRA was without a Director and human resources professional for 2020 and 2021. We have since hired a Human Resources Director, Beth Anne Falco, who is in the process of bringing all employee files current. As part of the updated files, CRA intends to issue new employee forms in the beginning of FY25, which will include updated job descriptions, salary information, payroll, and benefits.

Finding 2020-004 ? Internal Control over Statement of Expenditures of Federal Awards (Material Weakness) Criteria: The Organization is responsible for establishing and maintaining internal controls over financial reporting. Condition: The statement of expenditures of federal awards could not be reconciled to the consolidated financial statements. Context: The expenditures reported in the statement of expenditures of federal awards could not be verified in relation to the consolidated financial statements. Effect: We were unable to ascertain the amounts reported on the statement of expenditures of federal awards. Cause: The lack of internal control resulted in a disclaimer of opinion on the schedule of expenditures of federal awards since we were unable to conduct our audit procedures. Recommendation: The Organization should implement and maintain effective internal control policies to ensure the schedule of expenditures of federal awards can be reconciled to the consolidated financial statements. Views of Responsible Official: 2020 was a difficult year for Chicago Recovery Alliance. We lost two key personnel, the Executive Director, and the Financial Director, who oversaw the financial statements and grant-related documentation. A new Executive Director was hired in March of 2022. The Organization hired a bookkeeper soon after and they worked together to establish an organized documentation process. The Organization also recently hired an accounting firm that specializes in non-for-profit accounting and grant management. The Organization is still in the process of course correcting after the agency had little executive and financial oversight for nearly a year in a half. However, the CRA team continues to work diligently on implementing appropriate financial protocols to meet federal and state requirements.