Comprehensive Behavioral Health Center of St. Clair County, Inc.

2021-01 Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Community Mental Health Services Block Grant CFDA Number: 93.958 Award Period: July 1, 2020 ? June 30, 2021 Type of Finding: Significant Deficiency Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Grant Programs CFDA Number: 93.870 Award Period: July 1, 2020 ? June 30, 2021 Type of Finding: Significant Deficiency Criteria: Under the terms of the contract, the Center shall be managed in a manner consistent with sound fiscal standards. Conditions: At June 30, 2021, the Center did not meet the Debt Service Coverage Covenant which requires the Center to maintain funds necessary to pay the annual debt service, at a level of 1.15 as of each June 30, nor did the Center meet the Liquidity Covenant, which requires the Center to maintain 60 days of expenses in cash as of each June 30, nor did the Center meets the minimum deposited amount required in debt services reserve of $1,046,500. As of June 30, 2021, the Center net assets were negative $1,682,498. The Center has amounts due to the Illinois Department of Mental Health that consist of lapsed advanced grant payments. The total amount due to the State of Illinois is $413,906. The amounts due related to fiscal year 2021 is $208,817. Cause: The Center has been unable to generate enough revenues from reimbursement and expensed based contracts to cover operations expenses related to programs and debt service requirements. Effect: The Center has not met its debt compliance requirements and has experienced significant deficits in operations that raise substantial doubt about its ability to continue as a growing concern. During fiscal year 2020, the Center entered into a Forbearance Agreement. The Forbearance Agreement requires payments to get the Center current on past due interest and rebuild the minimum deposits required for debt service reserve. The Illinois Department of Human Services conducts a yearly administrative review. The review includes analyses of the Centers fiscal and administrative policies, procedures, and records. Repeat Finding: See prior year finding 2020-01. Recommendation: We recommend the Board and management continue to develop and refine a financial plan which includes budgets and formats that hold personnel accountable for reporting cash management. Future plans and budgets should be developed to produce positive operating cash flows and proactively avoid violation of debt covenants. In addition, management should continue to analyze the covenants on an ongoing basis. We also recommend the Board establish a designated cash reserve fund which would protect the Center from exposure to uncertainties and funding volatility. Views of Responsible Officials and Planned Corrective Actions: The Center has made progress during fiscal year 2021 and into fiscal year 2022. As of issuance date February 2, 2022, the Center has made all scheduled payments and transferred excess cash under the terms of the forbearance agreement. In December of 2021, the Center discussed with the bond holder the possibility of a third forbearance agreement. There have been discussions that a third forbearance agreement may jeopardize the tax-exempt status of the bond and the bond counsel are researching options. The Center has verbally agreed to continue making $100,000 monthly payments during the first months of calendar year 2022. The Center continues to explore refinancing options. The Center is working on a three to four year financial performance projection to prepare for possible refinancing or a new forbearance agreement. Views of Responsible Officials and Planned Corrective Actions ? (continued) During November 2021, the Center was awarded a two-year federal grant from the U.S. Department of Health and Human Services under the Substance Abuse and Mental Health Administration Program (SAMHSA). The Center is negotiating an indirect cost rate in excess of the 10% de minimis in hopes of improving their ability to offset overhead costs with grant funding. It is the Centers belief that the negotiated SAMHSA rate would be applicable to all Illinois Department of Mental Health fiscal year 2022 grants.

2020-01 Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Community Mental Health Services Block Grant CFDA Number: 93.958 Award Period: July 1, 2019 - June 30, 2020 Type of Finding: Significant Deficiency Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Grant Programs CFDA Number: 93.870 Award Period: July 1, 2019- June 30, 2020 Type of Finding: Significant Deficiency Criteria: Under the terms of the contract, the Center shall be managed in a manner consistent with sound fiscal standards. Conditions: At June 30, 2020, the Center did not meet the Debt Service Coverage Covenant which requires the Center to maintain funds necessary to pay the annual debt service, at a level of I .15 as of each June 30, nor did the Center meet the Liquidity Covenant, which requires the Center to maintain 60 days of expenses in cash as of each June 30, nor did the Center meets the minimum deposited amount required in debt services reserve of $1,046,500. As of June 30, 2020, the Center net assets were negative $1,577,546. As described in finding 2020-02, the Center has questioned costs payable to the State of Illinois. The total questioned costs for the period of June 30, 2017 through June 30, 2020 is $404,519. Cause: The Center has been unable to generate enough revenues from reimbursement and expensed based contracts to cover operations expenses related to programs and debt service requirements.2020-01 (Continued) Effect: The Center has not met its debt compliance requirements and has experienced significant deficits in operations that raise substantial doubt about its ability to continue as a growing concern. During fiscal year 2020, the Center entered into a Forbearance Agreement. The Forbearance Agreement requires payments to get the Center current on past due interest and rebuild the minimum deposits required for debt service reserve. Repeat Finding: See prior year finding 2019-01 . Recommendation: We recommend the Board and management continue to develop and refine a financial plan which includes budgets and formats that hold personnel accountable for reporting cash management. Future plans and budgets should be developed to produce positive operating cash flows and proactively avoid violation of debt covenants. In addition, management should continue to analyze the covenants on an ongoing basis. We also recommend the Board establish a designated cash reserve fund which would protect the Center from exposure to uncertainties and funding volatility. Views of Responsible Officials and Planned Corrective Actions: The Center has made progress during fiscal year 2020 and into fiscal year 2021 . Actions include the hiring of a longtime executive director from the behavioral health industry as Executive Director. The new Executive Director immediately reduced expenses and improved revenue by increasing the Center's proficiency at free-for-service billing. The Executive Director continues to review and reduce expenses and increase revenue from feefor service billing. The Center expects to show increases in net assets at the end of fiscal year 2021.

2020-02 Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Community Mental Health Services Block Grant CFDA Number: 93.958 Award Period: July 1, 2019-June 30, 2020 Type of Finding: Material Weakness Federal Agency: U.S. Department of Mental Health Pass-through entity: State of Illinois Department of Human Services Federal Program Title: Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Grant Programs CFDA Number: 93.870 Award Period: July 1, 2019 - June 30, 2020 Type of Finding: Material Weakness Criteria: Under the terms of the contract, the Center must have an accounting system that provides accurate, current, and complete disclosure of all financial transactions related to each state-and-federally funding Program. Accounting records must contain information pertaining to state and federal pass-through awards, authorizations, obligations, unobligated balances, assets, outlays, and income. The records must be maintained on a current basis and balanced at least quarterly. The Center shall use reasonable efforts to ensure that funding streams are delineated within the Centers accounting system. Under the terms of the contract, the Center must have accounting records supported by such source documentation including canceled checks, bank statements, invoices, paid bills, donor letters, time and attendance records, activity reports, travel reports, contractual and consultant agreements, and sub-award documentation. All supporting documentation should be clearly identified with the A ward and general ledger accounts, which are to be charged and credited. Under the terms of the contract, the Center must maintain effective control and accountability for all cash, real and personal property, and other assets. The Center must adequately safeguard all such property and must provide assurance that it is used solely for authorized purposes. The Center must also have a system in place that provide reasonable assurance that the information is accurate, allowable, and compliant with the terms and conditions state as part of the contract. Conditions: The Center claimed costs that were not adequately documented under the terms of the contract. Cause: The Center does not maintain financial records that provide timely accurate reporting and recordkeeping that enables program expenditure testing as required. The Center's general ledger use a mapping structure no longer allowed under the terms of the contract. Effect: The Centers documentation of the distribution of shared costs is not maintained in a manner to facilitate program expenditure testing. Questioned Costs: For CFDA Number 93.870 total questioned costs amounted to $47,764, which must be returned to the State of Illinois. The questioned costs were identified during the testing of source documentation and evaluation of the accounting system as whole. Recommendation: We recommend the Board and Management continue to develop and refine department roles and job descriptions to hold personnel accountable for upholding policies and procedures that ensure accurate reporting. Future evaluations of financial outcomes by department should occur on a monthly basis that compare budget to actual revenues and expense. Billings should be recorded in the general ledger when submitted. Revenue generating activities should be evaluated on a monthly basis to ensure grant revenue can be fulfilled in relation to its approved budget. Views of Responsible and Planned Corrective Action: During fiscal year 2021, the Center hired an experienced CPA as Finance Manager, a second experienced accountant, and a third experienced accountant on a temporary basis. By November of 2020, the new accounting team had closed out the fiscal year 2020 accounting records and produced unaudited financial statements. Furthermore, in January of 2021, the new accounting team had successfully closed the accounting records for December 2020. The Center is currently working with the implementer of their accounting software to develop the ability to produce computer-generated financial statements.