WAYSIDE HOUSE INCNon-Profit

Finding 2024-002: Significant Deficiency – Allowable Costs / Cost Principles Repeat Finding – 2023-002 Federal Program: Opioid STR - SARC Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number (ALN): 93.788 Pass-Through Agency: Minnesota Department of Health and Human Services Criteria: 2 CFR 200.403(e) and (f) state that charges to federal awards must be determined in accordance with generally accepted accounting principles (GAAP) and be adequately documented. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; and support the distribution of the costs among specific activities or cost objectives if the expenses supported more than one federal award, or a federal award and non-federal award. Also, 2 CFR 200.430(i)(1)(i) & (vii) state that 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; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award, or a federal award and non-federal award. Condition: Two of the forty non-payroll transactions that were tested did not have evidence of approval for the amount allocated to the federal program. Seven of the forty payroll transactions that were tested did not have evidence of an approved pay rate. The sample was not a statistically valid sample. Cause: The Organization's control process for expenditure and payroll authorizations were not properly implemented. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: Not required Recommendation: The Organization should have formal written procedures to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Finding 2023-002: Significant Deficiency – Activities Allowed or Unallowed Assistance Listing Number (ALN): 93.788 Federal Program: Opioid STR Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Minnesota Department of Human Services Federal Award Number: HT79TI083289 and H79TI085729 Federal Award Year: December 31, 2023 Criteria: 2 CFR 200.403(e) and (f) state that charges to federal awards must be determined in accordance with generally accepted accounting principles (GAAP) and be adequately documented. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; and support the distribution of the or costs among specific activities or cost objectives if the expenses supported more than one federal award, or a federal award and non-federal award Condition/Context: Six of the forty non-payroll transactions that were tested did not have evidence of approval for the amount allocated to the federal program, one transaction was recorded in the incorrect period and one transaction did not have evidence of receipt. The Organization experienced an unusually elevated level of turn-over of key personnel in business operations during the period of time that the control procedures lapsed as the individuals replacing those responsible for attaining allocation authorizations were not yet hired or fully trained in their assignments. The sample was not a statistically valid sample. Cause: The Organization's control process for expenditure authorizations was not properly implemented. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: Not required Recommendation: The Organization should have formal written procedure to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Finding 2023-003: Significant Deficiency – Reporting Assistance Listing Number (ALN): 93.788 Federal Program: Opioid STR Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Minnesota Department of Human Services Federal Award Number: HT79TI083289 and H79TI085729 Federal Award Year: December 31, 2023 Repeat finding of 2022-004 Criteria: 2 CFR 200.303 states that recipients of federal program funding 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. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: Evidence of proper segregation of duties over the federal program's reporting process could not be provided. Cause: The Organization's process for preparing and submitting required performance reporting was completed by a single individual. Both this individual and the personnel that would have been responsible for reviewing and approving reports submitted to the awarding agency are no longer employees of the Organization. As such there was no evidence provided of segregation of duties or internal control over reporting activities. Effect: Required reports submitted to the awarding agency could be inaccurate. Questioned Costs: None noted. Recommendation: The Organization should have formal policies that provide documentary evidence of proper segregation of duties and control structures over federal program reporting. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Federal Program: Section 223 Demonstration Programs to Improve Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 93.829 Federal Award Number: H79SM083269 Federal Award Year: December 31, 2022 Criteria: 2 CFR 200.430(i)(1)(i) & (vii) state that 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; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award, or a federal award and non-federal award Condition/Context: Six of the twenty-five personnel transactions that were tested did not have evidence of approval for the amount allocated to the federal program. The Organization experienced an unusually elevated level of turn-over of key personnel in business operations during the period of time that the control procedures lapsed as the individuals replacing those responsible for attaining allocation authorizations were not yet hired or fully trained in their assignments. The sample was not a statistically valid sample. Cause: The Organization's control process for monthly program allocation authorizations was not properly implemented during the months of May and June of 2022. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: None noted Recommendation: The Organization should have formal written procedure to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Federal Program: Section 223 Demonstration Programs to Improve Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 93.829 Federal Award Number: H79SM083269 Federal Award Year: December 31, 2022 Criteria: 2 CFR 200.303 states that recipients of federal program funding 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. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: Evidence of proper segregation of duties or internal controls over the federal program's billing process could not be provided. Cause: The Organization's process for compiling the reimbursable expenditures and billing those amounts to the Federal awarding agency were completed by a single individual. Both this individual and the personnel that would have been responsible for reviewing and approving the amounts billed are no longer with the Organization. As such there was no evidence provided of segregation of duties or internal control over the amounts charged to the Federal program Effect: Inadequate controls over the cash management process could result in reimbursable costs billed to Federal programs that are inaccurate or unallowable. Questioned Costs: None noted Recommendation: The Organization should have formal policies that provide documentary evidence of proper segregation of duties and control structures over Federal program cash management. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Federal Program: Section 223 Demonstration Programs to Improve Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 93.829 Federal Award Number: H79SM083269 Federal Award Year: December 31, 2022 Criteria: 2 CFR 200.303 states that recipients of federal program funding 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. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: Evidence of proper segregation of duties over the federal program's reporting process could not be provided. Cause: The Organization's process for preparing and submitting required performance reporting was completed by a single individual. Both this individual and the personnel that would have been responsible for reviewing and approving reports submitted to the awarding agency are no longer employees of the Organization. As such there was no evidence provided of segregation of duties or internal control over reporting activities. Effect: Required reports submitted to the awarding agency could be inaccurate. Questioned Costs: None noted. Recommendation: The Organization should have formal policies that provide documentary evidence of proper segregation of duties and control structures over federal program reporting. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.