CAREER AND RECOVERY RESOURCES, INC.

2023-002 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 21.027 COVID - 19 Coronavirus State and Local Fiscal Recovery Funds 2022-2023 Funding U.S. Department of Treasury Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $2,668 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.

2023-003 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families, VA Supportive Services for Veteran Families – Shallow Subsidy, and VA Supportive Services for Veteran Families – Legal Services 2021-2022 and 2022-2023 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $1,617 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan

2022-003 Compliance and Internal Controls over Allowable Costs and Earmarking (Significant Deficiency) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families, VA Supportive Services for Veteran Families ? Shallow Subsidy, and COVID ? 19 VA Supportive Services for Veteran Families 2020-2021 and 2021-2022 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of administrative costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Furthermore, the grant agreement requires that no more than 10% of supportive services grant funds may be used for administrative costs. Condition: Indirect cost allocation methodology used by the Agency to charge expenses to the grant is not allowable per grant. Additionally, administrative costs charged to closed out grants during the year exceeded the total allowable administrative costs by $6,365. Cause: The Company was charging administrative expenses to the grant based on an internally drafted allocation methodology and not on actual administrative costs incurred, which is not in line with grant agreement. Additionally, with the turnover in the Agency, reconciliation of grant funds received to the maximum allowed administrative costs per the agreement was not performed. Effect: While indirect costs charged to grants may be allowable, these need to be supported by actual expense incurred or the Agency risks elimination of indirect costs from future awards and / or loss of entire award and / or return of unsubstantiated administrative costs to the grantor. Questioned Costs: $6,365 Perspective: Grantor has identified that the Agency?s indirect allocation methodology is not in compliance with award requirements. Methodology as revised by the Agency was still not deemed in compliance. Recommendation: The Agency should establish and follow allowable indirect allocation policy based on identifiable measures. The indirect costs charged to grant should be able to be substantiated by actual costs incurred. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.

2021-001 Compliance and Internal Controls over Eligibility (Significant Deficiency, finding originated in June 30, 2020 audit) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families and VA Supportive Services for Veteran Families ? CARES Act 2019-2020 and 2020-2021 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Condition: The Agency?s internal controls over eligibility were not operating effectively. Seven out of the forty participant files reviewed did not contain program supervisor?s signature on the certifications of eligibility forms indicating verification and approval of case managers? assessment. Additionally, four out of the forty participant files reviewed did not contain program closeout checklist or the checklist was not signed by the program manager indicating sufficient evidence to support participants files were reviewed for completeness of documentation and proper closeout. Furthermore, nine of the forty participant files reviewed were missing case notes and / or other documentation required to be maintained under the grant agreement. Effect: Without internal controls operating effectively, it is possible that the Agency would be at risk to be out of compliance with the eligibility compliance requirements of the program. The Agency cannot effectively manage its federal program with controls that do not operate effectively. Cause: The Agency had an underperforming program manager and turnover in its grant personnel resulting in lapses over the eligibility review process. Questioned Costs: None. Auditors? Recommendation: We recommend that certificate of eligibility forms for all participants are reviewed and signed off by the program supervisor. Additionally, the program manager should review and sign off on the program closeout checklist signifying completeness of documentation and proper closeout. Views of Responsible Officials: Management has already taken action to ensure deficiencies noted above are being promptly corrected and control recommended above is being implemented. A new program manager replaced previous program manager and is ensuring controls are being applied consistently to all certification of eligibility forms and closeout checklists.

Assistance Listing Number 64.033 VA Supportive Services for Veteran Families 2019-2020 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Additionally, under 38 CFR 62.71, grantees are required to comply with VA reporting procedures. Condition: Grant closeout report for VA Supportive Services for Veteran Families 2019-2020 funding was not submitted timely. The Agency?s established controls over the reporting process did not work effectively to detect and / or correct this non-compliance over the closeout reporting process. Effect: This report is important to the VA because it lets them know about any unused funds that may need to be returned back by the grantee. Cause: There is no formal reporting calendar established at the Agency to prevent / detect reporting non-compliance. Questioned Costs: None. Auditors? Recommendation: We recommend that reporting deadlines are distributed at the start of the contract period. The Program Director should be responsible for adherence to these reporting requirements. Views of Responsible Officials: Management has already taken action to ensure any deficiencies noted are being promptly corrected. A formal reporting schedule has been devised and distributed to program managers with program director being responsible for timely submission of all required reports.

2020-001 Internal Controls over Reporting - Participant Satisfaction Surveys (Significant Deficiency) CFDA 64.033 VA supportive Services for Veteran Families and VA supportive Services for Veteran Families ? CARES Act 2019-2020 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Additionally under 38 CFR 62.36(c)(2) grantees must provide each SSVF participant household with a satisfaction survey that can be submitted by the participant directly to VA, within 30 days prior to such participant?s pending exit date from the grantee?s program. Condition: Controls were not established to ensure proper support was maintained to document participant satisfaction surveys were provided within 30 days prior to such participant?s pending exit date from the Agency?s program. Effect: Seven out of the eighteen participant files reviewed did not contain sufficient evidence to support satisfaction surveys were provided to participants. Cause: The Agency had an underperforming program manager and turnover in its grant personnel. As a result, controls were not established or were not operating effectively to allow the provision of satisfaction surveys to participants. Questioned Costs: None. Auditors? Recommendation: We recommend that the program manager reviews and signs off on the program closeout checklist which details participant survey as a to-do item before the participant is released from the program. Additionally, we recommend that support for all surveys provided is maintained in the participant file. Views of Responsible Officials: Management has already taken action to ensure deficiencies noted above are being promptly corrected and control recommended above is being implemented. All exiting participants are being provided the survey to complete onsite, with a copy maintained in their file as support.

2020-002 Internal Controls over Eligibility (Significant Deficiency) CFDA 64.033 VA supportive Services for Veteran Families and VA supportive Services for Veteran Families ? CARES Act 2019-2020 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Condition: The Agency?s controls over eligibility were not operating effectively. Five out of the forty participant files reviewed did not contain program manager?s signature on the certifications of eligibility forms indicating verification and approval of case managers? assessment. Effect: Without internal controls operating effectively, it is possible that the Agency would be at risk to be out of compliance with the eligibility compliance requirements of the program. The Agency cannot effectively manage its federal program with controls that do not operate effectively. Cause: The Agency had an underperforming program manager and turnover in its grant personnel resulting in lapses over the eligibility review process. Questioned Costs: None. Auditors? Recommendation: We recommend that certifications of eligibility forms for all participants are reviewed and signed off by the program manager. Views of Responsible Officials: Management has already taken action to ensure any deficiencies noted are being promptly corrected and appropriate controls are being applied consistently. A new program manager replaced previous program manager and is ensuring controls are being applied consistently to all certification of eligibility forms.