COMMUNITY SERVICES INCNon-Profit

Finding 2020-02 Ensure Costs are Allowable Major Program: Community Services Block Grant CFDA Number: 93.569 Type of Finding: Compliance and Significant Deficiency Questioned Costs: $15,378 Criteria or Specific Requirement: Per sub recipient agreement with the Texas Department of Housing and Community Affairs (TDHCA), agreement states: 2 CFR ?200.403 Factors affecting allowability of costs states: Except where otherwise authorized by statue, costs must meet the following general criteria in order to be allowed under Federal awards: (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period Condition: The Organization received funds from TDHCA for payroll costs which were originally paid using Paycheck Protection Program (PPP) proceeds. Cause: The Organization did not properly segregate payroll costs paid by PPP proceeds and received reimbursement for payroll costs from the Department for the same payroll period. Effect: The Federal government paid for the same expenditure twice. Recommendations: The Organization should implement a review process to ensure costs are properly paid with funds not reimbursed by another source. Views of Responsible Officials and Planned Corrective Actions: Agree with finding. See response on Corrective Action Plan.

Finding 2020-03 Ensure Costs are Allowable Program: Section 5311 Formula Grants for Rural Areas ? CARES Act Funding CFDA Number: 20.509 Type of Finding: Compliance and Material Weakness Questioned Costs: $150,109 Criteria or Specific Requirement: Per sub recipient agreement with the Texas Department of Transportation (TxDOT), agreement states: 2 CFR ?200.403 Factors affecting allowability of costs states: Except where otherwise authorized by statue, costs must meet the following general criteria in order to be allowed under Federal awards: (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period Condition: The Organization received funds from TxDOT for payroll costs which were originally paid using Paycheck Protection Program (PPP) proceeds. Cause: The Organization did not properly segregate payroll costs paid by PPP proceeds and requested and received advances for payroll costs from TxDOT for those same payroll periods. Effect: The Federal government paid for the same expenditure twice. Recommendations: The Organization should implement a review process to ensure costs are properly paid with funds not reimbursed by another source. Views of Responsible Officials and Planned Corrective Actions: Agree with finding. See response on Corrective Action Plan.

Monitoring Report issued on August 30, 2019, by the Texas Department of Housing and Community Affairs, titled Monitoring Report of On-site Review Conducted July 8 -10, 2019 Finding 2019-03 Ensure Full and Open Competition in Procurement Major Program: Community Services Block Grant CFDA Number: 93.569 Type of Finding: Compliance and Material Weakness Questioned Costs: $40,208 Criteria or Specific Requirement: Per sub recipient agreement with the Texas Department of Housing and Community Affairs (TDHCA), agreement states the following: UGMS _.36 Procurement Standards states: (c) Competition. (1) All procurement transactions will be conducted in a manner providing full and open competition consistent with the standards on Section _.36. Some of the situations considered to be restrictive of competition include but are not limited to: (vii) Any arbitrary action in the procurement process 2 CFR ?200.320 Methods of Procurement to be Followed states: (c) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply. (2) If sealed bids are used, the following requirements apply: (i) Bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; 2 CFR ?200.318 General Procurement Standards states: (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Condition: The Organization performed competitive bidding for IT Services in October 2017. Cause: The Organization did not follow the proper guidelines to ensure correct bids were selected in the procurement process. Effect: The Organization was not in compliance with competitive bidding which resulted in questioned costs. Recommendations: The Organization should implement a review process over procurement bids. Views of Responsible Officials and Planned Corrective Actions: Agree with finding. See response on Corrective Action Plan.

Monitoring Reports issued on August 30, 2019, by the Texas Department of Housing and Community Affairs, titled Monitoring Report of On-site Review Conducted July 8 -10, 2019 Finding 2019-04 Ensure Costs are Allowable Major Program: Community Services Block Grant CFDA Number: 93.569 Type of Finding: Compliance and Significant Deficiency Questioned Costs: $150 Criteria or Specific Requirement: Per sub recipient agreement with the Texas Department of Housing and Community Affairs (TDHCA), agreement states: 2 CFR ?200.421 Advertising and Public Relation states: (e) Unallowable advertising and public relations costs include the following: (3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs Condition: The Organization made a payment of $150 on December 20, 2018 to Trophies Unlimited. Cause: The payment was for a plaque to be given to a local elected official who had supported the CSBG program which is considered a Public Relations cost. Effect: The Public Relations costs cannot be paid for with CSBG funds and is considered unallowable. Recommendations: The Organization should implement a review process to ensure costs paid with CSBG funds are considered allowable. Views of Responsible Officials and Planned Corrective Actions: Agree with finding. See response on Corrective Action Plan.

Follow-Up Report issued on January 10, 2020 of Monitoring Reports issued on August 30, 2019, by the Texas Department of Housing and Community Affairs, titled Monitoring Report of On-site Review Conducted July 8 -10, 2019 Finding 2019-05 Ensure Costs are Allowable Major Program: Community Services Block Grant CFDA Number: 93.569 Type of Finding: Compliance and Material Weakness Questioned Costs: $118,260 Criteria or Specific Requirement: Per CSBG Contract Section 4. Department Financial Obligations states: D. Department shall not be liable to Subrecipient for certain costs, including but not limited to costs which: 5. are not incurred during the Contract Term. Condition: The Organization made payments for invoices incurred in 2017 to Medical Professional Institute, LLC in 2018 and 2019 totaling $118,260. Cause: The payments made in 2018 and 2019 were not funded by the same project year when the costs were incurred. Effect: The costs incurred in 2017 and paid in 2018 and 2019 are considered disallowed since the payments were not funded by the same project year where costs were incurred. Recommendations: The Organization should implement a review process to ensure costs are properly paid with funds for the correct year. Views of Responsible Officials and Planned Corrective Actions: Agree with finding. See response on Corrective Action Plan.

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