CARLSBAD LIFEHOUSE INC.Non-Profit

Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of reporting. The federal award required that an annual audit be conducted in accordance with the audit requirements of Uniform Guidance and submitted within six months after the Organization’s fiscal year-end if amounts were expended over $750,000. The Organization should have internal controls designed to ensure compliance with these provisions. Condition: The Organization did not submit annual audit on a timely basis in accordance with reporting provisions of federal awards. Questioned costs: None Context: The Organization did not retain the outsourced accounting firm to continue to assist the Organization in maintaining accurate financial records and as a result, completion of the audit was delayed for numerous adjustments that were required to be made and to reconcile the program revenue and receivables to the billing system used by the Organization. Cause: The Organization experienced significant growth in 2022 and thought they could handle the accounting function independently of the previously used outsourced accounting firm. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2021-002. Effect: The Organization was not incompliance with the annual audit reporting requirement as provided with the federal award. Recommendation: We recommend the Organization implement policies and procedures to ensure the books and records are closed and audit ready in a timely manner in order to meet the six-month audit requirement. Views of responsible officials and planned corrective actions: Carlsbad Lifehouse will initiate the 2023 audit earlier in 2024. Carlsbad Lifehouse will reconsider staffing and partners engaged in finance to expedite the process.

2021 ? 002 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse Prevention and Treatment Block Grant Assistance Listing Number: 93.959 Federal Award Identification Number and Year: H79TI083313 - 2020 Pass-Through Agency: New Mexico Behavior Health Services Division Pass-Through Number(s): 6B08TI083466-01M003 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: o Significant Deficiency in Internal Control over Compliance o Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of reporting. The federal award required that an annual audit be conducted in accordance with the audit requirements of Uniform Guidance and submitted within six months after the Organization's fiscal year-end if amounts were expended over $750,000. The Organization should have internal controls designed to ensure compliance with this provision. Condition: The Organization did not engage independent auditors until the sixth month following the fiscal year requiring an audit. Questioned costs: None Context: The Organization received a contract from the awarding entity during the fiscal year that had an audit requirement. Previously, the Organization did not have an audit requirement. Cause: The Organization did not determine that the expenditures under the federal award was over the required threshold timely. Effect: The Organization was not incompliance with the annual audit reporting requirement as provided with the federal award. Recommendation: We recommend the Organization implement policies and procedures to ensure the books and records are closed and audit ready in a timely manner in order to meet the six-month audit requirement. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Lifehouse engaged with a local accounting firm early in 2022. In beginning the audit process Lifehouse became aware that the local accounting firm would not be able to conduct the single audit and sought the services of the current auditor. This was the result of inexperience with the auditing process and will not be a problem in the future.