Hearts for the Invisible Charlotte Coalition

Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027, 14.239, 14,231 Federal award Identification number: All Federal award year: All Federal awarding agency: U.S. Department of Treasury and U.S. Department of Housing and Urban Development Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that include the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor's responsibility under 2 CFR 200.518 major program determination and for federal oversight. Condition: The Organization failed to include the correct amount of expenditures and the ALN numbers. The awards were identified as federal during the current audit; however, the Organization failed to include the ALN in the current year’s SEFA. After additional inquiry and evaluation, they were determined to fall under ALN 14.239, 14.231 and 21.027. Cause: There were deficiencies in the Organizations's internal controls over the SEFA preparation, specifically identifying the current ALN number for each federal award. The absence of the assistance listing number indicates inadequate review and verification procedures. Effect or Potential Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Missing ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. Repeat finding: This is not a repeat finding. Perspective: This issue affected three federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization:  Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs.  Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance Requirements. Management’s response and corrective action plan (unaudited): See corrective action plan

Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including:  Rationale for the method of procurement,  Selection of contract type,  Contractor selection or rejection, and  Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:  The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320.  No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Cause: The Organization did not implement adequate internal controls to ensure compliance with federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect or Potential Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of:  Noncompliance with federal regulations,  Unfair or noncompetitive procurement practices,  Inability to justify expenditures to federal agencies or auditors,  Disallowed costs or questioned costs during federal review. Repeat finding: This is not a repeat finding. Questioned costs: None identified for this transaction. However, the breakdown in controls presents a broader compliance risk. Perspective: This finding pertains to 3 purchases under AL 21.027 and reflects a broader issue in control enforcement that may affect other procurements under the same or other federal programs. -20- HEARTS FOR THE INVISIBLE CHARLOTTE COALITION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2024 Recommendation: We recommend that the organization:  Update and enforce its procurement policies to align with 2 CFR Part 200 standards.  Train staff on federal procurement requirements.  Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Management’s response and corrective action plan (unaudited): See corrective action plan.

Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: In accordance with 2 CFR 200.303, non-Federal entities must establish and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework.. This includes controls over: 1) Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). 2) Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2CFR 200.328). Condition: The Company has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, vendor payments, cash management, and reporting. Cause: The Company did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect or Potential Effect: Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Recommendation: We recommend that the Company ensure updated policies and procedures are implemented and consistently applied. This includes: 1) Documented review and approval of all transactions related to payroll, cash management, and reporting. 2) Maintenance of written evidence supporting such reviews. 3) Regular training and internal monitoring to ensure control procedures are consistently followed. Management’s response and corrective action plan (unaudited): See corrective action plan.