RECOVERY SOLUTIONS OF NORTHEAST OHIO

2022-004 - Strengthen SEFA Preparation and Performance Reporting Compliance Program Name/ Assistance Listing Number: 93.788 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification: Unknown Applicable Pass-through Entity: Ohio Department of Mental Health and Addiction Services (Ohio MHAS) Type of Findings: Significant Deficiencies and Material Weakness Compliance Requirement: Reporting Criteria: Effective grant management requires accurate financial and performance reporting, supported by strong internal controls to ensure compliance with federal regulations. The Schedule of Expenditures of Federal Awards (SEFA) must be complete, accurate, and aligned with grant agreements and accounting records, as it determines major program selection in the Single Audit. Performance reports should be consistent with supporting records to meet federal grant requirements and demonstrate compliance. Condition: Our audit identified opportunities to improve SEFA preparation and performance reporting to enhance accuracy, compliance, and efficiency. 1. SEFA Preparation-The SEFA required multiple revisions due to inaccuracies, including misaligned grant period dates, incorrect pass-through entity numbers, and errors in contract details for SAMHSA and SOR grants. Non-federal awards were mistakenly included, and expenditure totals for SOR contracts 2200648 and 230052 were miscalculated. 2. Performance Reporting- Performance reports contained inconsistencies with supporting documentation, discrepancies in reported outcomes versus internal records, and required performance measures for federal reporting were not always documented. Cause: SEFA preparation may not follow a structured review process, and additional training may be beneficial to ensure accurate reporting. Performance reporting processes may lack sufficient internal validation steps, leading to discrepancies in reported outcomes. Furthermore, documentation and internal control procedures may need enhancement to ensure consistency and transparency in financial and performance reporting. Potential Effect: The following are the potential effects of the condition:  Compliance Risks – Errors in SEFA and performance reporting could affect program selection, compliance testing, and overall federal compliance.  Audit & Operational Delays – Revisions and missing documentation can cause delays in the Single Audit, impacting financial reporting timelines.  Funding & Reputational Considerations – Inconsistent financial and performance reporting may raise concerns with funding agencies, affecting grant renewals and external stakeholder confidence.  Increased Administrative Burden – A lack of structured processes may increase the workload for finance staff, making grant reporting and performance tracking less efficient. Questioned Cost: Not quantifiable. Context: Our review covered the fiscal year ending December 31, 2022, and focused on transactions related to SOR grant programs administered through the Ohio Department of Mental Health and Addiction Services. During the audit, the SEFA underwent three revisions before being finalized. Additionally, we noted the following concerns:  Timely Access to Supporting Documentation – Documentation to verify SEFA information was not readily available, which delayed the validation process.  Performance Reporting Discrepancies – Performance reports submitted for federal compliance did not always match internal tracking records, indicating a need for improved validation. Recommendation: To strengthen financial reporting and compliance, we recommend the following actionable and achievable steps: 1. Establish a Structured SEFA Review Process Implement a two-step validation process before finalizing SEFA to ensure all information aligns with grant agreements and financial records. Assign a secondary reviewer (e.g., a senior accountant or compliance officer) to verify grant period dates, pass-through numbers, and award classifications. Use a grant reporting checklist to confirm all key reporting elements before submission. 2. Strengthen Performance Reporting Accuracy Establish a review process to validate performance reports against internal program data before submission. Develop standardized templates and reporting procedures to ensure consistency and completeness. Implement training for program staff to enhance understanding of performance reporting requirements. 3. Provide Targeted Training for Key Staff Offer Continuing Professional Education (CPE) courses focused on Single Audit requirements and federal grant reporting best practices. Conduct internal training for finance and program personnel to strengthen their understanding of federal compliance expectations. 4. Utilize Technology to Enhance Accuracy Leverage existing accounting software to improve SEFA accuracy. Implement automated grant tracking tools to reduce manual errors and improve efficiency. Utilize performance tracking software to enhance reporting accuracy. 5. Strengthen Internal Controls and Documentation. Develop and document clear policies and procedures for SEFA preparation and performance reporting. Maintain an organized grant documentation repository to ensure supporting records are easily accessible. Conduct periodic internal reviews to ensure ongoing compliance and process improvement. Views of Responsible Official: RSNEO agrees with the findings and will adhere to the corrective action plan outlined.

2022-005 - Reinforce Cash Management Compliance Program Name/ Assistance Listing Number: 93.788 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification: Unknown Applicable Pass-through Entity: Ohio Department of Mental Health and Addiction Services (Ohio MHAS) Type of Findings: Significant Deficiencies and Material Weakness Compliance Requirement: Cash Management Criteria: Cash management for reimbursement-based grants must be based on actual expenditures paid, ensuring compliance with federal cash management regulations and preventing excess fund retention. Condition: Our audit identified areas where cash management can be reinforced based on these specific instances: 1. Supporting documentation was not readily available to confirm that expenses were paid before requesting reimbursement. 2. The general ledger did not reflect all transactions supporting grant disbursement requests for the period January 1, 2022 to December 31, 2022. Cause: Cash management procedures may not be fully aligned with federal compliance requirements, leading to manual calculations instead of relying on real-time accounting data. Furthermore, documentation and internal control procedures may need enhancement to ensure consistency and transparency in financial reporting. Potential Effect: Errors in cash management could result in non-compliance with federal cash handling requirements. Missing documentation can delay audit procedures. Additionally, non compliance may impact grant renewals. Questioned Cost: $817,254 Context: Reimbursement requests were not always backed by documentation confirming expenses were paid, and the general ledger did not fully capture all grant-related transactions. These issues suggest gaps in internal controls, reliance on manual calculations, and misalignment with federal compliance requirements. If unaddressed, these deficiencies could lead to non-compliance, audit delays, and potential risks to future grant funding. Strengthening financial controls and reconciliation processes is necessary to ensure compliance and transparency. Recommendation: To enhance compliance, streamline reconciliation, and strengthen internal controls, we recommend implementing the following practical, proactive measures: 1. Align Reimbursement Requests with the General Ledger Ensure that all reimbursement requests are directly tied to actual expenditures recorded in the general ledger, minimizing reliance on manual tracking. 2. Implement a Systematic Reconciliation Process Establish a structured reconciliation process that links each reimbursement request to paid expenses, with supporting documentation readily available for review. 3. Strengthen Real-Time Grant Cash Flow Tracking Utilize existing accounting software to have a real-time tracking system for grant-related cash flow to ensure compliance with reimbursement-based grant requirements. 4. Assign a Grant Compliance Lead Designate a finance or administrative team member to oversee cash management compliance, ensuring consistency and acting as the primary point of contact for grant related financial matters. 5. Conduct Monthly Reconciliation Meetings Facilitate monthly reconciliation meetings between finance and program teams to align financial records with program expenditures and address any discrepancies proactively. Views of Responsible Official: RSNEO agrees with the findings and will adhere to the corrective action plan outlined.

2022-006- Late Submission of Single Audit Report and Data Collection Form to the U.S Census Bureau (Repeated 2021-007) Program Name/ Assistance Listing Number: 93.788 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification: Unknown Applicable Pass-through Entity: Ohio Department of Mental Health and Addiction Services (Ohio MHAS) Type of Findings: Significant Deficiencies and Material Weakness Compliance Requirement: Reporting Criteria: Under the Uniform Guidance (2 CFR Part 200, Subpart F – Audit Requirements), non federal entities that expend $750,000 or more in federal funds in a fiscal year must submit their Single Audit Report and Data Collection Form to the Federal Audit Clearinghouse (U.S. Census Bureau) within nine months after the end of the fiscal year or within 30 days of receiving the auditor’s report, whichever comes first. Condition: The Organization did not submit the required DCF for the fiscal year ended December 31, 2022, by the required deadline. Cause: The delay was primarily due to the timing of providing the necessary financial documents for audit completion. As a result, the auditors required additional time to complete their review, which contributed to the later submission date. Potential Effect: RSNEO was late for its submission of its 2022 Single Audit Report and its Data Collection for to the U.S. Census Bureau and as such will be considered a “High Risk Auditee” for the next two years. Questioned Cost: Not quantifiable. Context: In the prior year, RSNEO submitted the 2021 Single Audit Report and Data Collection Form in February 2023, exceeding the extended deadline of September 30, 2022. Despite previous recommendations to improve timeliness, RSNEO encountered similar delays in submitting the 2022 Single Audit Report, indicating the need for enhanced measures to ensure compliance with federal reporting requirements. Recommendation: RSNEO should make every attempt to submit both its 2023 Single Audit Report and its Data Collection Form to the U. S. Census Bureau by the required due date. Additionally, to help ensure timely audit submissions, RSNEO should consider the following:  Engage Auditors Earlier – Finalize auditor engagement at least six months before the deadline.  Strengthen Compliance Oversight – Assign a compliance officer or team to track and enforce deadlines.  Implement a Monitoring System – Develop a structured timeline with key milestones and regular progress checks.  Improve Coordination – Establish a document submission schedule to provide auditors with necessary records in advance.  Develop a Contingency Plan – Establish an escalation process to address unexpected delays and explore alternative solutions. Views of Responsible Official: RSNEO agrees with the findings and will adhere to the corrective action plan outlined.

2020-001 Detail Grant Activity Not Reflected in Accounting SystemCondition:RSNEO?s accounting system recorded financial activity in total only. The accounting system did not reflect grant financial activity for each specific grant program.Criteria:Generally accepted accounting principles (GAAP) requires that financial activity for each specific grant program be segregated and recorded separately to ensure effective internal controls over that specific program.Cause:Prior to the current audit period there were few grant programs, and it was relatively easy and not difficult to determine grant program activity by program from total financial activity so there was no attempt to isolate financial activity by grant program.Effect:Financial accounting records by grant programs was not readily available and the development of this information after year end close was time consuming and subject to error because of the passage of time and turnover in accounting personnel.Recommendation:Financial accounting records should be maintained for each specific grant program on a contemporaneous basis.Views of Responsible Officials:RSNEO senior management agrees with this recommendation.

2020-002 Difficulty in Determining Gross Payroll Expenses in Accounting RecordsCondition:Gross payroll expenses were reflected in the accounting records in two expense accounts as part of net payroll checks and as part of employee fringe benefit expense. This process made it difficult to reconcile total gross payroll expenses with payroll expenses in the payroll register.Criteria:GAAP requires that payroll expenses be recorded gross in the accounting system.Cause:Payroll expenses were recorded in the general ledger based on the cash disbursement basis (checks written basis) rather than on generally accepted accounting principle (GAAP) basis of gross payroll amount as recorded in the payroll register.Effect:It was difficult to determine and reconcile total gross payroll expenses in the accounting system with either grant awards or the agency?s payroll register.Recommendation:Gross payroll expenses should be recorded in the accounting records in one account.Views of Responsible Officials:RSNEO agrees and has already implemented the recommendation

2020-003 Transactions Between Related Companies Lacks Written SupportCondition:Throughout the calendar year, Moore Consulting & Remediation Services (MCMS a for profit related company to RSNEO) paid allowable expenses in behalf of RSNEO while RSNEO waited for reimbursement from its grantor agencies. The amounts paid by MCMS for RSNEO were not documented by any written agreements between the parties.Criteria:Written agreements of the amounts between related companies is required to not only document the terms of such transactions but is also required by generally accepted accounting principles.Cause:Because RSNEO recorded the amount owed to MCMS in its accounting system when the inter-company transactions occurred. RSNO did not believe it is necessary to also have a written agreement between the parties.Effect:The lack of written agreements between the parties when an inter-company account receivable and accounts payable transaction occurs, significantly increases the chance of error in the amount owed, the repayment amount or the omission of the recognition of the transaction altogether.Recommendation:All transactions between MCMS and RSNEO should be documented in writing. This reduces the possibility or errors in the original amount and the repayment amount and the possibility of omitting the original transaction altogether.Views of Responsible Officials:RSNEO senior management does not disagree with this finding.

2020-004 Lack of Sufficient Documentary Support for Payments from MCMS to RSNEOCondition:Invoices created by Moore Consulting& Mediation Services (MCMS) to Recovery Solutions of Northeast Ohio (RSNEO) lacked sufficient detailed documentation to support the total invoice amount and then later the amount paid to MCMS.Criteria:Generally accepted accounting principles GAAP) require sufficient competent evidence to support invoices prior to invoice payment.Cause:The client believed that since it could subsequently document the total invoice amount providing the significant detail to support the invoice was unnecessary.Effect:Paid invoices lacked sufficient support prior to payment. The potential for paying the incorrect amount increases when the supporting documentation is not supplied with the invoice and in support of the check written amount.Recommendation:All supporting documentation necessary to support the total invoice amount to be paid should be supplied with the invoice.Views of Responsible Officials:RSNEO does not disagree with the recommendation for this item.

2020-005- Lack of Segregation of Duties and Over Reliance on Executive DirectorCondition:The Executive Director of RSNEO was the only person with important financial and programmatic knowledge about RSNEO?s federal and other grant award programs and was the only person who performed almost all of the overall financial and related compliance and program oversite of these programs during the 2020 calendar year.Criteria:Generally accepted auditing standards (GAAS) require the segregation of duties, among qualified personnel and limiting over reliance on one person if at all possible.Cause:Qualified and experienced personnel was limited, and the loss of a key employee only magnified the segregation of duties and over-reliance on the RSNEO Executive Director.Effect:Should the Executive Director be unavailable, no remaining RSNEO employee could timely and accurately answer questions, issues, or other items on RSNEO grant award programs.Recommendation:To the extent possible, RSNEO should begin the process of delegating some accounting and other programmatic over-site responsibilities to other qualified employees.Views of Responsible Officials:RSNEO does not disagree with the recommendation and has begun the process of assigning other accounting, compliance, and program functions to other qualified employees.

2020-006- Lack of Senior Management Written Approval of Invoices and Adjusting Journal EntriesCondition:RSNEO lacked written documentation of approval of invoices or adjusting journal entries before these entries were posted to the entity?s accounting records.Criteria:Generally accepted auditing standards (GAAS) require written support from qualified and independent senior management before the RSNEO accountant posts this aforementioned accounting information into its accounting system.Cause:Verbal approval was always obtained from senior management before any invoices were paid. Verbal approval was also obtained for all adjusting journal entries. This verbal approval was thought to be sufficient.Effect:RSNEO lacks written evidence that postings into its accounting system were properly authorized by senior management.Recommendation:All invoices should be documented for approval for payment with evidence of signing off and dating by senior RSNEO management. Adjusting journal entries should also obtain written approval by senior management before being posted to the accounting records.Views of Responsible Officials:No disagreement with this recommendation.

2020-007 Improved Filing System NeededCondition:RSNEO?s cash disbursements were not stapled together with a copy of the cancelled check and invoice attached. Cash receipts also were not attached with supporting documentation. Cash receipts and cash disbursements were not filed in a manner to allow for easy and timely retrievalCriteriaAn organized process to file and retrieve both cash receipts and cash disbursement items in a timely and efficient manner is required for by generally accepte accounting principles.Cause:Before the current audit period there were few cash receipts and cash disbursement items for RSNEO, and an organized filing system was not a high priority.Effect:RSNEO could not timely and easily provide supporting documentation for its cash receipts and cash disbursement activity.Recommendation:All cash receipt and cash disbursement supporting documentation should be attached together and filed a manner for quick and easy retrieval.Views of Responsible Officials:RSNEO does not disagree with this recommendation.

FINDINGS AND QUESTIONED COSTS-MAJOR FEDERAL PROGRAMSDEPARTMENT OF HEALTH AND HUMAN SERVICESSTATE OPIOD RESPONSE GRANT-CFDA # 93.778 GRANT PERIODS ENDING 9-29/2020 AND 9/29/2021MATERIAL WEAKNESSES NUMBERS 2020-001-THROUGH 2020-2005. These material weaknesses also apply to this grant.SIGNIFICANT DEFICIENCIES IN INTERNAL CONTROL-2020-2006 AND 2020-2007. These significant weaknesses also apply to this grant.MATERIAL NON-COMPLIANCE ISSUES2020-008- Late Submission of Single Audit Report and Data Collection Form to the U.S Census BureauCondition:The extended due date for submission of the calendar year 2020 Single Audit Report and Data Collection Form was March 30, 2022. RSNEO did not file the 2020 Single Audit Report and the Data Collection Report to the U.S. Census Bureau until late August 2022.Cause:RSNEO did not engage its auditors to complete the RSNEO Single Audit Report until May 2022 which was after the required due date for submission of these items.Effect:RSNEO was late for its submission of its 2020 Single Audit Report and its Data Collection for to the U.S. Census Bureau and as such will be considered a ?High Risk Auditee? for the next two years.Recommendation:RSNEO should make every attempt to submit both its 2020 Single Audit Report and its Data Collection Form to the U. S. Census Bureau by the required due date.Views of Responsible Officials:RSNEO does agrees that the 2020 Single Audit Report and Data Collection Form were not submitted by the due date.