UNITED MENTAL HEALTH AND ADDICITON RECOVERY COALITION

Finding 2024-01: Improper classification of transactions in general ledger software Criteria: According to generally accepted accounting principles (GAAP), financial transactions must be accurately classified to reflect the true nature of each transaction. Condition: The audit identified several instances where expenses were classified as capital expenditures, and revenue transactions were incorrectly recorded as liabilities. These misclassifications resulted in inaccurate financial statements and misstated financial positions. Cause: The improper classification of transactions was due to insufficient oversight by management. Effect: The misclassification of transactions led to inaccurate financial statements, affecting decision-making and stakeholder confidence. Recommendation: UMARC management should implement robust review and approval procedures for financial transactions to ensure accurate classification. Questioned Costs $24,125 Auditee Response: Management concurs with the finding. We have passed the relevant adjustments to correct the misclassification in our FY24 financial statements. We will also update our accounting policies and procedures Per the Audit recommendation. The adjusted financial statements will be submitted to the federal awarding agency by the end of March 2025.

Auditee Response: Management concurs with the finding. We have passed the relevant adjustments to correct the misclassification in our FY24 financial statements. We will also update our accounting policies and procedures Per the Audit recommendation. The adjusted financial statements will be submitted to the federal awarding agency by the end of March 2025.

Finding 2024-01: Improper classification of transactions in general ledger software Criteria: According to generally accepted accounting principles (GAAP), financial transactions must be accurately classified to reflect the true nature of each transaction. Condition: The audit identified several instances where expenses were classified as capital expenditures, and revenue transactions were incorrectly recorded as liabilities. These misclassifications resulted in inaccurate financial statements and misstated financial positions. Cause: The improper classification of transactions was due to insufficient oversight by management. Effect: The misclassification of transactions led to inaccurate financial statements, affecting decision-making and stakeholder confidence. Recommendation: UMARC management should implement robust review and approval procedures for financial transactions to ensure accurate classification. Questioned Costs $24,125 Auditee Response: Management concurs with the finding. We have passed the relevant adjustments to correct the misclassification in our FY24 financial statements. We will also update our accounting policies and procedures Per the Audit recommendation. The adjusted financial statements will be submitted to the federal awarding agency by the end of March 2025.

Auditee Response: Management concurs with the finding. We have passed the relevant adjustments to correct the misclassification in our FY24 financial statements. We will also update our accounting policies and procedures Per the Audit recommendation. The adjusted financial statements will be submitted to the federal awarding agency by the end of March 2025.

Finding 2024-02: Noncompliance with Timely Financial Reporting for Federal Grant Award and State Reporting requirements Criteria: 2 CFR § 200.327(a) states that grantees must submit financial reports no less frequently than annually. Further, SEFA to the Federal Audit Clearinghouse website within nine (9) months of June 30, 2024. UMARC also didn’t submit its audited financial statements, CYEFR, and other required information to the GATA portal within six (6) months after June 30, 2024. Condition: The report for the quarter ended June 30, 2024, was due on July 30, 2024, was not submitted as of the date of this Audit, and the annual financial reports for FY24, were due on December 31, 2024, were also not submitted to the GATA portal as of the date of this audit. Cause: The grantee's internal controls over financial reporting were inadequate, lacking tracking, formal review, and approvals. As well as the late appointment of a new auditor. Effect: Late submission of financial reports hinders the federal agency's ability to monitor the financial health and programmatic progress of the grant. This can delay funding disbursements, impede program evaluation, and potentially lead to closer scrutiny of the grantee's activities. It also prevents the agency from fulfilling its oversight responsibilities as outlined in 2 CFR Part 200. Recommendation: Develop and implement a comprehensive financial reporting calendar that clearly identifies deadlines for all required reports and assigns responsibility for their preparation and submission. This calendar should be distributed to all relevant staff. Also provide comprehensive training to the finance staff on federal financial reporting requirements, including 2 CFR Part 200 and the specific requirements of this grant agreement. Include training on the grantee's internal financial reporting policies and procedures. Questioned Costs None noted Auditee Response: Management concurs with the finding. A new financial reporting calendar has been implemented and distributed to all staff. A formal review and approval process for financial reports has been implemented. The report for the quarter ended June 2024 will be submitted by end of March 2025.

Auditee Response: Management concurs with the finding. A new financial reporting calendar has been implemented and distributed to all staff. A formal review and approval process for financial reports has been implemented. The report for the quarter ended June 2024 will be submitted by end of March 2025.

Finding 2024-02: Noncompliance with Timely Financial Reporting for Federal Grant Award and State Reporting requirements Criteria: 2 CFR § 200.327(a) states that grantees must submit financial reports no less frequently than annually. Further, SEFA to the Federal Audit Clearinghouse website within nine (9) months of June 30, 2024. UMARC also didn’t submit its audited financial statements, CYEFR, and other required information to the GATA portal within six (6) months after June 30, 2024. Condition: The report for the quarter ended June 30, 2024, was due on July 30, 2024, was not submitted as of the date of this Audit, and the annual financial reports for FY24, were due on December 31, 2024, were also not submitted to the GATA portal as of the date of this audit. Cause: The grantee's internal controls over financial reporting were inadequate, lacking tracking, formal review, and approvals. As well as the late appointment of a new auditor. Effect: Late submission of financial reports hinders the federal agency's ability to monitor the financial health and programmatic progress of the grant. This can delay funding disbursements, impede program evaluation, and potentially lead to closer scrutiny of the grantee's activities. It also prevents the agency from fulfilling its oversight responsibilities as outlined in 2 CFR Part 200. Recommendation: Develop and implement a comprehensive financial reporting calendar that clearly identifies deadlines for all required reports and assigns responsibility for their preparation and submission. This calendar should be distributed to all relevant staff. Also provide comprehensive training to the finance staff on federal financial reporting requirements, including 2 CFR Part 200 and the specific requirements of this grant agreement. Include training on the grantee's internal financial reporting policies and procedures. Questioned Costs None noted Auditee Response: Management concurs with the finding. A new financial reporting calendar has been implemented and distributed to all staff. A formal review and approval process for financial reports has been implemented. The report for the quarter ended June 2024 will be submitted by end of March 2025.

Auditee Response: Management concurs with the finding. A new financial reporting calendar has been implemented and distributed to all staff. A formal review and approval process for financial reports has been implemented. The report for the quarter ended June 2024 will be submitted by end of March 2025.

Finding 2023-01 Improper Reconciliation of Cash Criteria In order to maintain proper internal controls over cash, it is imperative that cash accounts be properly reconciled. Condition UMARC cash balance as of June 30, 2023 was not properly reconciled. Cause This condition was due to UMARC’s accounting data file becoming corrupted during the fiscal close process. UMARC did not have a backup of its accounting data file as of June 30, 2023 to use to recover its accounting data. As such, certain transactions had to be re-input into an older back up data file in order to recreate the financial accounting records. During the process, there were several checks input with incorrect dates for the previous fiscal year (FY2022) resulting in a material misstatement of the cash balance. Effect The effect is that cash and beginning net assets were overstated by $316,455. Additionally, controls over the financial reporting process were weakened thereby increasing the risk that material misstatements could be included in the financial statements without management being aware.

Management concurs with the auditor’s finding and will implement the recommended corrective actions.