Friendly House, Inc

2022-002 Reporting Noncompliance Reporting Significant Deficiency in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2020 to September 30, 2021 and October 1, 2021 to September 30, 2022 Criteria: The Organization is required to submit performance reports for each trimester. Reports should be submitted timely in accordance with established requirements and should be reviewed by a supervisory individual prior to submission to ensure accuracy. Condition: Eide Bailly LLP (EB) noted the following internal control issues. ? Although the reports were reviewed in accordance with the internal controls, two out of three reports tested lacked the required documentation to support the reports Cause: Based on discussions with personnel, the errors in reports are due to administrative errors. Effect: Inaccurate information may be provided to the funder regarding performance of the Organization. Questioned Costs: None reported. Context/Sampling: All three of the reports submitted during the year were selected for testing. Repeat Finding from Prior Year: Yes, 2021-002. Recommendation: We recommend the Organization?s management routinely review and consider modifications that would strengthen the internal controls surrounding the reporting process, record-keeping, and the management thereof. Views of Responsible Officials: Management agrees with the finding.

2022-003 Cash Management Material Noncompliance Cash Management Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2020 to September 30, 2021 and October 1, 2021 to September 30, 2022 Criteria: For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payment by other means. Per review of the invoices for the programs and the Organization?s internal control processes, all invoices require approval by someone authorized and that the draw requests should be adequately supported. Condition: Eide Bailly LLP (EB) noted that four out of four draw requests did not have adequate support for the class hours included. Cause: Based on discussions with personnel, lack of supporting documentation occurred due to administrative oversight. Effect: Invoices could be incorrect. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 draw requests out of 12 total draw requests were selected for testing. Repeat Finding from Prior Year: Yes, 2021-003 Recommendation: We recommend the Organization?s management routinely review and consider modifications to or implementation of policies and procedures that would strengthen internal controls surrounding the approval and submission process of invoices. Views of Responsible Officials: Management agrees with the finding.

2021-001 Allowable Costs, Activities Allowed Material Noncompliance Allowable Costs, Activities Allowed Material Weakness in Internal Control over Compliance U.S. Department of Labor Reintegration of Ex-Offenders Federal Financial Assistance Listing/CFDA #17.270; July 1, 2018 to October 31, 2021 U.S. Department of Education Passed-through the Arizona Department of Education Adult Education Basic Grants to States Federal Financial Assistance Listing/CFDA #84.002A; Various Grants; July 1, 2020 to June 30, 2021 Criteria: A complete system of internal controls requires all expenditures be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with the Organization?s cost allocation plan. Condition: Eide Bailly LLP (EB) noted the following internal control issues. ? Reintegration of Ex-Offenders o Thirteen out of sixty expenditures tested lacked the required support to show that the hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgets. ? Adult Education Basic Grants to States o Thirteen out of sixty expenditures tested lacked the required support to show that the hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgets. Cause: Based on discussions with personnel, lack of supporting documentation occurred due to errors with the payroll system reports and lack of documentation of review occurred due to administrative errors. Effect: Improper expenses may be paid and charged to the federal program or charged at the wrong amount. Questioned Costs: Employees? time charged to the program could be over or understated compared to actual time worked on the program by an amount that has not been determined. Context/Sampling: For CFDA #17.270, a nonstatistical sample of 60 transactions out of 419 total transactions were selected for testing, which accounted for $59,758 of $225,475 total federal program expenditures. For CFDA #84.002A, a nonstatistical sample of 60 transactions out of 1,424 total transactions were selected for testing, which accounted for $65,517 of $278,647 total federal program expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2020-001. Recommendation: We recommend the Organization?s management implement a process that allows for actual hours for time spent to be billed to the program and ensure that supporting documents are retained. Views of Responsible Officials: Management agrees with the finding.

2021-002 Reporting Material Noncompliance Reporting Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2019 to September 30, 2020 and October 1, 2020 to September 30, 2021 Criteria: The Organization is required to submit performance reports for each trimester. Reports should be submitted timely in accordance with established requirements and should be reviewed by a supervisory individual prior to submission to ensure accuracy. Condition: Eide Bailly LLP (EB) noted the following internal control issues. ? Although the reports were reviewed in accordance with the internal controls, three out of three reports tested lacked the required documentation to support the reports Cause: Based on discussions with personnel, the errors in reports are due to administrative errors. Effect: Inaccurate information may be provided to the funder regarding performance of the Organization. Questioned Costs: None reported. Context/Sampling: All three of the reports submitted during the year were selected for testing. Repeat Finding from Prior Year: No. Recommendation: We recommend the Organization?s management routinely review and consider modifications that would strengthen the internal controls surrounding the reporting process, record-keeping, and the management thereof. Views of Responsible Officials: Management agrees with the finding.

2021-003 Cash Management Material Noncompliance Cash Management Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2019 to September 30, 2020 and October 1, 2020 to September 30, 2021 Criteria: For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payment by other means. Per review of the invoices for the programs and the Organization?s internal control processes, all invoices require approval by someone authorized and that the draw requests should be adequately supported. Condition: Eide Bailly LLP (EB) noted that four out of four draw requests did not have documentation supporting the review of the request. And three out of four draw requests did not have adequate support for the class hours included. Cause: Based on discussions with personnel, lack of supporting documentation and review occurred due to administrative oversight. Effect: Invoices could be incorrect. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 draw requests out of 12 total draw requests were selected for testing. Repeat Finding from Prior Year: No. Recommendation: We recommend the Organization?s management routinely review and consider modifications to or implementation of policies and procedures that would strengthen internal controls surrounding the approval and submission process of invoices. Views of Responsible Officials: Management agrees with the finding.

2021-004 Eligibility Noncompliance Eligibility Significant Deficiency in Internal Control over Compliance U.S. Department of Education Passed-through the Arizona Department of Education Adult Education Basic Grants to States CFDA #84.002A; Various Grants; July 1, 2020 to June 30, 2021 Criteria: In order to be eligible for the program, the participants must meet certain age and other requirements, including U.S. residency or citizenship. Part of the Organization?s documentation to determine eligibility includes a component that all participants? eligibility is reviewed. Condition: Eide Bailly LLP (EB) noted that one out of thirty-four files tested was missing review by program personnel and required completed verification of eligibility forms. Cause: Based on discussions with personnel, lack of supporting documentation occurred due to the Organization not following their control procedures with the remote environment caused by the COVID-19 pandemic. Effect: Ineligible individuals may receive service under the federal program without adequate documentation or approval. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 34 participants out of 226 total participants were selected for eligibility testing. Repeat Finding from Prior Year: Yes. Recommendation: We recommend the Organization?s management routinely review and consider modifications to or implementation of policies and procedures that would strengthen internal controls surrounding the eligibility process, record-keeping and the management thereof. Views of Responsible Officials: Management agrees with the finding.

2021-005 Eligibility, Activities Allowed Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2019 to September 30, 2020 and October 1, 2020 to September 30, 2021 Criteria: In order to be eligible for the program, the participants must meet certain age and other requirements, including qualifying status and length of residency. Part of the Organization?s documentation to determine eligibility includes a component that all participants? eligibility is reviewed. The allowable activities of the Organization are to provide English Language Transition courses to facilitate maximum acquisition of conversational English within three to six months of enrollment. Condition: Eide Bailly LLP (EB) noted no documentation of the review of eligibility or allowable activities for twenty participants. Cause: Based on discussions with personnel, lack of supporting documentation occurred due to the Organization not following their control procedures. Effect: Ineligible individuals may receive service under the federal program without adequate documentation or approval. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 20 participants out of 128 participants were selected for eligibility testing. Repeat Finding from Prior Year: No. Recommendation: We recommend the Organization?s management routinely review and consider modifications to or implementation of policies and procedures that would strengthen internal controls surrounding the eligibility process, record-keeping and the management thereof. Views of Responsible Officials: Management agrees with the finding.