VISIONQUEST NATIONAL, LTD. & SUBSIDIARIES & VISIONQUEST NONPROFIT CORP

Condition and criteria: Reporting requirements stipulated by the Uniform Guidance should be adhered to. The Single Audit shall be completed and the data collection form shall be submitted within the earlier of 30 days after receipt of the auditor's report, or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. Additionally, two agencies require annual audit reports to be submitted 120 and 180 days after year end. Effect: The annual audit, Single Audit and the data collection form were not completed by the required deadline. Population and items tested: Not applicable Cause: Due to the delay in the preparation of the SEFA and the compiling of records and supporting documentation related to the financial statement and compliance audit, the Company was not in compliance with the reporting requirement. Recommendation: We recommend the the Company complete its annual audit and Single Audit and submit the related data collection form to the Federal Clearinghouse by the required deadline. This is a repeat finding. See finding 2019-004 Auditee response: We agreed. Turnover and COVID caused significant delay in our ability to meet deadlines.

Cash Management (Instance of abuse relating to a major program) Conditions and criteria: When entities are funded on a reimbursement basis, internal controls should be in place to ensure that program costs are paid for with the Company's funds before reimbursement is requested from the Federal Government. Additionally in the event advances are taken, these cannot be held in excess of three days. Effect: Noncompliance with the cash management requirements. Population and items tested: The majority of the expenditures, out of a sample of forty expenditures were not paid within three days of the advance being made. Cause: Advances were taken based on anticipated budgeted expenses to be incurred and not always based on actual amounts to be paid out within the allotted three-day period of holding the advance. The Company was not submitting monthly reimbursement requests based on amounts actually disbursed. Recommendation: We recommend the Company establish controls to ensure advance payments are requested based on actual amounts to be disbursed within the three day allowed period and reimbursement requests are not submitted prior to actual payment disbursement. This is a repeat finding. See finding 2019-005 Auditee response: We disagree. It has been customary in our relationship with the Human and Health Services Department to request funding first to pay for our expenses. We do agree that funds should be spent within a reasonable period of time and three days are considered reasonable

Allowable Costs/Cost Principles Conditions and criteria: Direct charging of costs related to acquisition, construction or improvements of real property cannot be directly used with funding from this program. Effect: Noncompliance with approved budget and compliance supplement. Population and items tested: From our sample of forty cash disbursements, two disbursements related to tenant improvements. Cause: The Company did not have the proper procedures in place to ensure proper costs were being billed to funding agencies that are allowable. Recommendation: We recommend that the individual responsible for reviewing and approving expenditures billed to funding agencies under cost reimbursement contracts evaluate the expenditures for allowability in accordance with the Uniform Guidance as part of the review and approval process. Auditee response: We believe that this is a gray area. If that improvement were approved in the budget by the program then they could be appropriate and allowable. We also like to note that there were a lot of negotiations and rush to open the facility by the federal agency and they may have verbally authorized these costs. We are currently working with the federal agency to resolve this matter.

Activities Allowed or Unallowed (Instance of abuse relating to a major program) Conditions and criteria: Funds may only be used for activities and categories listed in the approved budget. Effect: Noncompliance with approved budget and compliance supplement. Population and items tested: Sixteen out of our sample of forty disbursements included amounts billed to the program that were not included in the approved budget. These included prepaid expenditures charged directly at time of payment, legal services and consulting fees associated with obtaining zoning required to operate a shelter facility. Cause: The Company did not have the proper procedures in place to ensure proper costs were being billed to funding agencies that are activities allowed. Recommendation: We recommend that the individual responsible for reviewing and approving expenditures billed to funding agencies under cost reimbursement contracts evaluate the expenditures for activities allowed or unallowed in accordance with the Uniform Guidance as part of the review and approval process. Auditee response: We disagree with $334,117 of the expenditures included in this finding. When zoning became a major issue, with the Office of Refugee Resettlement's consent, we were ordered to continue the zoning approval process, but not hire any staff. Hence, we shifted budget expenses from personnel to zoning approvals. Per the FAR, obtaining zoning was a key element in our contract and hence the expenditures are allowable.

Activities Allowed or Unallowed and Allowable costs Conditions and criteria: Allowable compensation for employees is subject to a ceiling in accordance with statute. Effect: Noncompliance with allowable compensation ceiling amounts. Population and items tested: Out of our sample of 40 transactions totaling $56,037, three transactions totaling $3,461 had amounts above the allowable ceiling amount of $1,185. Cause: The Company did not have the proper procedures in place to ensure proper costs are being billed to funding agencies that are activities allowed. Recommendation: We recommend that the individual responsible for reviewing and approving expenditures billed to funding agencies under cost reimbursement contracts evaluate the payroll expenses for activities allowed or unallowed in accordance with the Uniform Guidance as part of the review and approval process. Auditee response: We agree.

Activities Allowed or Unallowed Conditions and criteria: Control deficiencies were identified in the general disbursement process. Effect: There was no supporting documentation maintained and provided for disbursements tested. Documentation must support payment for expenses to ensure that they are allowable, allocable, necessary and reasonable. Population and items tested: Four out of our sample of forty expenses billed to the program were not substantiated with the proper documentation. Cause: The Company did not have proper procedures in place to ensure the documentation was obtained. Recommendation: Policies and procedures should be followed. The Company should re-evaluate their internal controls over the general disbursements process to ensure supporting documentation is maintained. Auditee response: We agree. We will put process and procedures to address this finding.

Procurement Conditions and criteria: The Company is required to maintain a written policy for procurement under a federal award. The policies should refer to 2 CFR Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Effect: The Company could not provide documentation of written policies and procedures. None Cause: Implementation of compliance with Federal requirements was incomplete and expenditures could not be tested for compliance with this policy. Recommendation: We recommend the Company document their procurement policy in writing and ensure it contains all the requirements of 2 CFR Part 200. Auditee response: We agree. We will put process and procedures to address this finding.

Period of Performance Conditions and criteria: Control deficiencies were identified in the general disbursement process. Effect: There was no supporting documentation maintained and provided for disbursements tested. Documentation must support payment for expenses to ensure that they are incurred within the period covered by the contract. Population and items tested: Two out of our sample of twenty five expenses billed to the program were not substantiated with the proper documentation. And one other transactions was a prepaid expenditure that exceeded the budget period. Cause: The Company did not have proper procedures in place to ensure the documentation was obtained and ensure that expenditures occur in the proper budget period. Recommendation: Policies and procedures should be followed. The Company should re-evaluate their internal controls over the general disbursements process to ensure supporting documentation is maintained and that Federal funding not be used to pay for costs prior to the period of performance. Auditee response: We agree. VisionQuest will improve its process and procedures to ensure back up documentations are properly completed.

Reporting Conditions and criteria: Control deficiencies were identified in the reporting process. Effect: Documentation supporting amounts drawn down were not maintained and provided. Documentation must support reimbursable amounts reported. Population and items tested: The cash disbursement amounts reported in the quarterly Federal financial report could not be substantiated to supporting documentation. And amounts did not seem reasonable considering amounts were drawn in advance. Cause: The Company did not have proper procedures in place to ensure the documentation was obtained and ensure that only expenditures that occurred were reported in the period reported. Recommendation: Policies and procedures should be followed. The Company should re-evaluate their internal controls over the reporting process to ensure supporting documentation is maintained and that amounts for Federal reporting are accurately calculated. Auditee response: We agree. VisionQuest will improve its process and procedures to ensure back up documentations are properly completed.

Condition and criteria:Reporting requirements stipulated by the Uniform Guidance should be adhered to. The Single Audit shall be completed and the data collection form shall be submitted within the earlier of 30 days after receipt of the auditor's report, or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. Additionally, two agencies require annual audit reports to be submitted 120 and 180 days after year end.Effect:The annual audit, Single Audit and the data collection form were not completed by the due required deadline.Population and items tested: Not applicable Cause: Due to the delay in the preparation of the SEFA and the compiling of records and supporting documentation related to the financial statement and compliance audit, the Company was not in compliance with the reporting requirement. Recommendation:We recommend the the Company complete its annual audit and Single Audit and submit the related data collection form to the federal clearinghouse by the required deadline. his is a repeat finding. See finding 2018-007Auditee response:The company has increased the finance staff and is currently scheduling audit work on a timely basis. Additional emphasis is being provided to the accounting department in order to comply with various audit deadlines.

Conditions and criteria:When entities are funded on a reimbursement basis, internal controls should be in place to ensure that program costs are paid for with the Company's funds before reimbursement is requested from the Federal Government. Effect: Noncompliance with the cash management requirements. Population and items tested:Five expenditures, out of a sample of thirty-seven expenditures were included in the monthly request for reimbursement prior to payment of those expenditures with the Company's funds. Cause:Reimbursement requests were based on amounts recorded as expenses in the general ledger instead of amounts actually disbursed. Recommendation:We recommend the Company establish controls to ensure reimbursement requests are not submitted prior to actual payment disbursement. Auditee response:The Company now has a policy of paying for reimbursable expenses before a request is submitted for compliance to programs that have this requirement. The Deputy CFO will be responsible for controlling the cash disbursements and the reimbursement request.

Conditions and criteria:Adjudicated claims are to be supported by appropriate documentation including case notes and proper support for eligibility of individuals. Effect: Thirty-two claims were not supported with the requisite case notes and eligibility documentation. Population and items tested: A sample of fifty claims was selected for audit incurred for the period July 1, 2018 through June 30, 2019. Cause: The Company did not have proper procedures in place to ensure the documentation of case notes and participant eligibility.Recommendation: Policies and procedures should be followed for maintenance of all individual case files whose claims are to be adjudicated. Auditee response:The Company is implementing a process to assign the task of maintaining proper source documents at each individual site and program. This process will be part of a procedure regarding the maintenance and storage of all required youth documents, including the procedures for the closure of a facility.

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