First Step HouseNon-Profit

2022-002 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.498 Provider Relief Fund Applicable Federal Award Number and Year ? Period 2 TIN #870290963 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The total lost revenues included on the report submitted to the Health Resources and Services Administration (HRSA) for Period 2 (Period 2 Report) utilizing Option 3, as defined by HRSA, contained errors. Cause: The Organization did not have an internal control process in place to ensure the calculation of lost revenues was properly calculated. Accordingly, errors in the lost revenue calculation spreadsheet were not identified by management. Effect: The reporting to HRSA for Period 2 was considered incorrect. Lost revenues were included on the report that were not supportable. Questioned Costs: $402,342. The Organization received $801,742 during Period 2. After the error noted, the corrected lost revenues and eligible expenditures totaled $399,400. Context: All key items associated with the five quarters of revenue initially claimed as eligible under the Option 3 lost revenue calculation were tested. There were significant differences noted in all five quarters tested for a difference of $402,342 between the funds received and the revised lost revenues calculated. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization implement a control process to ensure the lost revenue calculation is accurately calculated. Views of Responsible Officials: Management agrees with this finding and is designing and implementing policies and procedures to address the cause of this finding.

2021 ? 002 United States Department of Veteran Affairs 64.024 VA Homeless Providers Grant and Per Diem Program Allowable Costs Significant Deficiency in Internal Control over Compliance Criteria: First Step House should maintain proper documentation of authorization of disbursements. Condition: In connection with the audit procedures performed, supporting documentation of authorization for two disbursements tested was not maintained. Cause: First Step House?s internal control system was not sufficient to maintain documentation of authorization of all disbursements. Effect: Disbursements could be processed without proper authorization. Questioned Costs: None reported Context/Sampling: A non statistical sample of 42 transactions were selected for testing which accounted for $759,552 of $1,906,036 of federal program expenditures. Recommendation: First Step House should strengthen its maintenance of supporting documents for disbursements to ensure that the approval for all disbursements is properly maintained. Views of Responsible Officials: Management agrees with this finding.