Catholic Charities

Type of Findings: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Supportive Housing for Persons with Disabilities (Section 811) Assistance Listing #14.181. Compliance Requirement: Eligibility Criteria: In accordance with Renaissance Court's regulatory agreement with HUD and the 2024 compliance supplement, Renaissance Court is required to annually recertify its tenants as eligible tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Renaissance Court did not recertify some of its tenants within the timeframe specified by HUD. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: No. Context: We selected a sample of 6 tenants from a population of 21. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, four tenant recertifications were not performed within the 12 month timeframe specified by HUD. Recommendation: We recommend management design and implement internal controls over compliance to ensure tenant recertification is performed within the timeframe specified by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Type of Findings: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Program: HUD Supportive Housing for Persons with Disabilities (Section 811) Assistance Listing #14.181. Compliance Requirement: Replacement Reserve Criteria: Renaissance Court, Inc.'s regulatory agreement with HUD requires monthly deposits of $873 into the replacement reserve fund. Total deposits required annually is $10,476. Condition: The monthly required deposit of $873 and the total annually required deposit of $10,476 were not deposited into replacement reserve fund. Cause: The organization has suffered recuring losses from operations which have negatively impacted cash flows. Effect: The effect is immaterial non-compliance with the terms of the HUD programs listed above. Questioned Costs: None Repeat Finding: No. Context: We reviewed the Replacement Reverse Fund and noticed there was no monthly required deposit made in the Fund during fiscal year 2023. Recommendation: We recommend management design and implement internal controls over compliance to ensure the amount of $873 is deposited monthly into the Replacement Reserve account as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Finding 2022-001 Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Assistance Listing # 14.155) Criteria: In accordance with the respective regulatory agreements with HUD for the HUD Section 223(f) Insured Mortgages, Catholic Charities is required to annually recertify its tenants as eligible tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Catholic Charities affiliates Caritas Plaza and Caritas Villa did not recertify all of its tenants within the timeframe specified by HUD. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. The deficiency in internal controls over compliance could lead to material non-compliance with the eligibility compliance requirement. Questioned Costs: None. Repeat Finding: No. Context: Caritas Plaza - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, two tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications that fell outside of our sample. Caritas Villa - We selected a sample of 8 tenants from a population of 30. The sample size was determined based upon guidelines provided by the AICPA and was not considered a statistically valid sample. We performed procedures to determine whether the annual tenant recertification occurred within the timeframe specified by HUD. From our sample, seven tenant recertifications were not performed within the 12 month timeframe specified by HUD. Additionally, during our performance of other audit procedures, there were indications of additional late recertifications that fell outside of our sample. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Supportive Housing for Persons with Disabilities: (Section 811) Capital Advance and Project Rental Assistance Contract (Assistance Listing # 14.181) Criteria: The HUD Uniform Financial Reporting Standards (24 CFR ?5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90 day due date. Condition: Certain consolidated affiliate audits for the fiscal year ended June 30, 2020 were not submitted within the 90 day timeframe as required by HUD and was not submitted within the extension period authorized by HUD. Cause: The audit was not completed within the applicable time frames so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD programs listed above. Questioned Costs: None. Repeat Finding: Yes, see finding 2020-001. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Type of Finding: Material weakness in internal control over compliance. Federal Programs: All federal programs Criteria: The Uniform Guidance, under 2 CFR Part 200 Subpart F, requires the auditee to prepare a schedule of expenditures of federal awards for the period covered by the auditee?s financial statements which must include the total federal awards expended. Condition: While performing audit procedures on the schedule of expenditures of federal awards (SEFA), we noted the internal controls in place to identify federal awards and capture all relevant information for federal awards did not detect or prevent material misstatements on the schedule. We noted errors in the titles of federal agencies, assistance listing numbers, and federal expenditures that were improperly included or excluded from the SEFA. Cause: The internal controls currently in place were not properly designed or implemented to detect or prevent material misstatements on the SEFA. Effect: The SEFA was not complete and did not accurately reflect all required information and the SEFA was materially misstated at the commencement of the audit because it improperly included or excluded federal expenditures totaling $1,401,117. Questioned Costs: None. Repeat Finding: No Context: The total of federal expenditures improperly included or excluded from the SEFA represent approximately 6.8 percent of the adjusted SEFA total. Recommendation: We recommend management design and implement internal controls to ensure all federal assistance is identified at the program level and in the finance department. We also recommend that the Organization develop a process for detail reviewing the information included on the SEFA, including verification of federal award and expenditure amounts with grantors as necessary. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Continuum of Care Program (Assistance Listing # 14.267) Criteria: The HUD Continuum of Care Program Regulations (24 CFR ?578) stipulate that when grants are used to pay for individual housing units, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents. Condition: While performing audit procedures over a sample of program participants, we noted one instance in which HUD fair market rent determination was not documented and one separate instance in which rents paid on behalf of a participant exceeded the applicable HUD-determined fair market rent limitation by $16 per month. Cause: The process of documenting HUD fair market rent determinations was not consistently followed and rents were paid in excess of HUD-determined fair market rents based on guidance received from the County that passed the federal funds through to Catholic Charities. Finding 2021-003, continued Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: No Context: The sample size was 4 program participants; the sample was not a statistically valid sample. Our procedures detected one instance in which the HUD fair market rent determination was not documented, but the rent amount was below the applicable HUD-determined fair market rent. Our procedures also detected one instance in which the HUD fair market rent determination was documented, but the rent amount exceeded the applicable HUD-determined fair market rent. Recommendation: We recommend management design and implement internal controls over compliance to ensure that HUD fair market rent determinations are consistently documented and compared against the applicable HUD-determined fair market rent limits. We also recommend that management review internal policies and procedures to ensure they are congruent with program requirements stipulated in the Code of Federal Regulations. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Findings and Questioned Costs ? Major Federal Award Programs Audit Type of Finding: Significant deficiency in internal control over compliance and instance of immaterial noncompliance. Federal Programs: HUD Supportive Housing for Persons with Disabilities: (Section 811) Capital Advance and Project Rental Assistance Contract (CFDA 14.181) and HUD Section 8 Housing Assistance Payments Program (CFDA 14.195) Criteria: The HUD Uniform Financial Reporting Standards (24 CFR ?5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. Additionally, the Uniform Guidance (2 CFR ?200.512) requires auditees to complete the data collection form and annual audited financial statements to the Federal Audit Clearinghouse the earlier of 30 calendar days after the receipt of the auditor?s report or nine months after the end of the audit period. Condition: Certain consolidated affiliate audits for the fiscal year ended June 30, 2019 were not submitted within the 90 day timeframe as required by HUD or within nine months after year end as required by the Uniform Guidance. Cause: The audit was not completed within the applicable time frames so it was not available to be submitted to HUD or to the Federal Audit Clearinghouse. Effect: The effect is immaterial non-compliance with the terms of the HUD programs listed above as well as non-compliance with the ?200.512 of the Uniform Guidance. Questioned Costs: None. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD and the Federal Audit Clearinghouse as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.

Finding 2019-001 - Determination of Personal Services Allocations Identification of the Federal Program(s): CFDA Title/Number: CFDA 19.510 U.S. Refugee Admissions Program Award identification number and year: 90RP0100/02 for June 30, 2018 Name of federal agency: United States Department of State Name of applicable pass-through entity: United States Conference of Catholic Bishops Criteria: In accordance with 2 CFR 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 1) be supported by a system of internal controls which provides reasonable assurance that the charge are accurate; 2) be incorporated into official records of the non-federal entity; 3) reasonably reflect total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; 4) encompass both federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity's written policy; 5) comply with the established accounting policies of the non-federal entity; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than activity or cost objective. Budget alone do not qualify as support for charges to the federal awards, but may be used for interim accounting purposes, provided that the non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to federal awards based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: Personal services charged were recorded based on budget to the program and an after-the-fact determination of personal services charged to the program was not conducted and adjustments, if necessary, were not recorded or documented. Our audit identified deficiencies in internal control over compliance with the criteria identified above that represent a significant deficiency. The Organization does not have procedures in place to ensure that the determination of personal services cost allocations were completed in accordance with program requirements. The Organization was not in compliance with the critera identified above, as the Organization did not perform procedures to adjust the costs. Cause: The Organization was not aware of the requirement to make an after-the-fact accounting of time spent on the program. Effect: The amount of personal services charged to the federal award may be overstated or understated.Questioned Costs: The amount of salaries and wages charged to the federal program that were based on budgeted percentages during the fiscal year 2019 is approximately $100,000. The amount of questioned costs cannot be determined since there are no records that accurately reflect the actual work performed. Context: During the audit, we identified the cost principles as a key compliance requirement, which includes the requirements for compensation for personal services described above. Payroll was charged based on budgeted percentage on 22 of the 26 sample selections tested. Identification as a Repeat Finding: This is a repeat finding (2018 finding 2018-002). Recommendation: The Organization should review the requirements for cost principles as they relate to compensation for personal services under Uniform Guidance and implement controls to ensure that the internal controls includes processes to review after-the-fact interim charges made to federal awards based on budget estimates and that all necessary adjustments are made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Views of Responsible Officials: Agree

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