Catholic Community Services of Southern Arizona, Inc.

Approval of Employee Timesheets (Significant Deficiency) Federal Agency: U.S. Department of Health and Human Services Program Title: Aging Cluster, Refugee & Entrant Assistance Assistance Listing Number: 93.044, 93.045, 93.053, 93.566 Federal Award Source: Pass-through funding Pass-Through Entity: Western Arizona Council of Governments, Arizona Department of Economic Security Pass-Through Identifying Number: 86-0100880-25, CTR 062400 Criteria – Section §200.303, paragraph (a) of the Uniform Guidance states that a subrecipient must establish, document, and maintain effective internal control over its Federal awards that provides reasonable assurance that the recipient or subrecipient is managing its Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Condition and Context – During our testing of payroll transactions billed to the Organization’s major programs, we noted 1 out of 11 payroll samples related to the Aging Cluster (ALN 93.044, 93.045 and 93.053) major Federal program and 1 out of 26 payroll samples related to the Refugee & Entrant Assistance (ALN 93.566) major Federal program for which the selected employee’s timesheet did not have documentation of supervisory approval. Our sample was not a statistically valid sample. Cause – The finding appears to be the result of an oversight by the employees’ supervisors prior to the processing of payroll. Effect – By not adhering to internally required internal control procedures over the supervisory approval of employee timesheets, it is possible that employee hours billed to the Organization’s federal programs may not be accurate. Questioned Costs – None identified. Recommendation – We recommend the Organization improve its internal controls over the supervisory approval of employee timesheets in order to ensure that all timesheets are appropriately reviewed and approved prior to the processing of payroll. View of Responsible Officials: We agree with the finding. See our Corrective Action Plan for the fiscal year ended June 30, 2025 for additional detail.

Participant File Record Retention (Significant Deficiency) and Compliance Federal Agency: U.S. Department of Health and Human Services Program Title: Refugee & Entrant Assistance Assistance Listing Number: 93.566 Federal Award Source: Pass-through funding Pass-Through Entity: Arizona Department of Economic Security Pass-Through Identifying Number: CTR 061943 Criteria – Section §200.334 of the Uniform Guidance states that a subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Condition and Context – During our audit of allowable activities as it pertained to billed fees-for-services related to refugee participants served, we noted the Organization could not provide adequate documentation to support the service of 2 out of 40 refugee participant samples in the billing months selected. This resulted in unsupported billings of $1,074 for open tasks related to these refugee participants. Our sample was not a statistically valid sample. Cause and Effect - Due to the Organization’s primary use of a discontinued State-sponsored website (ARPODS) to maintain the Organization’s case notes and other supporting documentation for the Organization’s provision of services to the program’s refugee participants, the Organization did not consistently internally maintain separate and adequate supporting documentation for their provision of services to the program’s refugee participants. Questioned Costs –$1,074. Recommendation – We recommend that the Organization improve its internal controls over its internal record retention related to all Federal program participant files as required by the Uniform Guidance in order to ensure the Organization is able to adequately support all services it provides under its Federal programs. View of Responsible Officials: We agree with the finding. See our Corrective Action Plan for the fiscal year ended June 30, 2025 for additional detail.

Procurement Conflict of Interest (Significant Deficiency) and Compliance Federal Agency: U.S. Department of Homeland Security Program Title: Emergency Food & Shelter National Board Program (“EFSP”) Assistance Listing Number: 97.024 Federal Award Source: Pass-through funding Pass-Through Entity: Pima County Pass-Through Identifying Number: CT-GMI.23-334 Criteria – Section §200.318, paragraph (c)(1) of the Uniform Guidance states that no employee, officer, agent or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. A conflict of interest includes when the employee, officer, agent or board member, any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity considered or a contract. Condition – In the prior year, the Organization procured services from a vendor on an emergency basis and did not utilize a formal procurement method for selection. It was later determined that there was also a significant conflict of interest present by a former employee who procured the vendor’s services for reimbursement by the Federal program. Cause – The finding appears to be the result of an immediate need to obtain services, an oversight to subsequently conduct a formal procurement method of vendor selection on a timely basis, and the omission, misrepresentation and/or possible collusion of certain former employee(s) to appropriately report the conflict of interest within the Organization in accordance with the Organization’s policies. Effect and Context – By not adhering to a formal procurement method and certain employee(s) not internally reporting the conflict of interest, the Organization may or may not have chosen the best vendor to provide the services at the time and the Organization may or may not have paid more than the market rate for the services received over the term that the Organization’s received the services from the vendor. Questioned Costs – None noted. Recommendation – We recommend the Organization provide periodic training to its program staff regarding procurement requirements per the Uniform Guidance, including those covering conflicts of interest, and consider modifying its procurement related internal controls to ensure all staff follow the Organization’s procurement policies. View of Responsible Officials: We are in agreement with the finding and are in the process of updating our procedures to mitigate issues in the future. See our Corrective Action Plan for the fiscal year ended June 30, 2024 for additional detail.

Allocation of Program Payroll Costs (Significant Deficiency) and Compliance Federal Agency: U.S. Department of Health and Human Services Program Title: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Federal Award Source: Pass-through funding Pass-Through Entity: Arizona Department of Economic Security Pass-Through Identifying Number: CTR 066191 Criteria – Section §200.405 of the Uniform Guidance states that a cost is allocable to a Federal award or other cost objective if the cost is assignable to that Federal award or other cost objective in accordance with the relative benefits received and this standard is considered to be met if the cost (a) is incurred specifically for the Federal award; (b) benefits both the Federal award and other work of the recipient or subrecipient and can be distributed in proportions that may be approximated using reasonable methods; or (c) is necessary to the overall operation of the recipient or subrecipient and is assignable in part to the Federal award in accordance with the Uniform Guidance cost principles. Condition and Context – During our audit of allowable costs as it pertained to payroll costs, we noted the Organization could not provide adequate documentation to support the percentage of employee payroll costs allocated to the Federal program for 4 employees. This resulted in an unsupported allocation of payroll costs for 9 samples out of a total of 19 samples selected for testing, and $5,383 in payroll costs out of $14,585 total payroll costs selected for testing. Our sample was a statistically valid sample. Cause and Effect - Due to a transition in the billing structure of the program, which was previously fee for service in nature, to being cost reimbursement in nature, the Organization did not consistently maintain adequate supporting documentation for the allocation of payroll costs to the Federal program for all employees. It is possible the allocations used were not reflective of the actual or approximate time spent by the employees on the Federal program. Questioned Costs – Undetermined. We were unable to determine whether the allocations used were appropriate or not. Recommendation – We recommend that the Organization improve its internal controls over the allocation of payroll costs to the Federal program and ensure any allocations are updated timely, and appropriately reviewed and approved by supervisory personnel. View of Responsible Officials - We agree with the finding. We have implemented procedures to ensure secondary reviews of all billings. See our Corrective Action Plan for the fiscal year ended June 30, 2024 for additional detail.

Procurement (Significant Deficiency) and Compliance

Federal Agency: U.S. Department of Homeland Security Program Title: Emergency Food & Shelter National Board Program (“EFSP”) Assistance Listing Number: 97.024 Federal Award Source: Pass-through funding Pass-Through Entity: Pima County Pass-Through Identifying Number: CT-GMI-21-452

Criteria – Section §200.320 of the Uniform Guidance requires that when the value of the procurement for property or services under a Federal financial assistance award exceeds the Simplified Acquisition Threshold, a formal procurement method is required, such as a sealed bid or proposal. In addition, these formal procurement methods require public advertising.

Condition – During our audit of the procurement requirements for the EFSP program, we noted the Organization utilized a vendor who in total was paid more than the Simplified Acquisition Threshold; however, the Organization did not utilize a formal procurement method in selecting this vendor as required by their policies and the Uniform Guidance.

Cause – The finding appears to be the result of an immediate need to obtain services and an oversight to subsequently conduct a formal procurement method.

Effect and Context – By not adhering to a formal procurement method, the Organization may or may not have chosen the best vendor to provide the services. There was only one vendor whose payments exceeded the Simplified Acquisition Threshold during the audit period. Our sample was a statistically valid sample.

Questioned Costs – None noted.

Recommendation – We recommend the Organization provide periodic training to its program staff regarding procurement requirements per the Uniform Guidance and consider modifying its procurement related internal controls to ensure all staff follow the Organization’s procurement policies.

View of Responsible Officials: We are in agreement with the finding and are in the process of updating our procedures to mitigate issues in the future. See our Corrective Action Plan for the fiscal year ended June 30, 2023 for additional detail.

Secondary Review of Billings (Significant Deficiency)

Federal Agency: U.S. Department of Health and Human Services Program Title: Child Care and Development Block Grant Assistance Listing Number: 93.575 Federal Award Source: Pass-through funding Pass-Through Entity: Arizona Department of Economic Security Pass-Through Identifying Number: SX222367

Criteria – Section §200.303 of the Uniform Guidance states that a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.

Condition and Context – During our audit of allowable activities, we noted the Organization did not conduct a secondary internal supervisory review of the monthly billings for this program prior to submission to the funding source.

Cause and Effect - Due to a shortage in staff, all 12 monthly billings for this program were prepared by one individual and were not reviewed and approved by secondary supervisory personnel.

Questioned Costs - None identified.

Recommendation – We recommend that the Organization improve its internal controls over the preparation of billings for this program to ensure all billings are reviewed and approved by secondary supervisory personnel.

View of Responsible Officials - We agree with the finding. We have implemented procedures to ensure secondary reviews of all billings. See our Corrective Action Plan for the fiscal year ended June 30, 2023 for additional detail.