2022 CrossPurpose Audited Financial Statements by CrossPurpose

December 19, 2023

To whom it may concern,

I am writing regarding our 2022 financial statements and the associated audit. As an organization dedicated to transparency and accountability, I wanted to give context around these audit findings, both to acknowledge the findings identified and why they arose, and to share what we have done to rectify them. In connection with this application for grant funding, I especially wanted to highlight that these findings pertain exclusively to our documentation of federal funds, and do not show any issues related to our use of grant funding from foundations and private grantmakers, nor that funds were misappropriated in any way.

Our 2022 audit was our first ever “single audit”, following nine years of audits with no findings conducted under General Accounting Standards (GAS). This larger audit was required in compliance with a six-figure Supplemental Nutrition Assistance Program (SNAP) contract, which grew to over $750,000 in federal funding for the first time in 2022. Throughout our history of handling grants, we have always relied on the guidance from state agencies for billing these funds, and we followed instructions about how to bill and document the services we provided with these funds from the Colorado Department of Human Services (CDHS). The audit process highlighted areas where our revenue recognition from cost-reimbursement grant arrangements, as well as our standard accounting records and controls practices did not meet federal standards. During the audit, we actively engaged in three-way calls with our auditors, the state, and ourselves, underscoring that there was no malintent, and were diligently following the guidelines provided by the state agency.

Immediately following the audit we revised our financial control policies and implemented training for our staff to ensure compliance with accounting procedures and federal grant requirements. In recognition of the feedback we each received, the state subsequently revised the procedures and the guidance they provide to agencies receiving funding. Attached to this audit you will find a detailed outline of our procedures and how we have addressed this issue, as well as an explanation from the state that they are satisfied with these changes. Since the audit was performed we have signed and renewed several further contracts with county and state agencies, and we anticipate no further audit findings or issues with compliance.

We wanted to note that these ﬁndings were only related to our policies and procedures for handling federal funds, not to our handling of grant funds overall, which has consistently been conducted with diligence and adherence to best practices. The audit did not ﬁnd that funds were misused in any way. We take full responsibility for our part in these errors, and we believe that the revised guidelines will greatly reduce the likelihood of similar issues in the future.

We remain committed to upholding the highest standards of financial management and accountability. The lessons learned from this audit are invaluable, and have significantly strengthened our fiscal governance. I hope that our proactive approach in addressing these issues assures you of our dedication to responsible stewardship of funds and our commitment to transparency and excellent programming. Please feel free to contact me with any further questions.

Thank you,

Scott Lanzen Chief Financial Ofﬁcer

Scott Lanzen, Chief Financial Officer CrossPurpose

3050 Richard Allen Ct Denver, CO 80205

December 12, 2023

Dear Scott Lanzen,

The Colorado Department of Human Services (Department) has reviewed the audit findings shown in the Schedule of Findings and Questioned Costs in your organization’s FYE 12/31/2022 single audit report. This “Management Decision” letter is being issued pursuant to 2 C.F.R. Part 200, Subpart F – Audit Requirements, specifically § 200.521, Management Decisions.

The Department is sustaining the findings that are related to the funding passed through the Colorado Department of Human Services and we agree with the Corrective Action Plan (CAP) as submitted. The Department believes the CAP is sufficient to address and correct the audit findings.

The applicable audit findings and CAP actions are attached for your reference. Applicable findings: 2022-001, 2022-002, 2022-004

There are no questioned costs associated with these findings.

If you do not agree with this Management Decision, you may submit an appeal in writing to my attention . Appeals shall be based on factual errors related to the audit finding(s) or an incorrect interpretation of law and must be submitted within 20 business days from the date of this letter.

If you have any questions or concerns, please feel free to contact me at Junko.Billheimer@state.co.us or contact Dawn Olson at Dawn.Olson@state.co.us.

Sincerely,

Junko Billheimer

Junko Billheimer, MACC, CHP Audit Manager CDHS Audit Division

cc: Jason Adams, Managing Partner, The Adams Group, LLC

Rebecca Balu, CDHS Office of Economic Security, Employment & Training Manager

Karla Maraccini, CDHS Office of Economic Security, Division Director, Food & Energy Assistance

Ashley Caldwell, CDHS Office of Economic Security, Third-Party Partner Program Administrator

Telly Belton, CDHS Controller

Adam Blach, CDHS Audit Director

Elizabeth Mullins, CDHS Director of Operations, Administrative Solutions

Corrective Action Plan – Single Audit Finding 2022-001

Criteria or Specific Requirement:

The Code of Federal Regulations 2 CFR 200.413(a) requires that direct costs be identified specifically with a particular final cost objective, such as a federal award, or other internally or externally funded activity, or be directly assigned to such activities relatively easily with a high degree of accuracy.

Condition:

During our testing, we noted reimbursement requests were prepared using grant budgets rather than direct costs incurred. Management was unable to determine direct costs related to general and payroll disbursements. As a result, proper revenue recognition could not be determined for financial reporting purposes.

Action Taken:

The Organization will use the jobs and classes functions within their accounting software to track expenses related to grants. The Organization hired a Grant Coordinator to oversee the review, tracking, and reporting for all grants. The Organization will train and work with all applicable staff to create timesheets for grants requiring such documentation. The Organization will prepare a Schedule of Expenditures of Federal Awards (SEFA) which will be used in conjunction with the accounting software to track grant costs.

Corrective Action Plan – Single Audit Findings 2022-002 & 2022-003

Criteria or Specific Requirement:

The Code of Federal Regulations 2 CFR 200.318(a) states, “the non-Federal entity must have and use document procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward.”

In addition, per the Code of Federal Regulations 2 CFR 200.214, non-Federal entities are subject to the non-procurement debarment and suspension regulations. The regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.

PO Box 2483 Denver, CO 80201

(720) 724-9544

www.crosspurpose.org

Condition:

The Organization had not adopted a procurement policy and no procurement procedures were performed in selecting contractors.

Action Taken:

The Organization will develop and adopt a procurement policy that will include procedures for receiving competitive bids for the acquisition of property and/or services. The policy will include screening vendors to ensure eligibility. The Organization will ensure contracts include a conflictof-interest clause.

Corrective Action Plan – Single Audit Finding: 2022-004

Criteria or Specific Requirement:

Management is responsible for the accurate preparation of the schedule of expenditures of federal awards.

Condition:

Management did not track expenditures of federal awards. As a result, management was unable to determine federal expenditures incurred during 2022.

Action Taken:

The Organization will add a step to their grant application and acceptance process to determine if proceeds are funded with federal awards. The Organization will schedule training for accounting staff to learn how to prepare a SEFA.

PO Box 2483 Denver, CO 80201 (720) 724-9544 www.crosspurpose.org

Government Auditing Standards