HEALTHCARE SERVICES GROUP INC

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are intended to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as this Form 10-Q, is reported in accordance with Securities and Exchange Commission rules. Disclosure controls are also intended to ensure that such information is accumulated and communicated to Management, including the Principal Executive Officer (President and Chief Executive Officer) and the Principal Financial Officer (Chief Financial Officer) as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation as of September 30, 2024, pursuant to the Exchange Act Rule 13a-15(b), our Management, including our Principal Executive Officer and Principal Financial Officer, concluded that our internal control over financial reporting was effective, after taking into consideration the controls implemented during the nine months ended September 30, 2024 to address the material weakness identified in the 2023 Form 10-K.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis. In the course of preparing the Company’s consolidated financial statements as of and for the year ended December 31, 2023, management identified a material weakness related to accrued payroll liabilities from employee vested vacation. Our controls over accrued payroll liabilities in respect to accrued vacation were not sufficiently designed to consider all accounting and disclosure ramifications of such accrued payroll liabilities. This material weakness resulted in immaterial misstatements in our 2022 and 2021 financial statements related to the accounting for accrued vacation which were corrected prior to issuance of the Company’s 2023 financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Remediation Plan

The Company concluded that the material weakness identified in the 2023 Form 10-K surrounding controls over the estimation of accrued vacation has been remediated (the “Remediated Material Weakness”). During the nine months ended September 30, 2024, the Company completed the implementation of the following remedial measures to address the Remediated Material Weakness:

•Developed a comprehensive method of accruing for vacation hours that resulted in process-level controls being added to ensure completeness and accuracy of the vacation calculation;

•Standardized the processes performed by accounting department personnel to verify completeness and accuracy of information used in calculating the vacation accrual, including formal documentation of preparation and subsequent review of all reports and assumptions; and

•Integrated the vacation accrual into the Company’s standardized control activities related to the Company’s financial statement close process, including controls over manual journal entries and account reconciliations.

Changes in Internal Control over Financial Reporting

Other than the Remediated Material Weakness described in the paragraph above, there were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.

Certifications

Certifications of the Principal Executive Officer and Principal Financial Officer regarding, among other items, disclosure controls and procedures are included as exhibits to this Form 10-Q.