2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2019-103 and 2018-006) (initially reported 2014)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner.
Of twenty-seven encounters reviewed, we identified the following deficiencies and noncompliance with applicable requirements associated with application of the sliding fee scale.
- Six of the twenty-seven encounters sampled were related to a program the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees.
- One of the twenty-seven encounters sampled was related to the disaster recovery bus program that did not charge the patients for services.
- Seven of the twenty-seven encounters sampled had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay ( 42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)).
Cause: Failure to apply the sliding fee correctly, as noted in seven of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to obtain the required documentation associated with the six encounters above is due to the requirements of the agreement with the local school district, and one is due to procedures applied to the disaster recovery bus program that does not follow the written procedures of the Organization for use of the sliding fee scale.
Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts.
Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained on what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures.
Patients should be billed the usual and customer billing rates for all services until all documentation is received or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients in order to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted.
The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization’s policies for the sliding fee scale were recently updated during fiscal year 2022, by management, based on findings during the monitoring by HRSA performed in 2022, but management will consider discussing potential improvements to their policy with the grantor to potentially update it to allow for certain exceptions. The Organization will also consider discussing the agreement with the local school district in more detail with the grantor to either structure their policies to allow for these visits to have different requirements or to see if the grantor would be willing to provide a waiver with regards to theses visits not being technically in compliance with other regular clinic visits. The planned corrective action for this finding is currently in the process of development, approval, and implementation. The Organization expects to have the corrective action implemented by March 1, 2023. The Organization will continue to engage the consulting services of the professional certified accounting firm to assist in this process through completion.
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.
2020-104 Lack of Documentation Related to Reporting and Lack of Controls Related to Filing Reports (prior two years 2019-106 and 2018-009) (initially reported 2018)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Reporting
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization did not maintain proper documentation in support of reporting requirements and there was no review of the reports prior to submission to the grantor, other than the review done by the preparer.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards.
Cause: The Organization has considered a third-party review after initial submission a sufficient internal control for the UDS report, and did not consider it necessary on the SF-425 due to the limited information required.
Effect: The Organization could submit incorrect information.
Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its reporting policy and implemented the changes. The corrective action for this finding has been approved and implemented by the Organization.
2020-105 Lack of Required Policies Associated with Procurement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Procurement, Suspension and Debarment
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization does not have written policies in regards to procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the award.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, based on grant compliance requirements related to procurement and suspension and debarment, procurements under federal awards are to be made in compliance with applicable federal regulations and other procurement requirements specific to an award of sub award. In addition, ensure that covered transactions should be only with entities that are not suspended, debarred, or otherwise excluded.
Cause: The Organization has not documented procedures which reflect applicable state and local laws and regulations to conform to the applicable federal statutes and procurement requirements identified in 2 CFR part 200.
Effect: The Organization could obtain goods and services outside of the procurement requirements identified in 2 CFR part 200.
Recommendation: The Organization should create written policies for procurement to ensure federal awards are being spent in accordance with federal and other requirements under the award.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization will review and update its existing policies to include procurement to ensure federal awards are being spent in accordance with federal and other specific requirements under the awards. The Organization expects to have this implemented by March 1, 2023.
2020-106 Use of Budgeted Versus Actual Costs for Reimbursements (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Allowable Costs
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable costs, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained and no indication of a review process involved beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to included only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2020-107 Lack of ACH Payment Review and Approval (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: Payments are not reviewed prior to ACH payments. The Organization has no documented policies and procedures for handling the processing and review of ACH payments.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to activities allowed and allowable costs, costs charged to federal programs under the HCP award must comply with the cost principles at 45 CRF part 75, subpart E, and any other requirements or restrictions on the use of federal funds. Based on compliance requirements related to period of performance, federal awards are charged for (a) allowable costs incurred during the period of performance: or (b) costs incurred prior to the date the federal award was made that were authorized by the federal awarding agency or pass-through entity.
Cause: The payment for expenses under the program were not reviewed prior to payment for allowability of costs and whether the costs were incurred during the period of performance.
Effect: The Organization could report costs that were not allowable or not incurred during the period of performance which could result in losing funding.
Recommendation: We recommend the Organization develop policies and procedures related to processing and reviewing ACH payments under federal award programs for allowability of costs and determination of whether the costs were incurred during the period of performance.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing ACH payments prior to payment. We will update our policy to include a process for ACH reviews prior to payment. The planned corrective action for this finding is currently in the process of development, approval, and implementation.
2020-108 Lack of Controls over Costs Submitted for Reimbursement (initially reported 2020)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Activities Allowed, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization included an invoice for reimbursement under the program for which a vendor credit memo for the full amount of the invoice had been received due to miscoding of the credit memo to the correct COVID-19 class on the general ledger. In addition, the Organization did not include an applicable invoice for COVID-19 expenses for reimbursement due to the same miscoding of the COVID-19 class to the general ledger.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under compliance requirements for allowable costs 2 CFR section 200.405(a)(1) costs should be incurred specifically for the federal award, and 2 CFR section 200.406(a) to the extent credits accruing or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award program either as a cost reduction or cash refund as appropriate.
Cause: The Organization did not apply the credit memo or the invoice to the correct general ledger classification resulting in the credit memo and invoice being incorrectly included or not included in the reimbursement request.
Effect: The Organization is not applying for reimbursement with the correct supporting documentation which could lead to a loss of grant funding.
Recommendation: The Organization should review the posting of any credit memos or applicable invoices to ensure they are posted to the correct account/classification so that only allowable costs which were incurred during the period of performance are included on any reimbursement requests.
Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. Management understands the importance of reviewing the posting of credit memos or applicable invoices to ensure they are posted correctly. We will update our policy to include a process for review of credit memos prior to posting. The planned corrective action for this finding is currently in the process of development, approval, and implementation.