Audit 306052

FY End
2022-12-31
Total Expended
$3.10M
Findings
10
Programs
2
Year: 2022 Accepted: 2024-05-13

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
396474 2022-001 Significant Deficiency - L
396475 2022-002 Significant Deficiency Yes L
396476 2022-003 Significant Deficiency - B
396477 2022-004 Significant Deficiency - B
396478 2022-005 Significant Deficiency Yes N
972916 2022-001 Significant Deficiency - L
972917 2022-002 Significant Deficiency Yes L
972918 2022-003 Significant Deficiency - B
972919 2022-004 Significant Deficiency - B
972920 2022-005 Significant Deficiency Yes N

Contacts

Name Title Type
S59BZCFK9K18 Eric Dale Auditee
9047604904 Darryl R. Jackson Auditor
No contacts on file

Notes to SEFA

Title: Reporting Entity Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Agape Community Health Center, Inc. (the “Organization”) is a not-for-profit Florida Corporation under Chapter 617 of the Florida Statues. The Organization was organized to provide comprehensive healthcare services with compassion and love to the entire community. We strive to provide care that is unconditional, of high quality and readily accessible. As required by the grant agreements with the federal government, detailed accounting records are maintained for each expenditure type. Uniform Guidance and Government Accounting Standards Board Statement No. 14, “The Financial Reporting Entity” set forth the audit and reporting requirements applicable to recipients of federal financial assistance. As a result of applying the reporting entity criteria in GASB Statement No. 14, no other component units exist in which the Organization has any financial accountability and which would require inclusion in Agape Community Health Center, Inc.’s Schedule of Expenditures of Federal Awards.
Title: Basis of Accounting Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the Organization under programs of the federal government for the year ended December 31, 2022. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Since the Schedule presents only a select portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Organization.
Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented when available.
Title: Non-cash Awards Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization did not have any non-cash awards during the fiscal year.
Title: Indirect Cost Rate Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Contingencies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Grant monies received and disbursed by the Organization is for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowance of expenditures. Based upon experience, the Organization does not believe that such disallowances, if any, would have a material effect on the financial position of the Organization.
Title: Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Organization provided no federal awards to sub-recipients during the year December 31 2022.

Finding Details

Condition/Criteria: General ledger account balances should be reconciled to subsidiary ledgers and supporting documentation in a timely manner to ensure the accuracy and completeness of the financial statements. Cause: The Organization experienced an increase in turnover of accounting personnel in addition to constraints arising as a result of COVID-19. Effect: The Organization’s financial statements could be misstated due to errors not detected and/or corrected in a timely manner. This also resulted in several audit adjustments.
Criteria: Management is responsible for establishing and maintaining effective internal controls over financial reporting. Effective internal controls should include preparation of account reconciliations which should be reviewed by a person independent of the preparer in a timely manner. Supporting documentation of the reconciliations and of the review should be maintained by the Organization. In addition, entries posted as a result of the reconciliations should be reviewed by a person independent of the preparer and support of the review should be maintained by the Organization. Condition: Several misstatements of the Organization’s financial statements were discovered during the financial statement audit. Areas in which adjustments were proposed and recorded for the financial statements to be in conformity with accounting principles generally accepted in the United States of America (GAAP) include: • Patient receivable and their related reserves • Net assets • Credit card payable • Accrued salaries • Accounts payable and related expense Cause: The Organization failed to identify certain adjustments required to present the financial statements in accordance with GAAP. Management should review existing policies and procedures for necessary changes and formalize reconciliation and journal entry review processes. Effect: Account reconciliations were not prepared for several general ledger accounts. As a result, several adjusting journal entries were proposed and recorded during the financial statement audit for the financial statements to be materially correct and in conformity with GAAP.
Criteria: In order to maintain the proper internal controls regarding the processing of invoices, the disbursements system should require proper approvals and support for disbursements. Condition: The Organization had expenditures with no backup to support the disbursement. This resulted in a 5% error rate. Also, the Organization had several disbursements that had backup support; however, there was no approval of the disbursement. Cause: Accounting staff turnover at the Organization. Effect: The lack of proper controls increases the risk of error, fraud, misappropriation of assets and inaccurate financial reporting. Questioned Cost: None
Criteria: Based on documented internal controls, the Organization should be able to provide approved support for employee pay rates and agree to payroll reports. There should be no inconsistences between approved pay rates and payroll reports. Condition: The Organization was not able to provide support for employee's most recently approved pay rate. Cause: Discussions with Organization employees indicate the cause of missing documentation, approvals and inconsistencies was due to turn over in the Human Resources area. Effect: The missing support and missing rate approvals could result in improper payroll expenditures. Questioned Cost: None
Criteria: Federal grant compliance provisions require that the Organization correctly identify a patient's ability to pay and that the rates for services be adjusted accordingly based on the sliding fee schedule. The Organization is required to follow its sliding fee policy when providing discounts to eligible patients. Condition: In the sample of 35 tested items, patient information for 19 claims were inadequate to determine the proper sliding fee discount or the patient was given an inappropriate discount based on information provided. Cause: There was inadequate understanding and inconsistent handling of the documentation requirements of the sliding fee discount program policies and procedures by certain employees who were involved in sliding fee discount determination. Effect: Lack of strict enforcement of the policy of sliding fee eligibility determination and compliance may have resulted in the Center providing incorrect discounts for services provided. Questioned Costs: None reported Context/Sampling: For 3 of 10 over 200% income level patients selected for testing; the accounts had a discount applied improperly. Also, 16 of 25 less than 200% income level patients selected for testing, had various documents missing and could not be completely tested. This sampling was not, and was not intended to be, a statistically valid sample. The finding appears to be a systemic issue.
Condition/Criteria: General ledger account balances should be reconciled to subsidiary ledgers and supporting documentation in a timely manner to ensure the accuracy and completeness of the financial statements. Cause: The Organization experienced an increase in turnover of accounting personnel in addition to constraints arising as a result of COVID-19. Effect: The Organization’s financial statements could be misstated due to errors not detected and/or corrected in a timely manner. This also resulted in several audit adjustments.
Criteria: Management is responsible for establishing and maintaining effective internal controls over financial reporting. Effective internal controls should include preparation of account reconciliations which should be reviewed by a person independent of the preparer in a timely manner. Supporting documentation of the reconciliations and of the review should be maintained by the Organization. In addition, entries posted as a result of the reconciliations should be reviewed by a person independent of the preparer and support of the review should be maintained by the Organization. Condition: Several misstatements of the Organization’s financial statements were discovered during the financial statement audit. Areas in which adjustments were proposed and recorded for the financial statements to be in conformity with accounting principles generally accepted in the United States of America (GAAP) include: • Patient receivable and their related reserves • Net assets • Credit card payable • Accrued salaries • Accounts payable and related expense Cause: The Organization failed to identify certain adjustments required to present the financial statements in accordance with GAAP. Management should review existing policies and procedures for necessary changes and formalize reconciliation and journal entry review processes. Effect: Account reconciliations were not prepared for several general ledger accounts. As a result, several adjusting journal entries were proposed and recorded during the financial statement audit for the financial statements to be materially correct and in conformity with GAAP.
Criteria: In order to maintain the proper internal controls regarding the processing of invoices, the disbursements system should require proper approvals and support for disbursements. Condition: The Organization had expenditures with no backup to support the disbursement. This resulted in a 5% error rate. Also, the Organization had several disbursements that had backup support; however, there was no approval of the disbursement. Cause: Accounting staff turnover at the Organization. Effect: The lack of proper controls increases the risk of error, fraud, misappropriation of assets and inaccurate financial reporting. Questioned Cost: None
Criteria: Based on documented internal controls, the Organization should be able to provide approved support for employee pay rates and agree to payroll reports. There should be no inconsistences between approved pay rates and payroll reports. Condition: The Organization was not able to provide support for employee's most recently approved pay rate. Cause: Discussions with Organization employees indicate the cause of missing documentation, approvals and inconsistencies was due to turn over in the Human Resources area. Effect: The missing support and missing rate approvals could result in improper payroll expenditures. Questioned Cost: None
Criteria: Federal grant compliance provisions require that the Organization correctly identify a patient's ability to pay and that the rates for services be adjusted accordingly based on the sliding fee schedule. The Organization is required to follow its sliding fee policy when providing discounts to eligible patients. Condition: In the sample of 35 tested items, patient information for 19 claims were inadequate to determine the proper sliding fee discount or the patient was given an inappropriate discount based on information provided. Cause: There was inadequate understanding and inconsistent handling of the documentation requirements of the sliding fee discount program policies and procedures by certain employees who were involved in sliding fee discount determination. Effect: Lack of strict enforcement of the policy of sliding fee eligibility determination and compliance may have resulted in the Center providing incorrect discounts for services provided. Questioned Costs: None reported Context/Sampling: For 3 of 10 over 200% income level patients selected for testing; the accounts had a discount applied improperly. Also, 16 of 25 less than 200% income level patients selected for testing, had various documents missing and could not be completely tested. This sampling was not, and was not intended to be, a statistically valid sample. The finding appears to be a systemic issue.