Audit 385024

2024-004 Material Weakness in Internal Control Over Special Tests – Health Center Program (93.224) Criteria: The District’s internal control structure should ensure that patients whom have filled out a sliding scale fee application were charged the appropriate rate. Condition: During the audit, it was identified three out of sixty tested patients were determined to be a full discount eligibility, self-pay patients but the associated support documents could not be located. This testing focused on the Special Tests and Provisions regarding how the District maintains program documentation for federal compliance; the missing records represent a control deficiency in record retention rather than a direct impact on expenditures. Cause: The District lacks a formal review of maintaining all of the associated documentation. This deficiency was compounded by the significant turnover in key accounting and finance personnel identified in the prior year, which prevented the District to properly review the processes. Effect: Any incorrect calculated self pay patients discount could be not properly identified. Recommendation: We recommend that the District develop and implement a formal review process. Management’s Response: Management acknowledges the finding and is committed to strengthening its review process. Questioned Costs: None. While the documentation was missing, there was no evidence that the services provided were unallowable or that the lack of documentation resulted in an overpayment of federal funds. Recurring Finding: Yes. (A similar deficiency regarding sliding scale fee overrides was identified in the prior year as Finding 2023-002).

2024-002 Material Weakness in Internal Control Over Period of Performance – Health Center Program, WIC Special Supplemental Nutrition Program for Women, Infants, and Children, and Immunization Cooperative Agreements (93.224, 10.557, 93.268) Criteria: As discussed in the material weakness in internal control over financial reporting item 2024-001, this requires the statement of expenditures of federal awards to report on the accrual bases of accounting. Condition: See material weakness in internal control over financial reporting item 2024-001. Audit procedures identified that payroll periods overlapping the fiscal year-end were not properly allocated. Specifically, for the WIC (10.557), Immunization (93.268) and Health Center (93.224) programs, the District incorrectly included two days of salary from the prior fiscal year (September 2023) while failing to accrue three days of salary earned within the current fiscal year (September 2024). Additionally, for the Health Center (93.224) program, the District failed to properly adjust the SEFA for a salary overpayment, which was further impacted by improper fiscal year-end accrual timing. The cumulative impact of these errors resulted in a net understatement of $5,513 in SEFA expenditures as follows: • Immunization (93.268): $2,469 Net Understatement • WIC (10.557): $3,085 Net Understatement • Health Center (93.224): $41 Net Overstatement Cause: See material weakness in internal control over financial reporting item 2024-001. Effect: As discussed in the material weakness in internal control over financial reporting item 2024-001, the statement of expenditures of federal awards was under accrued as of year end. Recommendation: See material weakness in internal control over financial reporting item 2024-001. Management’s Response: See material weakness in internal control over financial reporting item 2024-001. Questioned Costs: None. The costs were determined to be allowable and substantiated; however, they were reported in the incorrect fiscal period. Recurring Finding: No. (New finding for the fiscal year ended September 30, 2024).

2024-003 Material Weakness in Internal Control Over Allowable Costs/Cost Principles and Reporting – WIC Special Supplemental Nutrition Program for Women, Infants, and Children, and Immunization Cooperative Agreements (10.557, 93.268) Criteria: The District’s internal control structure should ensure that the indirect costs be properly calculated and reported according to the allowable indirect costs provided by Texas Health and Human Services. Condition: During the audit, formula errors were identified and total allowable costs were over reported and reimbursed. Specifically, the District utilized inaccurate salary bases when applying the approved indirect cost rate of 21.51%, resulting in the following program-specific variances: • WIC (10.557): Based on the audited allowable salary base of $654,232, the total allowable indirect cost was determined to be $140,725. However, the District only requested reimbursement for $139,492, representing an under-reported variance of $1,234. • Immunization Cooperative Agreements (93.268): The District reported indirect costs of $57,255. Based on the audited allowable salary base of $258,449, the maximum allowable indirect cost was $55,592, representing an over-reported variance of $1,663. (Note: This variance was partially offset by the under-reporting in other programs). The aggregate impact of these discrepancies resulted in a net over-reimbursement of $429. These errors were primarily attributed to manual spreadsheet formula inaccuracies and the omission of certain eligible salary categories from the financial reports. Cause: The District lacks a formal review of reporting. This deficiency was compounded by the software transition challenges and significant turnover in key accounting and finance personnel identified in the prior year, which prevented the District to properly review the reporting and the associated calculation. Effect: The total indirect costs were over reported and reimbursed. Recommendation: We recommend that the District develop and implement a formal review of reporting. Management’s Response: Management acknowledges the finding and is committed to strengthening its reporting controls. Questioned Costs: None. The $429 over-reimbursement of indirect costs was fully offset by the $5,513 understatement of salary expenditures identified in Finding 2024-002. Consequently, the cumulative impact resulted in a net understatement of federal expenditures, and no repayment is required. Recurring Finding: No. (This specific calculation error is a new finding for the fiscal year ended September 30, 2024).

2024-005 Material Weakness in Internal Control Over Eligibility – WIC Special Supplemental Nutrition Program for Women, Infants, and Children (10.557) Criteria: The District’s internal control structure should ensure that only eligible applicants participate into the program. Condition: During the audit, it was identified partial of the associated support documents could not be located for two out of sixty tested participants. This testing was performed to evaluate the District’s controls over maintaining federal program eligibility files; as the participants were served by the program, the finding relates to document maintenance and has no direct impact on federal expenditures. Cause: The District lacks a formal review of maintaining all of the associated documentation for review purpose. This deficiency was compounded by the significant turnover in key accounting and finance personnel identified in the prior year, which prevented the District to properly review the processes. Effect: The associated information for the participants could be incorrectly reported. Recommendation: We recommend that the District develop and implement a formal review process. Management’s Response: Management acknowledges the finding and is committed to strengthening its review process. Questioned Costs: None. The finding relates to a failure in the control process for maintaining participant documentation. No unauthorized expenditures were identified. Recurring Finding: No. (New finding for FY 2024).