Finding No. 2023-006 Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Schedule of Expenditures of Federal Awards (SEFA) Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined due to discrepancies between the Schedule of Expenditures of Federal Awards and the grant expense schedule, which prevented the identification of a complete and accurate population of expenditures for testing. Criteria: Uniform Guidance (2 CFR §200.510(b)) requires nonfederal entities to prepare a complete and accurate SEFA that agrees with underlying accounting records and grant expense schedules. The SEFA must be subject to appropriate review to ensure accuracy and completeness. Condition: The amount reported on the SEFA for AL No. 93.224 did not agree with the related grant expense schedule. As a result, the SEFA could not be reconciled to the underlying accounting records for audit purposes. Cause: The SEFA was not adequately reviewed or reconciled to the grant expense schedule prior to submission for audit. This condition was attributable to weaknesses in financial reporting controls and the absence of effective oversight to ensure the accuracy of federal award reporting. Effect: Because the SEFA did not reconcile to the grant expense schedule, Kagman Community Health Center, Inc. cannot demonstrate that federal expenditures were accurately and completely reported. This creates a reasonable possibility that material misstatements in the SEFA may not be prevented or detected on a timely basis and weakens internal controls over financial reporting. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over SEFA preparation by: 1. Reconciling the SEFA to grant expense schedules and accounting records prior to submission. 2. Implementing supervisory review procedures to verify the accuracy and completeness of SEFA amounts. 3. Maintaining documentation to support all federal expenditures reported on the SEFA. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Allowable Costs/Cost Principles Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined due to discrepancies between the Schedule of Expenditures of Federal Awards and the grant expense schedule, which prevented the identification of a complete and accurate population of expenditures for testing. Criteria: Under Uniform Guidance (2 CFR Part 200, Subpart E), costs charged to federal awards must be allowable, allocable, reasonable, and adequately documented. Nonfederal entities must maintain sufficient records to support expenditures charged to federal programs. Condition: No expenditure selections were tested for cost principle compliance. The auditors were unable to identify a reliable population of expenditures for this program due to discrepancies between the SEFA and the underlying grant expense records. Cause: The SEFA for AL No. 93.224 did not reconcile to the grant expense records, and supporting documentation for program-specific expenditures was not sufficiently available. In addition, the absence of a formal turnover of accounting and grant records following personnel changes limited the availability of information necessary to identify a complete and accurate population for testing. Effect: Because no expenditures were tested, the auditors were unable to determine whether costs charged to AL No. 93.224 complied with applicable cost principles. This increases the risk that unallowable or unsupported costs may have been charged to the program and weakens internal controls over compliance with federal cost requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over federal cost compliance by: 1. Ensuring that expenditures charged to each federal program are accurately tracked, documented, and reconciled to the SEFA and accounting records. 2. Maintaining adequate supporting documentation to substantiate allowability, allocability, and reasonableness of costs charged to federal programs. 3. Implementing supervisory review procedures to ensure program-specific expenditures are complete, accurate, and available for audit review. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Cash Management Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined Criteria: Under Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds. Specifically: • Non-federal entities receiving advance payments must limit drawdowns to immediate cash needs. • Trial balances should be reviewed for unearned revenue to assess whether advances are consistent with cash management requirements. • For cost-reimbursement arrangements, reimbursement requests should generally be limited to costs that have been disbursed or incurred in accordance with applicable regulations, including the Federal Acquisition Regulation (48 CFR §52.216-7(b)). Condition: Cash management testing for cash management could not be adequately performed. Trial balances, cash drawdown records, and supporting documentation necessary to determine whether federal funds were drawn and disbursed in compliance with cash management requirements were not available for audit review. Cause: Because adequate documentation was not available, the auditors were unable to determine whether Kagman Community Health Center, Inc. complied with federal cash management requirements for Assistance Listing No. 93.224. This increases the risk that federal funds may not have been drawn or disbursed in accordance with applicable regulations and weakens internal controls over compliance with cash management requirements. Effect: Because adequate documentation was not available, the auditors were unable to determine whether Kagman Community Health Center, Inc. complied with federal cash management requirements for AL No. 93.224. This increases the risk that federal funds may not have been drawn or disbursed in accordance with applicable regulations and weakens internal controls over compliance with cash management requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over federal cash management by: 1. Maintaining complete and accurate records of federal cash drawdowns, disbursements, and related trial balance activity. 2. Implementing procedures to regularly review unearned revenue balances to ensure compliance with cash management requirements. 3. Establishing formal turnover and record-retention procedures to ensure continuity of grant accounting and cash management documentation during personnel transitions. 4. Implementing supervisory review to ensure drawdowns and reimbursement requests comply with Uniform Guidance and applicable federal regulations. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Period of Performance Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined Criteria: Under the OMB Compliance Supplement and Uniform Guidance (2 CFR §200.309), costs charged to a federal award must be incurred within the approved period of performance unless otherwise authorized by the federal awarding agency or pass-through entity. Specifically: • Costs recorded at the beginning of the period of performance must not have been incurred prior to the start date unless authorized. • Costs recorded near or after the end of the period of performance must have been incurred within the approved performance period. • Obligations not liquidated as of the end of the period of performance must be liquidated within the time period allowed by applicable regulations. Condition: No expenditure selections were tested for period of performance compliance. The auditors were unable to identify a reliable population of expenditures to test due to discrepancies between the SEFA and underlying grant expense records. Cause: The amount per SEFA for AL No. 93.224 did not reconcile to grant expense records, and supporting documentation for program-specific expenditures was not sufficiently available. Additionally, the absence of a formal turnover of accounting and grant records following personnel changes limited the availability of information necessary to identify a complete and accurate population for testing. Effect: Because no expenditures were tested, the auditors were unable to determine whether costs charged to AL No. 93.224 were incurred within the approved period of performance or whether obligations were liquidated within allowable timeframes. This increases the risk that costs incurred outside the period of performance may have been charged to the program and weakens internal controls over compliance with federal award requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over period of performance compliance by: 1. Ensuring that expenditures are accurately tracked by federal program and period of performance. 2. Maintaining documentation that clearly supports the timing of costs incurred and the liquidation of obligations. 3. Reconciling grant expense records to the SEFA to allow identification of a complete population for compliance testing. 4. Establishing formal turnover and record-retention procedures to ensure continuity of grant accounting documentation. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Procurement and Suspension and Debarment Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined Criteria: Under Uniform Guidance (2 CFR §§200.317–200.327), non-federal entities must follow documented procurement procedures that provide for full and open competition and maintain records sufficient to detail the history of procurement. In addition, non-federal entities must verify that contractors are not suspended or debarred prior to contract award. Condition: No procurement transactions were tested. The auditors were unable to identify a reliable population of procurement transactions attributable to this program due to discrepancies between the SEFA and underlying accounting and procurement records. Cause: The SEFS for AL No. 93.224 did not reconcile to underlying accounting records, and procurement documentation specific to the program was not sufficiently available. Additionally, the absence of a formal turnover of accounting and procurement records following personnel changes limited the availability of information necessary to identify a complete and accurate population for testing. Effect: Because no procurement transactions were tested, the auditors were unable to determine whether Kagman Community Health Center, Inc. complied with federal procurement requirements, including competition, documentation, and suspension and debarment verification. This increases the risk of noncompliance with federal procurement standards and weakens internal controls over compliance with federal award requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over federal procurement compliance by: 1. Ensuring procurement transactions are properly identified, documented, and tracked by federal program. 2. Maintaining complete procurement records, including evidence of competition and suspension and debarment verification. 3. Reconciling procurement-related expenditures to the SEFA and accounting records to allow identification of a complete population for compliance testing. 4. Establishing formal turnover and record-retention procedures to ensure continuity of procurement documentation during personnel transitions. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.
Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 & 93.527 Program Title: Community Health Centers & Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program Area: Reporting Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: $0.00 Criteria: Under Uniform Guidance (2 CFR §200.328), non-federal entities are required to submit complete, accurate, and timely financial and performance reports in accordance with federal award terms and conditions. Condition: The following SF-425, Federal Financial Reports for the reporting period ended March 31, 2023, were submitted after the required deadline of 90 days following the reporting period end date: AL No. Grant No. Reporting Date Date Submitted 93.224 21H8FCS41048C6 3/31/2023 7/27/2023 93.224 22H80CS31624 3/31/2023 8/3/2023 93.527 23H8GCS48480 11/30/2023 4/3/2024 Cause: Federal reporting requirements, including SF-425 and Uniform Data System (UDS) reporting, were not adequately monitored, documented, or retained. This condition was exacerbated by significant turnover in accounting and executive management and the absence of a formal turnover of federal reporting responsibilities and supporting records. Effect: Late submission of required federal financial reports and the absence of required UDS reporting documentation limit Kagman Community Health Center, Inc.’s ability to demonstrate compliance with federal reporting requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over federal reporting by: 1. Establishing procedures to track and monitor all federal financial and special reporting requirements, including SF-425 deadlines. 2. Implementing supervisory review procedures to verify the accuracy, completeness, and timeliness of federal reports prior to submission. 3. Establishing formal turnover and documentation procedures to ensure continuity of federal reporting responsibilities during personnel changes. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.