Finding #2025-002 – Significant Deficiency. Applicable federal programs: U. S. Department of Health and Human Services, Direct Federal Funding, Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges, Assistance Listing #93.332, Contract #NAVCA240482-01-00, Contract year: 08/27/24 – 08/26/25. U. S. Department of Health and Human Services, Direct Federal Funding, Affordable Care Act (ACA) Personal Responsibility Education Program, Assistance Listing #93.092, Contract #90AK0075-03-03, Contract year: 09/30/23 – 09/29/25. Criteria: Reporting and allowable costs – Management of Civic Heart is responsible for establishing and maintaining an effective system of internal control over government grant billing requests to ensure all grant reimbursement requests are properly prepared and recorded and that all costs submitted for reimbursement are properly allocated, where applicable. Condition and context: Civic Heart’s internal controls over grant billing requests were not sufficient to ensure that grant billing requests were consistently independently reviewed and approved. Transaction testing for details and internal controls revealed the following: 1) 3 out of 12 grant billing requests did not have evidence of independent review and approval. 2) 3 of 3 pay period journal entries used to allocate payroll expense between departments and funding sources did not have evidence of independent review and approval. Cause and effect: Transitions in the accounting and management team resulted in independent reviews of grant billing requests and payroll allocation journal entries either not occurring or documentation of such review and approval not being retained. Failure to establish and maintain an adequate system of internal control over financial reporting adversely affects Civic Heart’s ability to prepare financial statements in accordance with GAAP and may result in improper grant billings. Questioned costs: Unknown. Recommendation: Same as finding reported as #2025-001. Views of responsible officers and planned corrective action: Management agrees with the finding. See Corrective Action Plan.
Finding #2025-003 – Significant Deficiency and Other Noncompliance. Applicable federal programs: U. S. Department of Health and Human Services, Direct Federal Funding, Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges, Assistance Listing #93.332, Contract # NAVCA240482-01-00, Contract year: 08/27/24 – 08/26/25. U. S. Department of Health and Human Services, Direct Federal Funding, Affordable Care Act (ACA) Personal Responsibility Education Program, Assistance Listing #93.092, Contract #90AK0075-03-03, Contract year: 09/30/23 – 09/29/25. Criteria: Allowable costs and period of performance – The Uniform Guidance, Subpart E Cost Principles, establishes costs principles which must be followed for expenditures to be allowable and requires a system of internal controls sufficient to ensure that costs are properly charged to the appropriate general ledger object and class code. The Uniform Guidance §200.309 period of performance requires expenditures be incurred during the period of the federal grant award in order to be allowable. Condition and context: During our testing of payroll, non-payroll and indirect cost pool transactions, we identified the following exceptions: Controls over allowable cost and other non-compliance: AL #93.092 Affordable Care Act (ACA) Personal Responsibility Education Program. In a sample of 40 non-payroll transactions tested for internal controls and compliance for allowable cost we found one instance of an annual subscription for the term ending May 2026 charged to a grant which ended September 29, 2025 resulting in eight months, or approximately $1,200, charged outside the period of performance. Partial repeat of finding #2024-004. Controls over period of performance and other non-compliance: AL #93.332 Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges. In a period-of-performance sample of 18 vendor transactions with grant charges close to grant beginning or ending dates during the audit period, we found 3 instances or $1,003 of vendor costs charged outside the grant period of performance. Additionally, testing of payroll charged at the end of the grant period revealed that approximately $6,693 was charged outside the period of performance. Cause and Effect: Failure to follow Civic Heart’s policies and procedures related to review of coding for charges to the grants resulted in costs charged outside the grant’s period of performance. Questioned costs: $8,896. Recommendation: Emphasize adherence to established policies and procedures to ensure maintenance and review of payroll spreadsheets and general ledger coding for all transactions. View of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.
Finding #2025-004 – Significant Deficiency and Other Noncompliance. Applicable federal programs: U. S. Department of Health and Human Services, Direct Federal Funding, Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges, Assistance Listing #93.332, Contract #NAVCA240482-01-00, Contract year: 08/27/24 – 08/26/25. U. S. Department of Health and Human Services, Direct Federal Funding, Affordable Care Act (ACA) Personal Responsibility Education Program, Assistance Listing #93.092, Contract #90AK0075-03-03, Contract year: 09/30/23 – 09/29/25. Criteria: Reporting – The Uniform Guidance §200.508 and §200.510 requires management to prepare a schedule of expenditures of federal wards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended and amounts expended by subrecipients. Management is responsible for establishing and maintaining an effective system of internal control sufficient to prepare the SEFA in accordance with Uniform Guidance. Condition and context: Civic Heart had not performed a reconciliation of federal expenditures resulting in errors in reported expenditures. Additionally, subrecipient expenditures were not identified for two programs. There was no independent review of the SEFA. During the audit of the 2025 fiscal year, it was noted that the SEFA for the year ended August 31, 2024 overstated expenditures for the HIV Prevention Activities – Non-Governmental Organizational Based program (AL #93.939) by $52,013. The 2024 SEFA included expenditures that were allowable in accordance with the grant agreement but not billed to the federal agency for reimbursement. An audit adjustment reducing the current year expenditures was required. Cause: Transitions in the accounting and management team resulted in failure to follow Civic Heart’s policies and procedures related to preparation and review of the SEFA. Effect: Adjustments of approximately $52,600 were required to properly report expenditures and adjustments of approximately $76,600 were required to properly report subrecipient expenditures on the SEFA. Recommendation: Emphasize adherence to established policies and procedures to reconcile the federal expenditures to the federal program revenue on a routine basis and formalize the independent review process for the SEFA and grant billings. View of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.