Audit 404913

Finding Number: 2025 001 Finding Type: Nonmaterial Noncompliance and Significant Deficiency in Internal Controls Over Compliance related to Special Tests and Provisions Information on the Federal Program: Program Name: Health Center Program Cluster (93.224/93.527) Federal Awards Project Title: Health Center Program Award Period: January 1, 2025 – December 31, 2025 Award Number: H80CS06658 Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Criteria: In accordance with Section 330(k)(3)(G) of the Public Health Services Act (42 U.S. Code § 254b), as an FQHC, the Organization must have a sliding fee discount program in which the Organization’s fee schedule is discounted based on a patient’s ability to pay. Condition: Through testing a statistically valid sample of 25 individual patient balances, we noted one instance in which the sliding fee discount applied was inconsistent with the Organization's policy. Specifically, a contracted third-party billing company incorrectly applied a sliding fee discount to a patient account, resulting in a discount that was not consistent with the Organization's sliding fee discount policy. Cause: The Organization utilizes a contracted third-party billing company to perform certain billing functions, including the application of sliding fee discounts. Although management performs monitoring procedures over the sliding fee discount program, those procedures were not adequately designed or consistently performed to detect errors made by the third-party billing company. Specifically, monitoring was performed only quarterly, included a limited sample of transactions, was not formally documented within the Organization's sliding fee discount policy, and was not consistently performed throughout 2025. As a result, the incorrect application of a sliding fee discount was not identified through the Organization's monitoring procedures. Effect: Sliding fee discounts may not be consistently applied in accordance with policy, resulting in potential noncompliance with federal program requirements if errors are not timely identified and corrected. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that the Organization strengthen its oversight and monitoring procedures over the sliding fee discount program, including activities performed by the contracted third-party billing company. Management should evaluate the frequency and scope of monitoring activities to ensure a sufficient number of transactions are reviewed throughout the year to identify potential errors in the application of sliding fee discounts. In addition, the Organization should update its sliding fee discount policy and related procedures to reflect current monitoring practices, assign responsibility for performing and reviewing monitoring activities, including oversight responsibilities for third-party billing vendors, and document the results of reviews and any corrective actions taken. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding and will develop and implement the recommendations above.

Finding Number: 2025 002 Finding Type: Significant deficiency in internal controls over compliance related to Procurement, Suspension and Debarment Information on the Federal Program: Program Name: Congressional Directives (93.493) Federal Awards Project Title: Community Project Funding/Congressionally Directed Spending ‐ Construction Award Period: June 1, 2023 – September 29, 2026 Award Number: CE2CS49443 and CE2CS52630 Agencies: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Criteria: Under 2 CFR § 200.214 (Suspension and Debarment), non-Federal entities are prohibited from entering into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in Federal programs. To comply with these requirements, entities must implement internal controls reasonably designed to ensure that Federal awards are not used to pay or engage suspended or debarred individuals or entities, including appropriate verification procedures such as screening against the SAM.gov Exclusions List. Condition: The Organization did not have adequately designed internal controls to ensure compliance with Federal suspension and debarment requirements. Specifically, the Organization did not perform SAM.gov exclusion screenings for all contractors. SAM.gov checks were performed only for employees, rather than being performed for all applicable vendors whose yearly expenditures charged to the grant met or exceeded $25,000. As a result, the Organization’s exclusion screening process was not consistently applied to all vendors who met the expenditure threshold. Cause: The Organization's policies and procedures did not establish a comprehensive process to identify contractors and vendors subject to Federal suspension and debarment requirements and ensure that SAM.gov exclusion screenings were performed and documented. Staff turnover and operational challenges contributed to the breakdown in the control process. Effect: Without appropriately designed and consistently applied exclusion screening procedures, there is an increased risk that Federal funds could be used to compensate suspended or debarred entities. This could result in noncompliance with Federal award requirements and may result in questioned costs or other Federal award consequences if such entities were engaged. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that the Organization strengthen its internal controls over compliance with suspension and debarment requirements by implementing formal policies and procedures to ensure SAM.gov exclusion screenings are performed and documented for all applicable contractors and vendors subject to Federal suspension and debarment requirements. At a minimum, the Organization should: • Perform SAM.gov exclusion checks at the time of engagement for all contractors whose expenditures could be charged to Federal awards; • Establish a defined frequency for ongoing monitoring (e.g., periodic or at least annually) to ensure continued compliance; and • Document the results of all exclusion searches and maintain evidence to support compliance with Federal requirements. Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding. Management will implement the recommendations above.