Finding 2021-009: Reporting – Lack of Management Oversight to Ensure Proper Tracking of Federal Award Expenditures – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA The Uniform Guidance requires grantees to maintain its accounting records in sufficient detail to allow for the tracking of all federal funds received, as well as details on how such funds were spent. As such, management is responsible for maintaining and completing the Schedule of Expenditures of Federal Awards (SEFA). The SEFA must accurately reflect expenditures based on qualifying costs actually incurred and must be supported by the accounting records. CONDITION AND CONTEXT Management did not track expenses incurred under each federal award. As such, it was unable to properly report such expenses on the SEFA. Instead, the SEFA was based on cash received under each of the federal programs. Management received funds totaling $3,535,567 during the year and reported organization-wide expenses of $4,662,359. However, management was unable to provide adequate support, such as invoices, contracts, or payroll records, to support the extent to which such funds were spent on the federal program. CAUSE QCHC did not have a policy in place requiring expenses to be tracked by project, program and cost center such that an accurate SEFA could be prepared and be substantiated by the accounting records. EFFECT OR POTENTIAL EFFECT QCHC is not in compliance with the requirements of the Uniform Guidance. QUESTIONED COST $3,535,567. REPEAT FINDING Yes (2020-004) RECOMMENDATION Management should develop a policy which requires that all direct and indirect expenses relating to federal award programs are properly coded as such and tracked in the general ledger. This coding should be reviewed by a management level employee for propriety. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-010: Reporting – Lack of Management Oversight to Ensure the Timely Submission of Reporting Package and Data Collection Form – Material Weakness in Internal Controls Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA The Uniform Guidance requires the reporting package and Data Collection Form be submitted to the Federal Audit Clearinghouse the earlier of 30 days after the reports are received from the auditors or nine months after the end of the audit period. Additionally, in accordance with the grant agreement, QCHC must submit an annual Uniform Data System Report within 45 days of the reporting period end and Federal Financial Report within 90 days of the budget end date. CONDITION AND CONTEXT QCHC was required to submit the reporting package and the Data Collection Form for the year ended July 31, 2021, by April 30, 2022. This filing remains outstanding. QCHC was unable to provide evidence that the Uniform Data System Report and the Federal Financial Report were prepared and submitted. CAUSE QCHC experienced issues with its accounting software and turnover within its accounting leadership, which had a direct impact on the financial reporting process which precipitated delinquency in commencing and completing the fiscal year 2021 audit and ensuring the completion and submission of the required reports in a timely manner. EFFECT OR POTENTIAL EFFECT The late submission of the reporting package affects all Federal programs administered by QCHC. QUESTIONED COST None REPEAT FINDING Yes (2020-005) RECOMMENDATION We recommend that management implement procedures to ensure that all federal reports are filed by the required due dates. We also recommend that management implement a process of formally documenting the review and approval of reports prior to submission. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-011: Allowable Activities – Lack of Adequate Documentation to Support That Services Provided to Patients Were an Allowable Activity – Material Weakness in Internal Control Over Compliance FEDERAL PROGRAM ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA QCHC is required to maintain sufficient patient records to support that federal funds were spent only on qualifying services. CONDITION AND CONTEXT During the audit of the financial statements for the fiscal year ended July 31, 2021, QCHC was unable to provide adequate documentation to support the nature of services provided to patients. CAUSE There was significant turnover in the Finance department and the adequate documentation to support patient services was not maintained. EFFECT OR POTENTIAL EFFECT By not retaining patient records and charges documentation, patients may have received services that are unallowed or may have not been charged the proper amount for the services received. This finding is a material weakness in internal control over compliance and noncompliance with the Uniform Guidance. QUESTIONED COST Amount, if any, could not be determined due to lack of supporting documentation. REPEAT FINDING Yes (2020-006) RECOMMENDATION We recommend management improve their documentation retention processes to support the services provided to individuals. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-012: Special Tests and Provisions – Lack of Management Oversight and Document Retention over Application of Sliding Fee Discounts – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA Under the terms of the federal award, QCHC is required to develop a sliding fee discount schedule and apply the appropriate calculated discount to eligible patients for services rendered. The sliding fee discount is based on the eligible patient’s ability to pay. CONDITION AND CONTEXT QCHC was unable to provide documentation to support the approved sliding fee discount was applied to eligible patients during the year. CAUSE There was significant turnover in the Finance department and the adequate documentation to support patient services was not maintained. EFFECT OR POTENTIAL EFFECT By not retaining documentation of patient charges and the related discount, we were unable to determine whether patients were charged the proper amount for their services. QUESTIONED COST Amount, if any, could not be determined due to lack of supporting documentation. REPEAT FINDING Yes (2020-007) RECOMMENDATION We recommend management improve their documentation retention process to support patient charges and any related sliding fee discounts applied. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-013: Cash Management – Lack of Management Oversight over Drawdown Requests – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA Recipients of federal grants are required by federal regulations (Uniform Guidance, 2 CFR Part 200) to maintain documentation demonstrating that cash receipts correspond to drawdowns based on actual, allowable costs incurred. Drawdowns for Federal awards should be properly supported with relevant forms and reports to substantiate the costs incurred and evidence management review and approval. CONDITION AND CONTEXT For the year ended July 31, 2021, QCHC recorded cash receipts related to their federal awards totaling $3,535,567. However, QCHC was unable to provide evidence that these amounts represent drawdowns from the federal grants. The only available documentation substantiates the receipt of cash, without linking it to eligible grant expenditures. CAUSE There was significant turnover in the Finance department and the records to support grant drawdowns were not maintained. EFFECT OR POTENTIAL EFFECT We were unable to determine whether the cash received and recorded in total for the year were based on allowable costs incurred. As a result, there is a risk that federal funds may have been received in advance of, or in excess of, allowable expenditures. This could lead to noncompliance with federal regulations and potential misstatement of federal expenditures and the accuracy of the Schedule of Expenditures of Federal Awards. QUESTIONED COST $3,535,567. REPEAT FINDING No RECOMMENDATION We recommend that management establish procedures to ensure that documents supporting all drawdown requests are properly retained. Such requests should also be reviewed and approved prior to the request being made, with this approval documented and retained. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-014: Allowable Costs – Lack of Management Oversight to Ensure Retention of Timesheets Approval and Payroll Allocation – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA In accordance with the Uniform Guidance, the costs charged to federal funds must comply with the cost principles of 45 CFR Part 75, Subpart E, and any other requirements or restrictions on the use of federal funding. CONDITION AND CONTEXT QCHC was unable to provide the approval of timesheets and the payroll allocation for 60 selections for payroll control testing. CAUSE There was significant turnover in the Finance department and the records to support timesheets approval and payroll allocation were not maintained. EFFECT OR POTENTIAL EFFECT We were unable to determine whether the time charges to the federal award were accurate, allowable, and properly allocated, leading to inaccurate information being charged through the awards. QUESTIONED COST $106,818. REPEAT FINDING No RECOMMENDATION We recommend that management implement procedures to ensure that timesheets and related approvals are adequately maintained and supported. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.
Finding 2021-015: Indirect Costs – Lack of Management Oversight to Ensure the Accuracy, Allowability and Proper Allocation of Indirect Costs – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA Under the Uniform Guidance (2 CFR Part 200, Subpart E), recipients of federal awards must maintain documentation to support costs charged to federal programs, including indirect costs. The documentation should demonstrate that costs are allocable, allowable, and in accordance with the approved indirect cost rate agreement, if applicable. CONDITION AND CONTEXT QCHC was unable to provide sufficient records to substantiate costs charged to federal grants. As a result, we were unable to determine the accuracy or allowability of both direct and indirect costs recorded. Furthermore, due to this lack of support documentation, we could not verify whether indirect costs were charged, nor could we confirm that any indirect cost calculations were based on an appropriate and complete base of direct costs or were calculated properly in accordance with the negotiated indirect cost rate agreement. CAUSE There was significant turnover in the Finance department and the records to support the allocation of indirect costs was not maintained. EFFECT OR POTENTIAL EFFECT This may affect the accuracy of the Schedule of Expenditures of Federal Awards and compliance with federal requirements. QUESTIONED COST Unable to determine. REPEAT FINDING No RECOMMENDATION We recommend that management implement procedures to ensure that all indirect costs claimed under federal grants are supported by adequate documentation, including detailed allocation methodologies and supporting records, in accordance with federal regulations. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION