Audit 409710

Criteria: According to the Uniform Guidance, entities are required to submit their Data Collection Form (DCF) within nine months following the end of the fiscal year. This ensures timely reporting and compliance with regulatory requirements. Condition: Because the December 31, 2024 audit is being issued in November 2025, the Data Collection Form will be filed approximately 2 months after the required submission deadline. Cause: The delay in completing the audit, and ultimately submitting the data collection form was caused by turnover in the accounting department. Effect: Failure to submit the Data Collection Form timely results in non-compliance with the Uniform Guidance. This can lead to potential penalties, and loss of or decreases in funding. Moreover, it affects transparency and accountability of the entity’s financial reporting process. Recommendation: We recommend that management implement procedures to ensure that documents are readily available to multiple personnel in order to complete the audit and submit the Data Collection Form timely. Management response: La Red Health Center, Inc. acknowledges the finding and has taken steps to ensure compliance with the Data Collection Form submission in the future. Those steps are documented in our corrective action plan.

Criteria: 2 CFR §200.510(b) requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for the period, identified by federal agency, pass-through entity (as applicable), assistance listing number (ALN), and other required elements. 2 CFR §200.303 requires the auditee to establish and maintain effective internal controls over federal awards to provide reasonable assurance of compliance with statutes, regulations, and the terms and conditions of federal awards. Under GAGAS and Uniform Guidance, internal controls should ensure that federal expenditures are properly accumulated, reconciled, reviewed, and reported in the SEFA. Condition: Our audit of the SEFA for the year ended December 31, 2024, federal expenditures totaling approximately $1,586,906 were omitted from the SEFA initially prepared by management. The omitted amount represented approximately 27% of total federal expenditures for the year and included activity under the Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027. The SEFA was subsequently adjusted to include these expenditures. Cause: The entity’s SEFA preparation process did not include sufficient procedures to ensure completeness. Specifically: • The SEFA was prepared using incomplete grant tracking reports that were not reconciled to the general ledger and grant agreements. • There was no formal secondary review by personnel independent of the preparer. • Procedures were not designed to ensure all pass-through federal awards were identified and included. Effect: The omission resulted in initially materially misstated SEFA and noncompliance with SEFA reporting requirements under 2 CFR §200.510(b). The deficiency required significant auditor proposed adjustments to correct the SEFA. This control deficiency constitutes a material weakness because it indicates that the entity’s internal controls over SEFA preparation were not effective to prevent or detect a material misstatement on a timely basis. In addition, the incomplete SEFA could lead to inaccurate reporting to oversight agencies and may affect risk assessments for program compliance. Recommendation: 1. Comprehensive Reconciliation: Reconcile federal grant activity (drawdowns, expenditures, indirect costs) to the general ledger, grant agreements, and agency/portal records. 2. Program Inventory & Certifications: Maintain a centralized inventory of all federal awards (by ALN, pass-through, award number) with program manager certifications of completeness at year-end. 3. Formal Review Workflow: Establish a documented secondary review by finance leadership independent of the preparer, with checklists covering ALNs, pass-throughs, subrecipient disclosures, notes to SEFA, and indirect cost treatment. 4. Subrecipient & Pass-Through Controls: Implement procedures to capture and verify all subrecipient amounts, pass-through activity, and required subrecipient disclosures on the SEFA. 5. Close Calendar & Training: Adopt an annual SEFA close calendar with milestones and provide training on Uniform Guidance reporting requirements to staff involved in SEFA compilation and review. Management Response: Management agrees with the finding. The omission resulted from incomplete reconciliation of grant activity and insufficient review controls.