Audit 413304

Finding No. SA 2025-001 – Schedule of Expenditures of Federal Awards (SEFA) Preparation and Review (Material Weakness) Criteria: Under Uniform Guidance, the auditee is responsible for preparing a complete and accurate Schedule of Expenditures of Federal Awards (SEFA). Title 2: Grant and Agreements, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), Subpart F Audit Requirements, specifically 200.510 (b) Schedule of expenditures of Federal Awards: The auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements, which must include the total Federal awards expended as determined in accordance with §200.502 - Basis for determining Federal awards expended. While not required, the auditee may choose to provide the information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amounts of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: • List individual Federal programs by Federal agency using the applicable Assistance Listing number(s). For a cluster of programs, the non-Federal entity must provide the cluster name, a list of individual Federal programs within the cluster, and provide the Federal agency name and the applicable Assistance Listing number(s). • For Federal awards received as a subrecipient, the name of the pass-through entity and the identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listings number or other identifying number when the Assistance Listings information is unavailable. For a cluster of programs, the auditee must also provide the total for the cluster. Condition: Audit procedures identified a material omission of $3,008,167 in expenditures reported for ALN 93.224, Community Health Centers Program, Section 330. As a result, reported expenditures increased from $5,101,362 on the initial SEFA to $8,109,529 on the final SEFA. The revision was necessary for the SEFA to be fairly stated in all material respects, in accordance with the requirements of Uniform Guidance. Cause: Management's controls over the preparation and review of the SEFA were not adequately designed or operating effectively to identify and correct material errors before the schedule was provided for audit. Effect: Without auditor detection and correction, the SEFA would have been materially misstated. An inaccurate SEFA could result in an incorrect program risk assessment process and improper major program determination, inaccurate compliance reporting, and an increased risk that users of the Single Audit reporting package may rely on incomplete or inaccurate information. Questioned Costs None. Recommendation: The SEFA, which is prepared by the auditee and considered supplementary information to the financial statements, is a key part of the reporting package required by the Uniform Guidance. The SEFA also serves as the primary basis that auditors use to determine which programs will be audited as part of the single audit. Therefore, the auditee’s responsibility for preparing an accurate and complete SEFA is critical. We recommend that management strengthen its controls over the preparation and review of the SEFA by: • Performing a detailed reconciliation of SEFA expenditures to the underlying general ledger and grant reports. • Reviewing Assistance Listing Numbers and pass-through information for accuracy and completeness. • Implementing a documented supervisory review process prior to submission of the SEFA. • Utilizing a year-end SEFA preparation checklist to ensure all federal programs and disclosures are properly reported. Views of responsible officials and planned corrective actions: Management concurs with the finding. Previous CFO submitted a SEFA based on revenue recognized without reconciling grant allowable expenses. To remediate the identified material weakness in financial reporting oversight, the CEO has initiated a restructuring of the fiscal leadership team. Effective May 22, 2026, an interim CFO with extensive knowledge of healthcare accounting, GAAP and Uniform Guidance has been appointed. Corrective Action Plan: Senior accountants have been provided training on federal grant accounting procedures. Drawdowns are now performed after proper reconciliation of allowable expenses per grant budgets. Personnel responsible for implementation: Kristopher Zuniga Position of responsible personnel: Interim Chief Financial Officer Expected date of implementation: Implemented as of June 30, 2026.

Finding No. SA 2025-002 – Inaccurate Application of Sliding Fee Discounts (Significant Deficiency) Federal Assistance Listing Number: 93.224 Federal Program Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Award Period: Fiscal year 2025 Program Identification Numbers: H80CS00850 H8N54038 Criteria: Health centers must have a schedule of fees or payments for the provision of their health services consistent with locally prevailing rates or charges and designed to cover their reasonable costs of operation. They are also required to have a corresponding schedule of discounts applied and adjusted based on the patient’s ability to pay. The patient’s ability to pay is determined based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (HHS). The poverty guidelines are issued each year in the Federal Register and HHS maintains a web page that provides the poverty guidelines. Non-grant funds (State, local, and other operational funding and fees, premiums, and third-party reimbursements which the project may reasonably be expected to receive, including any such funds in excess of those originally expected), shall be used as permitted under the law and may be used for such other purposes as are not specifically prohibited under the law if such use furthers the objectives of the project. Condition: WHC has a schedule of fees and has adopted the Sliding Fee Discount Policy. WHC determines the amount of fees to be charged to a patient based on the patient’s income, expenses, and number of dependents in conjunction with the sliding fee schedule. Of the 60 patients selected for testing, we noted that three patients were charged with the incorrect sliding fee amount, which resulted in overcharging the patients by a total of $30. Cause: WHC has identified the root causes of the issue as staff error in assessing the patient’s ability to pay and insufficient training on the sliding fee program requirements, failing to properly link nominal charges to the corresponding coded procedures. Effect: The deficiencies resulted in inaccurate billing and an increased risk of noncompliance with the HRSA sliding fee discount program requirements. Questioned Costs: $30 in net overcharged sliding fee for patients sampled. Repeat Finding Yes, see Summary Schedule of Prior Year Audit Finding (SA 2024-001)