#2025-003: Grant Program: Department of Health and Human Services – Assistance Listing #93.696 – Certified Community Behavioral Health Clinic Expansion – Internal Controls Over Expenditures, Financial Reporting, and Tracking of Program Income Condition: As a result of our audit procedures, we identified multiple deficiencies in internal control over compliance related primarily to documentation, review, and monitoring controls across key compliance areas. Specifically, we noted instances where evidence of review was not maintained for expenditures and payroll, lack of documented review over federal financial reports, and insufficient processes for tracking and monitoring program income. Collectively, these deficiencies indicate that internal controls were not consistently designed or operating effectively to ensure compliance with federal requirements. Certain compliance areas affected by these control deficiencies, including procurement and suspension and debarment, are addressed in a separate finding. Criteria: In accordance with 2 CFR 200 (Uniform Guidance), the Center is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. This includes maintaining adequate documentation, performing timely and evidenced reviews, and implementing monitoring controls over compliance activities. Context: The deficiencies were identified through testing across multiple compliance areas and transaction types within the major program. Exceptions included missing evidence of review on expenditures and payroll, lack of documentation supporting review of federal financial reports, and insufficient tracking and documentation of program income. These issues were not isolated, but were observed across multiple samples and processes. Cause: The deficiencies appear to be the result of insufficiently formalized policies and procedures, lack of consistent enforcement of documentation and review requirements, and ineffective monitoring of compliance-related activities. Effect: The lack of effective internal controls over compliance increases the risk that noncompliance with federal program requirements could occur and not be prevented, or detected and corrected, on a timely basis. This may result in: • Unallowable or unsupported costs being charged to federal programs • Errors or omissions in federal financial reporting • Improper monitoring or application of program income Continued noncompliance could result in increased oversight, questioned costs, or potential loss of federal funding. No known or likely questioned costs were identified as a result of the control deficiencies noted above. Recommendation: We recommend that management strengthen internal controls over compliance by: • Implementing consistent documentation standards requiring evidence of review for all key compliance activities, including expenditures, payroll, and reporting • Establishing and enforcing formal review procedures over federal financial reports • Enhancing tracking and monitoring of program income to ensure proper documentation and application • Performing periodic internal reviews to ensure compliance controls are operating effectively • Providing training to personnel responsible for compliance to reinforce documentation and review expectations Management Response: See Corrective Action Plan.
#2025-004: Grant Program: Department of Health and Human Services – Assistance Listing #93.696 – Certified Community Behavioral Health Clinic Expansion – Documented Procurement Procedures Condition: As a result of our audit procedures over the Procurement and Suspension and Debarment compliance requirement, we noted that the Center did not have documented procurement policies and procedures in place during the fiscal year under audit. Additionally, during testing of contracts funded by federal awards, we noted that the procurement contract did not clearly include required provisions related to debarment and suspension. We also noted that the Center had not established a documented conflict of interest policy applicable to procurement activities involving federal awards. Criteria: Uniform Guidance requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under federal awards. Procurement transactions are required to be conducted in a manner providing full and open competition and must include written standards of conduct covering conflicts of interest governing employees, officers, board members, and agents engaged in the selection, award, and administration of contracts. Procedures should be in place to ensure contractors are not suspended, debarred, or otherwise excluded from participation in federal programs. Context: The Center did not have a procurement policy in place during the fiscal year under audit. Additionally, the contract funded by federal awards did not clearly include the required debarment and suspension-related provisions. The Center also had not adopted written conflict of interest standards addressing procurement decisions and contractor relationships for federally funded activities. Cause: The Center had not established and implemented formal procurement procedures, including written standards of conduct and conflict of interest requirements, applicable to federal awards during the fiscal year under audit. Effect: The absence of procurement procedures, contractor eligibility verification, and documented conflict of interest standards increases the risk that procurement activities may not comply with federal requirements and that federal funds could be awarded to contractors that are suspended, debarred, or otherwise ineligible, or have relationships that could create actual or perceived conflicts of interest. No known or likely questioned costs were identified as a result of the control deficiencies noted above. Recommendation: We recommend that management continue to implement and strengthen its formal procurement policies and procedures to ensure compliance with federal procurement requirements. Procedures should require that federally funded procurement activities are documented and retained, including the method of procurement, basis for contractor selection, evidence of competition when applicable, and compliance with applicable federal contract provisions. In addition, management should implement procedures to verify contractor eligibility prior to entering into federally funded contracts by checking SAM.gov, obtaining appropriate contractor certifications, or including required suspension and debarment clauses in contracts, and document conflict of interest disclosures and related determinations. Management Response: See Corrective Action Plan.
#2025-005: Grant Program: All Programs Included in the Schedule of Expenditures of Federal Awards – Assistance Listing # – Various – Data Collection Form Compliance Condition: The Center did not submit the Data Collection Form (DCF) and reporting package to the Federal Audit Clearinghouse (FAC) within the required timeframe for both fiscal years ended June 30, 2024, and June 30, 2025. Criteria: Per 2 CFR §200.512(b), the Center must submit the completed DCF and the reporting package to FAC within the earlier of 30 calendar days after receipt of the Auditors’ report(s), or nine months after the end of the audit period. Context: The DCF for the year ended June 30, 2024, was not timely filed during the year ended June 30, 2025. At the time of completion of the audit for the year ended June 30, 2025, the deadline for submission of March 31, 2026, had passed and the DCF is considered not timely filed. Cause: The late submission was due to delays in finalizing the audits. Effect: Failure to submit the DCF timely may delay Federal Agencies’ access to audit results and could impact the Center’s eligibility for future funding. Additionally, an untimely filed DCF results in high-risk auditee status. Recommendation: We recommend the Center implement procedures to ensure timely submission of the DCF and reporting package, including establishing internal deadlines ahead of the federal due date for audit completion. Management Response: See Corrective Action Plan.