2024-003 Improve Internal Controls Over Reporting Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement 2 CFR 200.303 requires the County to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Per U.S. Department of the Treasury’s Coronavirus State and Local Fiscal Recovery Funds: Compliance and Reporting Guidance, recipients are required to accurately report project-level information, including the breakdown of expenditures by individual project, and to avoid duplicative or misclassified reporting of expenditures across reporting periods. Condition and Context During our audit, it was determined that the County did not submit its quarterly performance and evaluation report to Treasury within the required timeline for the quarter 2 2024 report (April-June). Further, there is no documented review of the project and expenditure reports by an individual that is not involved with preparing the reports. Additionally, key line items, specifically current period expenditures and total cumulative expenditures, included on the project and expenditure reports for quarters 2 and 4 of 2024 (April–June and October–December) did not agree to the general ledger, as required by the terms of the grant agreement. Cause The County’s internal controls over federal award reporting did not ensure expenditures were accurately reported. Effect or Potential Effect Inaccurate reporting of project-level and current period expenditure information increases the risk of noncompliance with federal reporting requirements and impairs the transparency and oversight expected by the Treasury. No questioned costs are reported as the requirement is procedural in nature and costs reported were ultimately deemed allowable. Recommendation The County should address the weakness in internal controls noted above by requiring two individuals to be involved in preparing and reviewing reports submitted to federal agencies to ensure the reports are complete and accurate. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
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.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 17.235, Senior Community Service Employment Program Federal Award Identification Number and Year: 2022-1 Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting compliance, it was noted the client failed to submit the monthly expenditure reports for the period ended June 30, 2024 within the required time frame. Context – The required reports were not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The reports were submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 21.027, Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year: 2022-0001 & E20250728-002 & E20250157-001 Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting compliance, it was noted the client failed to submit the monthly expenditure reports for the period ended January 31, 2024, February 29, 2024, April 30, 2024, June 30, 2024, July 31, 2024, September 30, 2024, November 30, 2024, and December 31, 2024 within the required time frame. Context – The required report was not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The report was submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.
Federal Award Number and Award Year RW1-17, award year 3/1/2023 – 2/29/2024 for AL No. 93.914 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition and Context BayCare included expenditures related to 2023 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $155,429 was required and resulted in identification of an additional major program. Possible Cause and Effect In preparing the SEFA, BayCare utilized the 2024 claim payments received as the basis of the amount on the SEFA rather than expenditures incurred during 2024. Thus, this resulted in 2023 expenditures being included on the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding Yes Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Federal Award Number and Award Year 4486DR-FL and January 1, 2024 to December 31, 2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of federal awards for the period covered by the entity’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-federal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal control should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Condition and Context The Organization did not have adequate controls in place related to the identification and reporting of federal expenditures for the COVID-19 Disaster Grants - Public Assistance (Presidentially Declared Disasters) program (FEMA) on the SEFA. Specifically, the Organization lacked controls to ensure expenditures incurred for FEMA were recognized on the SEFA when obligated. As a result, $4,644,457 of FEMA expenditures were omitted from the December 31, 2024 SEFA. Possible Cause and Effect Management did not perform appropriate risk assessment procedures related to federal awards that have unique recognition criteria such as FEMA. Specifically, there was not a control in place to ensure FEMA expenditures were recognized on the SEFA based on when the FEMA award was both obligated and expenditures were incurred. Failure to establish effective internal controls over the preparation of the SEFA may prevent the Organization from reporting accurate information and completing an audit in accordance with the Uniform Guidance. Questioned Cost Not applicable Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat of Prior Finding Not a repeat finding. Recommendation We recommend that the Organization strengthen its processes and internal controls over ensuring that expenditures have been reported completely and accurately on the SEFA. View of Responsible Official Management agrees with the noted finding.
Federal Program AL No. 97.036 - COVID-19 Disaster Grants- Public Assistance (Presidentially Declared Disasters) Federal Agency U.S. Department of Homeland Security- Federal Emergency Management Agency Federal Award Number and Award Year 4486DR-FL and January 1, 2024 to December 31, 2024 Criteria Activities Allowed or Unallowed and Allowable Costs/Cost Principles Per FEMA’s Public Assistance Program and Policy Guide, this criterion applies to all costs claimed. Not all costs incurred as a result of the incident are eligible. To be eligible, costs must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act Section 312, 42 USC Section 5155, and 2 CFR 200.406); • Authorized and not prohibited under Federal or SLTT government laws or regulations; • Consistent with the Applicant’s internal policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the Applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR 200.403). Special Tests and Provisions – Project Accounting For large projects, the recipient is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). Internal Control Additionally, 2 CFR 200.303 requires non-federal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition and Context On December 9, 2024, FEMA obligated Project Worksheet #674964 in the amount of $4,644,457. This amount included $209,763 of duplicate invoices. In July 2025, the Homeland Security Operational Analysis Center (HSOAC) issued an Applicant Review Memorandum indicating that it had evaluated Project Worksheet #674964 and determined that the methodology used by management to calculate a portion of the estimated expenditures was not reasonable, as the population included two duplicate invoices. As a result of these findings, FEMA subsequently deobligated $209,763. The Organization had a control in place over the compilation and review of expenditures submitted to FEMA for reimbursement that was appropriately designed to detect duplicate expenditures. However, the control did not operate effectively, as the review was not performed with sufficient rigor to identify and remove duplicate invoices prior to submission. Consequently, duplicate expenditures were included in the reimbursement request submitted to FEMA. Possible Cause and Effect The Organization had established a review control over expenditures submitted to FEMA for reimbursement that was designed to identify and prevent duplicate expenditures from being included in reimbursement requests. However, the control did not operate effectively, resulting in two duplicate expenditures totaling approximately $209,000 being included in a reimbursement request submitted to FEMA. The duplicate expenditures were subsequently identified during the HSOAC review process and were deobligated. Questioned Costs $209,763 Statistically Valid Sample Not applicable Repeat of Prior Finding Not a repeat finding. Recommendations We recommend that the Organization strengthen controls over the preparation and management review of FEMA reimbursement submissions to ensure duplicate invoices are identified and excluded, unallowable costs are not included, and all relevant supporting documentation is maintained in accordance with Federal requirements. View of Responsible Official Management agrees with the noted finding.
Criteria: 2 CFR § 200.303(a) requires the establishment and maintenance of effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award Condition: During our audit, we noted that POP Biotechnologies Inc. does not maintain or store bank reconciliations on file. There is no evidence of a formal process for reconciling cash balances on a regular basis. Cause: The organization has not established or implemented procedures requiring the preparation and retention of bank reconciliations. Effect or Potential Effect: Failure to perform and retain bank reconciliations increases the risk of errors or irregularities in cash balances going undetected, which could result in misstatements in the financial statements and noncompliance with federal requirements. Known Questioned Costs: None identified. Perspective Information: This issue was identified for all bank accounts reviewed during the audit period, indicating a systemic deficiency. Identification of Repeat Findings: This is a new finding for the current year. Recommendation: We recommend that POP Biotechnologies Inc. implement procedures to ensure that bank reconciliations are prepared and reviewed monthly, and that documentation is retained for audit and management review.
2024-005 – LACK OF SUPPORT FOR PROCUREMENT – ALN 12.118 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2024-005 Federal Program: FAIN: NORTH DAKOTA ENVIRONMENTAL INFRASTRUCTURE (SECTION 594) - ARRA Unknown ALN: 12.118 Year(s): 2024 Federal Agency: U.S. Department of Defense Questioned Cost: Unknown Condition The City of Cando did not maintain support surrounding the selection process for the construction engineer for the 2022 Water and Improvements project. Therefore, we were unable to determine if the engineer selection was properly completed. In addition, the City of Cando did not have a procurement policy. Effect Without support for the selection of the construction engineer, the City of Cando is unable to demonstrate that contract was properly awarded. Cause The City of Cando does not have sufficient procedures in place to ensure procurement documentation is maintained to verify that the selection process was completed in accordance with NDCC. Criteria • N.D.C.C. §48-01.2-19 (selection process for construction management services) includes, but is not limited to, the following requirements: o The selection committee shall establish the content of the request for qualifications, which must include (but is not limited to); the identity of the governing body and a list of the members of the selection committee, description of the proposed public improvement, proposed budget limits of the public improvement, commencement and completion date of the proposed public improvement, and the description of the scope of services to be provided. • 2 CFR 200.318 states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." • Under 2 CFR 200.303(a), recipients and subrecipients must "establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Context The City of Cando entered into a contract for construction engineering services for the City’s 2022 Water & Sewer Improvements project with a contract value of $511,600. Repeat Finding No. Recommendation We recommend the City of Cando maintain support surrounding the selection process for engineering services. We also recommend that a procurement policy is established. City of Cando’s Response See the Corrective Action Plan.
Program Information: Assistance Listing #: 21.027 U.S. Department of the Treasury COVID-19 American Rescue Plan Act - 2021 Award Numbers: SLFRP3186, SLFRP4785 Award Periods: 8/13/2021 - 12/31/2026, 6/4/2021 - 12/31/2026 Criteria: Recipients may use payments from SLFRF to replace lost public sector revenue to provide government services. Recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic. Under the 2022 Final Rule, recipients can elect a one-time “standard allowance” of $10 million (not to exceed the recipient’s award amount) to spend on the “provision of government services” during the period of performance. Alternatively, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the 2022 Final Rule to determine the amount of SLFRF funds that can be used for the “provision of government services.” In calculating revenue loss, recipients can choose whether to use calendar or fiscal year dates but must be consistent throughout the period of performance. If calculating revenue loss, recipients must provide auditors with evidence supporting their revenue loss calculation. 2 CFR § 200.303 - Internal controls states, the non-federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During testing, we noted the following: 21.027 • The Tribe was unable to provide documentation demonstrating that the required Annual Project and Expenditure Report was prepared and submitted. Additionally, the Tribe was unable to provide documentation supporting the calculation of revenue loss used to support expenditures reported under the revenue replacement provision. [ X ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: The Tribe did not retain copies of the required performance reports, and procedures for maintaining federal reporting documentation were not consistently followed. Turnover in management likely contributed to the lack of record retention. Effect: The lack of retained documentation increases the risk that required reports may not be submitted accurately or timely and that expenditures reported under the revenue replacement provision may not be adequately supported. As a result, the Tribe may be unable to demonstrate compliance with applicable Federal requirements and amounts reported to the Federal awarding agency may be subject to additional review or potential disallowance. Questioned Costs: None noted. The lack of documentation demonstrating preparation and submission of the Annual Project and Expenditure Report did not result in identifiable questioned costs. Additionally, aince the Tribe was unable to provide documentation supporting the revenue loss calculation used to substantiate the amount reported under the revenue replacement provision. Accordingly, we were unable to determine whether any questioned costs were associated specifically with the revenue replacement calculation. Repeat Finding: No. Recommendation: We recommend the Tribe implement a formal process to track required federal reporting deadlines and ensure that copies of all submitted reports are maintained in the grant files. This may include establishing a reporting calendar, designating a responsible staff member to complete and retain the reports, and implementing a supervisory review to ensure compliance. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: Assistance Listing #: 93.445 U.S. Department of Health and Human Services I.H.S. Water Tank Replacement Award Numbers: PH12-U35, RN0222 Award Periods: 7/29/2021-7/29/2025 Criteria: 2 CFR § 200.305(b) - Federal Payment (Cash Management) requires that non-federal entities receiving federal awards minimize the time elapsing between the transfer of federal funds and the disbursement of those funds for program purposes. Advance payments must be limited to the minimum amounts needed and timed to meet the recipient’s actual and immediate cash requirements. Entities must maintain written procedures and financial management systems that provide for appropriate fund control and accountability. 2 CFR § 200.303 - Internal controls states, the non-federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During testing, we noted the following: 93.445 • For 2 of 2 samples, we were not provided documentation to verify that the expenditures were incurred prior to the date of the reimbursement request. • For 2 of 2 samples, there was no documentation of review and approval of the reimbursement requests. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The Tribe did not have adequate procedures in place to ensure that supporting documentation for reimbursement requests, including documentation demonstrating that expenditures had been incurred and evidence of management review and approval, was consistently maintained. Turnover in management likely contributed to the lack of record retention. Effect: Without adequate supporting documentation, the Tribe was unable to demonstrate that federal reimbursement requests were limited to expenditures incurred prior to requesting reimbursement. Additionally, the lack of documented review and approval increases the risk that unsupported, inaccurate, or otherwise unallowable amounts could be requested for reimbursement and not be detected and corrected in a timely manner. Questioned Costs: None. Although sufficient documentation was not provided to verify that expenditures were incurred prior to the reimbursement requests, no specific unallowable costs were identified as a result of audit procedures. Repeat Finding: No. Recommendation: We recommend that the Tribe follow its policies and procedures and establish procedures as needed requiring each federal reimbursement request to be supported by documentation demonstrating that the related expenditures were incurred prior to the reimbursement request. We further recommend that reimbursement requests be reviewed and approved by an appropriate individual prior to submission, with evidence of the review and approval documented and retained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: Assistance Listing #: 93.445 U.S. Department of Health and Human Services I.H.S. Water Tank Replacement Award Numbers: PH12-U35, RN0222 Award Periods: 7/29/2021-7/29/2025 Assistance Listing #: 21.027 U.S. Department of the Treasury COVID-19 American Rescue Plan Act - 2021 Award Numbers: SLFRP3186, SLFRP4785 Award Periods: 8/13/2021 - 12/31/2026, 6/4/2021 - 12/31/2026 Criteria: 2 CFR § 200.303 - Internal controls states, the non-federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Tribe, as a nonfederal entity and Indian tribe, is required to follow the same procurement laws and procedures it uses for procurements from non-federal funds, together with applicable federal statutes, the procurement standards in 2 CFR part 200 (including 2 CFR 200.317 and related provisions), and any additional procurement requirements specified in the federal award documents when expending federal award funds. In addition, under the Procurement and Suspension and Debarment compliance requirement, the Tribe must ensure that contracts and subawards under covered transactions are not made with parties that are suspended, debarred, or otherwise excluded from participation in federal assistance programs, which requires verification against the System for Award Management (SAM) Exclusions in accordance with 2 CFR 200.213 and 2 CFR part 180 (including 2 CFR 180.300). Condition/Context: During testing, we noted the following: 21.027 • 5 of 6 IIIs did not have documentation of alternate bidding or sole source justification. • 6 of 6 IIIs did not have documentation that a suspension and debarment search was performed prior to purchasing. 93.445 • 7 of 7 IIIs did not have documentation that a suspension and debarment search was performed prior to purchasing. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The Tribe’s procurement procedures were not consistently followed, and required documentation was not consistently prepared or retained. Staff turnover and inconsistent application of procurement requirements contributed to the lack of documentation supporting competitive procurement or sole source justification and suspension and debarment verification. Effect: Without documented verification, there is an increased risk that procurements may not be conducted in accordance with Federal requirements or that Federal funds could be paid to an ineligible vendor. Questioned Costs: Suspension and Debarment: None noted. The vendors were not found to be suspended or debarred; the issue relates solely to lack of documentation. Procurement: 21.027 • $108,943 - Known Repeat Finding: Yes for 93.445, Finding #2023-003. No for 21.027. Recommendation: We recommend the Tribe strengthen its procurement procedures to ensure Federal procurement requirements are completed and documented prior to contract award or purchase. Procurement files should include documentation supporting competitive procurement or an allowable sole source justification, when applicable, as well as evidence of suspension and debarment verification. The Tribe should also establish procedures to ensure required procurement documentation is retained and reviewed for compliance. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: Assistance Listing #: 93.445 U.S. Department of Health and Human Services I.H.S. Water Tank Replacement Award Numbers: PH12-U35, RN0222 Award Periods: 7/29/2021-7/29/2025 Assistance Listing #: 21.027 U.S. Department of the Treasury COVID-19 American Rescue Plan Act - 2021 Award Numbers: SLFRP3186, SLFRP4785 Award Periods: 8/13/2021 - 12/31/2026, 6/4/2021 - 12/31/2026 Assistance Listing #: 11.029 U.S. Department of Commerce National Telecommunication & Information Adm. Award Number: NT23TBC0290003 Award Period: 12/1/2022-11/30/2026 Criteria: 2 CFR § 200.303 - Internal controls states, the non-Federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During testing, we noted the following: 21.027 • 1 of 11 Non-IDC Individually Important Items (IIIs) did not have an indication of review/approval of a journal entry (JE) reallocating funds from the program. • 2 of 2 IDC IIIs did not have indication of review/approval on the indirect cost allocation JE. 93.445 • 5 of 7 Non-IDC IIIs had no purchase requisition documentation provided. • 1 of 1 IDC IIIs did not have indication of review/approval on the indirect cost allocation JE. 11.029 • 7 of 11 IIIs had no purchase requisition documentation provided. [ ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The Tribe has limited fiscal staffing and experienced personnel changes during 2025 and 2026. As a result, procedures for documenting and retaining and locating evidence of review and approval were not consistently followed for journal entries and purchase requisitions. Effect: The lack of documented review and approval increases the risk that errors, misstatements, or unauthorized transactions may not be prevented or detected and corrected in a timely manner. Additionally, without documentation of the review and approval, the Tribe is unable to demonstrate that established internal control procedures were consistently performed. Questioned Costs: None noted, testing did not identify any unallowable, unsupported, or otherwise questioned expenditures related to the items tested. Repeat Finding: No. Recommendation: We recommend the Tribe strengthen its internal controls over federal expenditures by ensuring that purchase requisitions, journal entries, and indirect cost allocation entries are reviewed and approved by appropriate personnel prior to processing. Evidence of the review and approval should be consistently documented and retained in accordance with Tribal policies. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Federal Award Findings and Questioned Costs: Finding Number: 2024-001 Federal Assistance Listing Number: 97.036 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: D20-528 Federal Award Year: 2024 Criteria Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart E, Section 200.303), the nonfederal entity must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, Subpart E Section 200.403 states that administrative closeout costs may be incurred until the due date of the final reports. If incurred, these costs must be liquidated prior to the due date of the final reports and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. Conditions Found In one of 25 selections for testwork over period of performance, expenditures related to contract labor were submitted for reimbursement to the Federal Emergency Management Agency (FEMA) that were outside of the project period. Further, the review performed over expenditures was not completed appropriately to identify this error, representing an instance of the District’s internal control not operating as designed. Cause The District does not have adequate controls in place to ensure that contract labor expenditures submitted for reimbursement by FEMA under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program represent service dates within the project period. Effect Without effective controls in place, expenditures could be reimbursed by the program that were incurred outside of the project period, resulting in non compliance with program requirements. Questioned Costs $1,316, representing the known amount of expenditures incurred outside of the project period for the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that management strengthen processes and controls in place to ensure contract labor expenditures submitted to FEMA for reimbursement under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are appropriately reviewed prior to submission to ensure they represent service dates within the project period. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.
Federal Award Findings and Questioned Costs: Finding Number: 2024-002 Federal Assistance Listing Number: 97.036 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: D20-528 AND D20-287 Federal Award Year: 2024 Criteria According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of federal awards (Schedule) for the period covered by the entity’s financial statements, which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the Schedule. Conditions Found The District did not have adequate internal controls related to the reporting of expenditures on the Schedule for the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program (FEMA). Specifically, the District’s review controls over the accuracy and completeness of the Schedule were not designed to operate at an appropriate level of precision. As a result, $4,485,028 of FEMA expenditures had been omitted from the December 31, 2024 Schedule. Cause In discussing the conditions with District management, they stated the error was caused by the management review controls in place not operating at a sufficient level of precision to detect the error. Effect Failure to establish effective internal controls over the preparation of the Schedule may prevent the District from completing an audit in accordance with Uniform Guidance. Questioned Costs Not applicable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that the District implement a system of internal controls that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.
Inability to Test Compliance Requirements Housing Voucher Cluster Public and Indian Housing - AL No. 14.850 Public Housing Capital Fund - AL No. 14.872 Material Weakness in Internal Control Material Noncompliance (Repeated in part from prior year, Finding 2023-005) Condition: The Authority did not provide adequate records or supporting documentation for the necessary audit procedures to be performed for the following compliance requirements: • Housing Voucher Cluster - Reporting, Special Tests and Provisions (Waiting List) • Public and Indian Housing - Allowability, Eligibility, Procurement, Special Tests and Provisions (Waiting List) • Public Housing Capital Fund – Allowability, Cash Management, Procurement Criteria: Uniform Guidance, per 2 CFR Section 200.302 and 200.303, requires recipients of federal awards funding to maintain records with sufficient documentation to support compliance. Context: The auditor was not able to review adequate support to perform audit procedures for compliance testing. Cause: The Authority experienced staffing and operational challenges during the prior year and did not have the available staff to follow the established internal controls to meet the timeframe given for audit testing. Effect: The auditor was unable to obtain sufficient appropriate evidence to form an opinion on compliance. Questioned Costs: Unknown. Auditor Recommendations: The Authority should implement controls to ensure documentation is maintained and made available.
ALN Number: 14.871 Name of Federal Agency: U.S. Department of Housing & Urban Development Type of Finding – Single Audit Material Weakness in Internal Control Over Financial Reporting Criteria: HUD requires that public housing authorities accurately report program activity in the Voucher Management System (VMS) and reconcile these submissions to the general ledger (GL) on a monthly basis. The Uniform Guidance (2 CFR 200.303) requires non-federal entities to establish and maintain effective internal control over federal awards, including accurate financial reporting and reconciliation processes. Condition The Schertz Housing Authority did not properly track and reconcile its monthly VMS submissions to the general ledger. As a result, there were material discrepancies between the VMS-reported data and the HCV program’s financial statements, specifically related to income and restricted equity. Cause and Effect: The Authority did not follow their formal procedures to ensure that VMS submissions were reconciled to the general ledger each month. Material discrepancies existed in the HCV program’s financial statements, affecting reported income and restricted equity. Additionally, these discrepancies contributed to the Authority experiencing a funding shortfall in the HCV program by year-end, increasing the risk of questioned costs and noncompliance with HUD requirements. Recommendation: We recommend that the Schertz Housing Authority should work with their fee accountant to ensure that the financial records agree to the VMS submissions to the general ledger. View of Responsible Officials and Planned Corrective Action: We are working with our HUD field office to correct our VMS reporting. Responsible Official: Cristi LaJeunesse, Executive Director
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2021 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population below 250,000 residents that are allocated more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the P&E quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. INDIANA STATE BOARD OF ACCOUNTS 22 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County's current policy and procedure for complying with reporting requirements is to have the Director of Operations prepare the P&E reports with assistance from his Administrative Assistant and then the President of the Board of County Commissioners certifies the P&E reports. The current internal control has been determined to be ineffective since the P&E reports do not agree with the County's financial records. The County submitted four P&E reports during the audit period; however, the errors as identified below were noted on all four reports. Quarterly Report: October 1, 2023 to December 31, 2023 • Current period obligations reported 8 projects with errors cumulatively totaling $846,032. • Current period expenditures reported 3 projects with errors cumulatively totaling $52,645. • Cumulative expenditures reported 19 projects with errors cumulatively totaling $1,142,929. Quarterly Report: January 1, 2024 to March 31, 2024 • Current period obligations reported 5 projects with errors cumulatively totaling $501,694. • Current period expenditures reported 3 projects with errors cumulatively totaling $159,815. • Cumulative expenditures reported 19 projects with errors cumulatively totaling $1,174,814. Quarterly Report: April 1, 2024 to June 30, 2024 • Current period obligations reported 5 projects with errors cumulatively totaling $580,935. • Current period expenditures reported 1 project with errors cumulatively totaling $44,288. • Cumulative expenditures reported 19 projects with errors cumulatively totaling $1,088,021. Quarterly Report: July 1, 2024 to September 30, 2024 • Current period obligations reported 3 projects with errors cumulatively totaling $291,992. • Current period expenditures reported 1 project with errors cumulatively totaling $144,863. • Cumulative expenditures reported 20 projects with errors cumulatively totaling $1,232,884. The lack of effective internal controls and noncompliance were systemic issues throughout the entire audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 23 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County's oversight process for filing the P&E reports did not detect errors. The errors were the result of including expenditures from the incorrect time periods. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not report current period obligations, current period expenditures, and cumulative expenditures properly when filing the P&E reports during the audit period. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County strengthen its system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E reports. INDIANA STATE BOARD OF ACCOUNTS 24 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024-006 Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Health and Human Services ALN: 93.600 Criteria Per 2 CFR 200.303(a), recipients must “establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition During our testing of cash disbursements, we identified three outstanding check payments for program expenses that had not been cleared by the bank. We identified the checks as outstanding on the bank reconciliation. Vendors were contacted during fieldwork and confirmed that KCR did not have an open balance, and that the vendors did not have custody of the checks. Questioned Costs $7,856 Cause KCR’s internal controls over cash disbursement were not adequately designed to identify and respond to outstanding checks, especially for payments related to federal program expenses. Effect KCR’s failure to identify and respond to outstanding checks resulted in noncompliance with 2 CFR 200.403(a). Unnecessary and unreasonable costs were charged to the Federal award. Repeat Finding No. Recommendation We recommend KCR strengthen its internal controls over cash disbursements to better identify and respond to outstanding checks. Bank reconciliations, with an outstanding check register, should be regularly reviewed by those charged with governance. Views of Responsible Officials Management concurs with the finding and recommendation. Please see the attached corrective action plan.
Finding 2024-004: Suspension and Debarment Information on the Federal Programs: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing No. 10.557 Federal Agency: U.S. Department of Agriculture Federal Award Identification Number: WIC-ARPA-MIS-STRAT-24 Federal Award Year: Year ended December 31, 2024 Compliance Requirement: Procurement - Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other MattersCriteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): As stated in 2 CFR §200.303, the non-Federal entity (i.e. the Association) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). According to 2 CFR §200.214, the non-Federal entity is subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our audit, we noted that the Association did not consistently perform or retain evidence of suspension and debarment checks through SAM.gov for applicable vendors, contractors, or consultants before entering into covered transactions. Cause: Management did not have effective internal controls in place to ensure that suspension and debarment checks were consistently performed and documented before entering into applicable contracts or other covered transactions. Effect or Potential Effect: The Association is exposed to an increased risk of entering into transactions with vendors, contractors, or consultants that are suspended, debarred, or otherwise excluded from participation in Federal programs. Such noncompliance could result in disallowed costs or other remedies available to the Federal awarding agency. Questioned Costs: None. Although the Association did not retain sufficient documentation to demonstrate that suspension and debarment checks were performed before entering into applicable transactions, we performed procedures to search the selected vendors, contractors, and consultants tested through SAM.gov. Based on those procedures, none of the selected parties tested were identified as suspended, debarred, or otherwise excluded from participation in Federal programs. Accordingly, no questioned costs were identified. Context: We selected 2 of 2 applicable vendor, contractor, or consultant agreements for suspension and debarment testing. The items selected were intended to be representative of the population tested. For 2 of 2 items tested, the Association did not provide documentation that a SAM.gov suspension and debarment check was performed before entering into the applicable transaction. Based on the nature of the control deficiency, the matter is considered systemic. Identification as a Repeat Finding, if Applicable: Not Applicable. Recommendation: We recommend that the Association implement internal controls requiring suspension and debarment screening before entering into any applicable contract or covered transaction funded by Federal awards. Evidence of the SAM.gov search should be retained in the vendor or contract file. We also recommend that the Association formalize a policy requiring periodic, at least annual, screening of existing vendors, contractors, and consultants that are expected to continue providing goods or services under Federal awards.
Finding 2024-002 Finding Type: Material noncompliance and material weakness in internal control Federal Department: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention Identification of the Federal Program: Assistance Listing Number 93.988 – Cooperative Agreements for Diabetes Control Programs Award Number: NU58DP007394 Compliance Requirement(s): Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria: Per 2 CFR Part 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Other than Personnel Services: 2 CFR Part 200.403(g) states that for costs to be allowable under federal awards they must be adequately documented. Indirect Costs: 2 CFR Part 200.403 outlines the factors affecting allowability of costs, including indirect costs charged to federal grants. Specifically, the Year 1 Notice of Award (NOA) for budget period June 30, 2023 through June 29, 2024, did not obligate any funds for indirect costs. In addition, the Year 2 NOA for budget period June 30, 2024 through June 29, 2025, obligated $250,000 for indirect costs. Personnel Services: Under 2 CFR Part 200.430(g) (Standards for Documentation of Personnel Services), charges to federal awards for salaries and wages must be based on records that accurately reflect the actual work performed. Budget estimates (meaning, estimates determined before the services are performed) alone does not qualify as support for charges to federal awards, but may be used for interim accounting purposes. Condition: Other than Personnel Services: During our testing of credit card transactions, we noted that adequate support was not maintained for four selections, which totaled $138. In total, there were 64 transactions charged to the grant in the amount of $6,398. Because supporting documentation was not maintained, we were unable to determine whether the charges were allowable. Indirect Costs: 1. In January 2024, the Imperative received approval for a negotiated indirect cost rate agreement (NICRA) of 28.5%, As part of the NICRA, the Year 1 award agreement (NOA) was to have been amended to apply the rate to the award. However, the Imperative was unable to provide a copy of the amended NOA. The original copy of the Year 1 NOA did not obligate any funds for indirect costs. When Imperative charged $200,000 of indirect costs to the federal program toward the Year 1 award, it was determined that the indirect costs was deemed to be unallowable costs for calendar year 2024. 2. Per the Year 2 NOA, indirect costs of $250,000 were allowed. However, per review of general ledger detail and per discussion with management, the Imperative did not calculate indirect costs as the indirect cost rate times the allowable actual direct costs base when they calculated the monthly indirect costs but instead calculated the monthly indirect costs as one-twelfth of the $250,000 budgeted amount. We recalculated the amount charged for July through December 2024 under the Year 2 award for reasonableness and verified that it would have exceeded the amount the Imperative actually charged using their straight-line method. 3. Overall, per review of the indirect cost journal entries and supporting documentation, we verified that the outside accountant or the EVP of Finance prepared and booked the monthly indirect costs expense with no review and approval performed by someone other than the preparer for calendar year 2024. Personnel Services: The Imperative charged payroll costs to the federal program based on the percentage allocated in the approved grant budget. However, payroll costs should have been charged to the federal program based on the actual time incurred in accordance with 2 CFR Part 200.430. We were unable to determine actual payroll costs incurred because the Imperative did not maintain records of the actual hours incurred (timesheets, etc.) during 2024. In addition, two out of 25 personnel cost transactions tested amounting to $5,724 were charged to the AL #93.988 federal program in error and, therefore, was determined unallowable costs for calendar year 2024. Per review of the personnel cost transactions journal entries and supporting documentation, we verified that there was no review and approval for allowability performed by someone other than the preparer for calendar year 2024. Cause: Other than Personnel Services: Due to oversight, the Imperative did not establish or maintain adequate internal controls and documentation over the credit card purchase process. Indirect Costs: Due to oversight, the Imperative charged $200,000 in indirect costs to the Year 1 award that were not allowed per the Year 1 NOA. The Imperative did not establish or maintain adequate internal controls and documentation over the indirect costs expenditure process. Personnel Services: Due to oversight, the Imperative charged $5,724 of personnel costs to the AL #93.988 federal program that were unallowed. The Imperative did not establish or maintain adequate internal controls and documentation over the personnel costs expenditure process. Effect: Other than Personnel Services: We are unable to determine whether the credit card transactions charged to the grant program were allowable. Indirect Costs: Unallowable costs of $200,000 relating to indirect costs was charged to the grant program. Personnel Services: Unallowable costs of $5,724 relating to personnel costs was charged to the grant program. Questioned Costs: Other than Personnel Services: Questioned costs of $6,398 Indirect Costs: Questioned costs of $200,000 Personnel Services: Questioned costs of $5,724 Repeat Finding: Not applicable. Recommendation: Other than Personnel Services: We recommend that the Imperative implement procedures to establish, document, and maintain adequate internal controls and supporting documentation over the credit card purchase process. Indirect Costs: We recommend that the Imperative implement procedures to establish, document, and maintain adequate internal controls over the indirect costs expenditures process. Personnel Services: We recommend that the Imperative implement procedures to establish, document, and maintain adequate internal controls over the personnel costs expenditures process. View of Responsible Officials: See management’s corrective action plan.
Finding 2024-003 Finding Type: Significant deficiency in internal control Federal Department: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention Identification of the Federal Program: Assistance Listing Number 93.988 – Cooperative Agreements for Diabetes Control Programs Award Number: NU58DP007394 Compliance Requirement(s): Cash Management Criteria: Under 2 CFR Part 200.303 (Internal Controls) and 2 CFR Part 200.305 (Federal Payment Standards), non-federal entities must maintain internal controls that provide reasonable assurances that drawdowns are accurate, reviewed, and aligned with actual immediate cash needs. Condition: For all five cash drawdowns performed during 2024 totaling $1,114,944, we noted no evidence of review prior to submission in the Payment Management Services (PMS) system. Cause: This finding occurred due to oversight and inadequate procedures. Effect: The potential exists for general ledger expenditures to not align with drawn-down funds. Questioned Costs: None. Repeat Finding: Not applicable. Recommendation: We recommend that the Imperative implement procedures to establish, document, and maintain adequate internal controls over the cash drawdown process. View of Responsible Officials: See management’s corrective action plan.
Finding 2024-005 Finding Type: Noncompliance and significant deficiency in internal control Federal Department: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention Identification of the Federal Program: Assistance Listing Number 93.988 – Cooperative Agreements for Diabetes Control Programs Award Number: NU58DP007394 Compliance Requirement(s): Procurement and Suspension and Debarment Criteria: Per 2 CFR Part 200.318(a) (Documented Procurement Procedures), the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with state, local, and tribal laws and regulations and the standards identified in 2 CFR Part 200.317 through 2 CFR Part 200.327. Non-federal entities are prohibited from contracting with parties that are suspended or debarred. Covered transactions include contracts or goods and services that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. Per 2 CFR Part 180.300, when a non-federal entity enters into a covered transaction with another entity at the next lower tier, the non-federal entity must verify that the entity with whom it intends to do business is not excluded or disqualified by: 1) Checking SAM.gov exclusions; or 2) Collecting a certification from that entity; or 3) Adding a clause or condition to the covered transaction with that entity. Per 2 CFR Part 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The Imperative did not have a written procurement policy in place for 2024 as required by 2 CFR Part 200.318(a). The Imperative provided AL #93.988 funds equal to or exceeding $25,000 to seven subgrantees and contractors during 2024. The Imperative failed to perform and document a verification check on SAM.gov for one contractor totaling $25,000. Additionally, the corresponding contract did not contain a suspension and debarment certification clause, and the Imperative did not obtain a signed vendor-specific suspension and debarment certification. Cause: Due to oversight, the Imperative did not establish a written procurement policy or maintain adequate internal controls and documentation over the procurement and suspension and debarment process for the AL #93.988 program for 2024. Effect: The potential exists that the Imperative could have provided federal funds to suspended or debarred parties, resulting in the Imperative being in noncompliance with federal procurement regulations. Questioned Costs: None. Repeat Finding: Not applicable. Recommendation: We recommend that the Imperative implement procedures to establish a written procurement policy, establish a process of vetting vendors and maintain adequate internal controls over the procurement and suspension and debarment process. View of Responsible Officials: See management’s corrective action plan.
Subrecipient Monitoring Federal Department – U.S. Department of Justice Pass-through Illinois Criminal Justice Information Authority Federal Award Identification Number and Year: 15JOVW-21-GG-00543-STOP and 2021 15JOVW-22-GG-00422-STOP and 2022 Violence Against Women Formula Grants, Federal Assistance Listing #16.588 County Department – State’s Attorney Office Finding 2024 – 002 CRITERIA 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D—Post Federal Award Requirements Standards for Financial and Program Management, Section 200.303 Internal controls states, “the recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Section 200.332. Requirements for pass-through entities, requires that “A pass-through entity must: (c) Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency)... (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must:(1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521.(4)Resolve audit findings specifically related to the subaward…. (g)Verify that a subrecipient is audited as required by subpart F of this part. (h) Consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records. (i) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations. CONDITION During the current audit period, the Cook County State’s Attorney Office (SAO) did not adequately comply with its subrecipient monitoring requirements as required by Federal regulations. CAUSE Based on discussions with management, the cause of this finding was an inadequate understanding of sub-recipient monitoring policies and best practices. While the Department believed at the time that they were in compliance with the applicable monitoring requirements, they now recognize that their efforts did not fully meet the necessary standards. EFFECT Failure to adequately perform and document the risk assessments on its subrecipient(s) could result in the inadequate monitoring of the activities and performance of a subrecipient. Also, this could result in Federal awards being used by the subrecipient for unauthorized purposes. QUESTIONED COSTS None. CONTEXT During our review of two (2) subrecipients (of a population of 4 subrecipients), we noted the following: For both subrecipients, we noted documentation was not maintained to support SAO’s evaluation of the subrecipients’ risk of noncompliance and the frequency of monitoring to be conducted by SAO based on the assessed risk. We also noted for both subrecipients, no documentation was provided to verify whether the subrecipients were required to have a Single Audit conducted, including SAO’s review of the report, and if applicable, issuance of a management decision on audit findings noted as required by 2 CFR 200.332e(3). The SAO utilized a “Subrecipient Monitoring Checklist” (Checklist) to conduct and document its monitoring of subrecipients. Based on review, we noted the Checklist does not include evidence of who completed the monitoring, the date the actual monitoring was performed nor the subrecipient personnel with whom the monitoring results were discussed during the site visit. Also, the Checklist appears to be inaccurately completed. Specifically, we noted the Checklist noted that the results include expected corrective actions and dates for resolution. However, there was no finding or issues noted in the formal letter submitted to the subrecipient(s) after the site visit(s). IDENTIFICATION OF REPEATED FINDINGS None. RECOMMENDATION We recommend SAO implement procedures to ensure adequate documentation is maintained to support the evaluation of each subrecipient’s risk of noncompliance and review of the Single audit report, as required by Federal regulations. Also, we suggest that the Checklist be accurately prepared and updated to include evidence of who completed the monitoring, the date the actual monitoring was performed, and the subrecipient personnel with whom the monitoring results were discussed during the site visit. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The County agrees with the finding and recommendation. The County’s corrective action plan is on pages 38-39.
Assistance Listing, Federal Agency, and Program Name COVID 19 21.027, U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Fund Federal Award Identification Number and Year N/A Pass through Entity Michigan Department of Health and Human Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria The City must establish and maintain effective internal controls to ensure compliance with federal requirements including period of performance as outlined in 2 CFR 200.303. Condition The City lacked adequate controls to verify that expenditures charged to the grant were incurred within the proper period of performance. Transactions were processed without sufficient review or procedures around the period of performance, resulting in expenditures being charged from outside the allowable timeframe. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context During the year, the City requested reimbursement for $151,621 of expenditures that were not within the period of performance. Cause and Effect The City's control for identifying whether expenditures charged to the grant was not effective as it relied on the date of the vendor's invoice and not the period in which the services were performed. As a result, reports and reimbursement requests improperly included $64,109 of expenditures incurred prior to the period of performance. The City identified the error after year end and appropriately excluded the expenditures from the final SEFA. Later, it was discovered that an additional $87,512 was improperly included on the SEFA. The City removed the additional expenditures discovered from the SEFA as well, thus creating no questioned costs. Recommendation Internal controls should be strengthened to ensure expenditures are being properly reviewed for period of performance before submitting for reimbursement. Views of Responsible Officials and Corrective Action Plan The CIty concurs with this finding and has already implemented controls to look specifically at service period of expenditures when reviewing invoices and submitting reports and reimbursement requests.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (repeated, prior two years 2023-101 and 2022-101) (initially reported 2014) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Special Tests and Provisions – Sliding Fee Discounts Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), COVID-19 H8L50549 (2023), and COVID-19 H8G48569 (2022). Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: The Organization lacks consistently applied processes and procedures related to the application of the sliding fee scale. The Organization also lacks a clear review process related to the sliding fee scale to identify errors quickly to allow for corrections to be made in a timely manner. This has been a systemic issue as a repeat finding in the prior years. The sample was not statistically valid. - Sliding fee scales were not used for the agreement that the Organization has in place with the local school district in which they provide services to students. The agreement specifically does not allow the Organization to obtain information related to household size and income as needed to appropriately place the family on the sliding fee scale. The agreement also indicates no amounts can be collected from the students, except when that student has insurance which allows the Organization to bill the insurance company for a portion of the fees. - Sliding fee scales are not used in the disaster recovery bus program that does not charge the patients for services. - Thirteen of the sixty encounters sampled where the sliding scale was used had the wrong sliding fee scale applied based on information obtained about the patient’s family size and income. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Health centers must prepare and apply a sliding fee discount schedule, so that the amounts owed for health center services by eligible patients are adjusted based on the patient's ability to pay (42 U.S.C 254b(k)(3)(G)(i)). The patient's ability to pay is based on the official poverty guidelines, as revised annually by the U.S. Department of Health and Human Services (42 U.S.C 9902(2)). Cause: Failure to apply the sliding fee correctly, as noted in 13 of the encounters above, was due to improper staff training or failure to properly monitor the process. Failure to apply the sliding fee scales due to the requirements of the agreement with the local school district and procedures applied to the disaster recovery bus program do not follow the written procedures of the Organization for use of the sliding fee scale. Effect: The Organization could be incorrectly billing for services and maintaining customer account balances at incorrect amounts. Recommendation: Staff should be consistently trained in how patients should complete the intake forms, including the sliding fee scale application, and require patients complete the form appropriately, including refusal to provide information, if applicable. Staff should also be consistently trained in what documentation is considered sufficient to support income identified as well as verify the application is consistent with the documentation and, when needed, clearly document the reasons for inconsistency. Staff should make every effort to obtain documentation of patient income in accordance with internal policies and procedures. Patients should be billed the usual and customary billing rates for all services until all documentation is received, or policies are adjusted to allow for self-determination by patients in certain situations. A process should be put in place to track patients to attempt further collection of the necessary data that would allow for adjustment of the bill after the fact when necessary. These exceptions should be tracked each month with the monthly review by the regional operations managers. The reviews by the regional operations managers should be documented and retained including the results and corrective action of the follow-up on deficiencies noted. The Organization should discuss with HRSA what could be done to either adjust policies and procedures used during the school visits to be compliant or obtain a waiver from HRSA to indicate their knowledge and approval of the school visits and disaster bus program visits not being compliant with the application of the sliding fee scale requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Billing and Collections Policy was updated to waive co-pays for students in the School-Based Program. The Billing Department is in the process of auditing and implementing quarterly feedback & training sessions for the Operations Department for training and compliance for the Sliding Fee Discount Program. This process was implemented in 2025.
2024-104 Lack of Controls Related to Filing Reports (repeated, prior years 2023-104) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), C1650381 (2023), COVID-19 H8L50549 (2023), COVID-19 H8G48569 (2022).GA142923 (2021) G2846293 (2022) and G3949501 (2023) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation to support the review of the report prior to submission to the grantor, other than the review done by the preparer. In four of the reports selected for testing under ALN 93.224 and 93.527 two reports did not have documentation of approval by the CEO prior to submission. In three of the reports selected for testing under ALN 93.211 two reports did not have documentation of approval by the CEO prior to submission. This is a systemic issue that has been a finding in the previous year. The sample was not statistically valid. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The Organization did not have a process in place for review of the data being reported on the HRSA website for the funds being expensed under the federal award programs. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be kept that clearly documents who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The accounting staff was restructured in November 2024 with the addition of a Finance Manager and Senior Accountant to strengthen internal controls and facilitate segregation of duties best practices for day-to-day activities. In addition to review of month-end journal entries, reporting requirements with additional review was also implemented in 2025.
2024-105 Lack of Payroll Review and Approval (repeated, prior year 2023-105) (initially reported 2023) Assistance Listing Number: 93.224, 93.527 and 93.211 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs, Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: No documentation of employee time approval by supervisors could be provided. The payroll clerk processes the payroll, and the finance director approves through the releasing of the payroll. However, there is no formal documentation of the overall review of the payroll process and the supervisors’ approval of time recorded by employees. This is a systemic issue and has been a finding in the previous year. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards The requirement is for the Organization to have a process in place to correctly calculate, record, and pay payroll related expenses in accordance with grant and program requirements. Cause: The Organization does not have an effective process to review, approve, and document the supervisor’s approvals prior to making the payments. Effect: This situation provides an opportunity for errors and unauthorized transactions to occur and not be detected in a timely manner resulting in payroll expenses to be charged incorrectly to the federal awards. Recommendation: In April 2024, the Organization began using a third-party service provider to process payroll resulting in new control processes over the approval of time sheets by supervisors. We recommend that the Organization implement internal control procedures under the new payroll processes to ensure that documentation of supervisor approval of time sheets and subsequent payments is kept on file. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a new payroll process using the ADP system. Employees are now required to approve their own time within the ADP portal, and this approval is documented. Following this, supervisors review and approve their employees’ time, which is also documented in the portal. Human Resources then prepares the payroll, reviewing all entries and initialing a shared file of payroll items and providing backup for changes. Once HR confirms accuracy, they notify Finance. Finance then reviews the payroll, with the Finance Manager providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within ADP by employees and supervisors and the shared file drive where HR and Finance initial off on the reviewed payroll items, ensuring a traceable record of the entire payroll approval process.
2024-106 Lack of Time and Effort Documentation Policy (Initially reported 2024) Assistance Listing Number: 93.224, 93.527 and 93.211. Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program, and Rural Telemedicine Grants Compliance Requirement: Allowable Activities and Allowable Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2024 and 2023), H2E45500 (2022), H8K49674 (2023), COVID-19 H2E50094 (2023), H8N53812 (2024), H8L50549 (2023), COVID-19 H8G48569 (2022), GA142923 (2021), G2846293(2022) and G3949501 (2023) Finding Type: Material Weakness in Internal Control Questioned Costs: $0 Condition: Time and effort reporting on actual hours spent on individual grant projects used to support the budgeted allocations of employee salary for each grant are not being kept. This is a systemic issue as a procedure for documenting time and effort by employee to justify the allocation of salaries across grants has not been put in place. This is a systematic issue. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under eCFR 2 CFR 200.430 – Compensation – personal services budget estimates do not qualify as support for charges to federal awards. Cause: The Organization has not put into practice a procedure where records are kept with employee salaries spent by hour on individual grants to substantiate the amount of budgeted FTE used on the reimbursement requests. Effect: Budgeted FTE used for reimbursement requests may be inaccurate resulting in incorrect amounts being requested for reimbursement. Recommendation: The Organization should put in place procedures to accurately document employee hours spent on each of the federal awards to support the budgeted FTE used on the reimbursement requests. Views of Responsible Officials and Planned Corrective Action: We acknowledge the finding and have adopted a formal Time and Effort Reporting Policy. Standardized timesheets will be implemented and staff trained within 60 days, with supervisors reviewing submissions. The Finance Manager will monitor records monthly and conduct quarterly reviews to ensure compliance going forward.