2023-105 Lack of Payroll Review and Approval (Also see financial statement finding 2023-004) 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: Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) 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. 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: We recommend that the Organization begin using the approval feature in the Time Clock program to document the supervisor's approval of time for hourly employees. We also recommend that the Organization develop a process that includes and documents the review of payroll by an employee at least one level above the preparer prior to payment. 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 Manger providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within the 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.
2023-106 Missing Documentation to Support Payroll Authorizations (Initially reported 2023) 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: Allowable Activities and Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization could not provide one salary authorization form for sample selection of 40 employees. 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 Under compliance requirements for allowable activities and costs, management should ensure that costs can be supported by underlying accounting documentation. Cause: Filing errors resulting in staff being unable to provide the requested authorizations. Effect: The Organization would not be able to provide the related documentation to support allowable activities and costs under the program which could lead to loss in grant funding. Recommendation: We recommend that the Organization should put in a process to appropriately retain documentation to support allowable activities and costs under applicable grant programs. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a process to ensure that all salary authorizations are properly obtained and stored. When there is any change in an employee's status or salary, an Employee Status Form is completed and signed by the employee, their supervisor, and Human Resources, and when required, by the COO and CEO. Additionally, the salary authorization form is added to a secure shared file drive. The shared file drive includes a section where all salary changes are listed. Both HR and Finance initial off to confirm that each salary change is supported by the proper documentation during the payroll review process.
2023-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2022-101 and 2021-101) (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 (2022 and 2023), COVID-19 H8G48569 (2023) and COVID-19 ARP H8F40324 (2021) 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. - 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. - 14 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. Four of the sixty encounters were for lab services which were not documented on the billing system and therefore the correct amount of the sliding scale fee could not be determined. 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 six of the encounters above, was due to improper staff training or failure to properly monitor the process. Three of the encounters could not be determined for application of the correct sliding fee scale as lab fees were not documented in the billing system. 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.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-105 Lack of Payroll Review and Approval (Also see financial statement finding 2023-004) 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: Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) 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. 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: We recommend that the Organization begin using the approval feature in the Time Clock program to document the supervisor's approval of time for hourly employees. We also recommend that the Organization develop a process that includes and documents the review of payroll by an employee at least one level above the preparer prior to payment. 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 Manger providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within the 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.
2023-106 Missing Documentation to Support Payroll Authorizations (Initially reported 2023) 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: Allowable Activities and Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization could not provide one salary authorization form for sample selection of 40 employees. 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 Under compliance requirements for allowable activities and costs, management should ensure that costs can be supported by underlying accounting documentation. Cause: Filing errors resulting in staff being unable to provide the requested authorizations. Effect: The Organization would not be able to provide the related documentation to support allowable activities and costs under the program which could lead to loss in grant funding. Recommendation: We recommend that the Organization should put in a process to appropriately retain documentation to support allowable activities and costs under applicable grant programs. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a process to ensure that all salary authorizations are properly obtained and stored. When there is any change in an employee's status or salary, an Employee Status Form is completed and signed by the employee, their supervisor, and Human Resources, and when required, by the COO and CEO. Additionally, the salary authorization form is added to a secure shared file drive. The shared file drive includes a section where all salary changes are listed. Both HR and Finance initial off to confirm that each salary change is supported by the proper documentation during the payroll review process.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-105 Lack of Payroll Review and Approval (Also see financial statement finding 2023-004) 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: Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) 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. 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: We recommend that the Organization begin using the approval feature in the Time Clock program to document the supervisor's approval of time for hourly employees. We also recommend that the Organization develop a process that includes and documents the review of payroll by an employee at least one level above the preparer prior to payment. 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 Manger providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within the 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.
2023-106 Missing Documentation to Support Payroll Authorizations (Initially reported 2023) 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: Allowable Activities and Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization could not provide one salary authorization form for sample selection of 40 employees. 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 Under compliance requirements for allowable activities and costs, management should ensure that costs can be supported by underlying accounting documentation. Cause: Filing errors resulting in staff being unable to provide the requested authorizations. Effect: The Organization would not be able to provide the related documentation to support allowable activities and costs under the program which could lead to loss in grant funding. Recommendation: We recommend that the Organization should put in a process to appropriately retain documentation to support allowable activities and costs under applicable grant programs. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a process to ensure that all salary authorizations are properly obtained and stored. When there is any change in an employee's status or salary, an Employee Status Form is completed and signed by the employee, their supervisor, and Human Resources, and when required, by the COO and CEO. Additionally, the salary authorization form is added to a secure shared file drive. The shared file drive includes a section where all salary changes are listed. Both HR and Finance initial off to confirm that each salary change is supported by the proper documentation during the payroll review process.
2023-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2022-101 and 2021-101) (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 (2022 and 2023), COVID-19 H8G48569 (2023) and COVID-19 ARP H8F40324 (2021) 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. - 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. - 14 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. Four of the sixty encounters were for lab services which were not documented on the billing system and therefore the correct amount of the sliding scale fee could not be determined. 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 six of the encounters above, was due to improper staff training or failure to properly monitor the process. Three of the encounters could not be determined for application of the correct sliding fee scale as lab fees were not documented in the billing system. 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.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-105 Lack of Payroll Review and Approval (Also see financial statement finding 2023-004) 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: Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) 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. 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: We recommend that the Organization begin using the approval feature in the Time Clock program to document the supervisor's approval of time for hourly employees. We also recommend that the Organization develop a process that includes and documents the review of payroll by an employee at least one level above the preparer prior to payment. 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 Manger providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within the 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.
2023-106 Missing Documentation to Support Payroll Authorizations (Initially reported 2023) 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: Allowable Activities and Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization could not provide one salary authorization form for sample selection of 40 employees. 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 Under compliance requirements for allowable activities and costs, management should ensure that costs can be supported by underlying accounting documentation. Cause: Filing errors resulting in staff being unable to provide the requested authorizations. Effect: The Organization would not be able to provide the related documentation to support allowable activities and costs under the program which could lead to loss in grant funding. Recommendation: We recommend that the Organization should put in a process to appropriately retain documentation to support allowable activities and costs under applicable grant programs. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a process to ensure that all salary authorizations are properly obtained and stored. When there is any change in an employee's status or salary, an Employee Status Form is completed and signed by the employee, their supervisor, and Human Resources, and when required, by the COO and CEO. Additionally, the salary authorization form is added to a secure shared file drive. The shared file drive includes a section where all salary changes are listed. Both HR and Finance initial off to confirm that each salary change is supported by the proper documentation during the payroll review process.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-102 Lack of Documentation Related to Reporting (prior two years 2022-108 and 2021-104) (initially reported 2018) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. 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 compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document 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 Action: 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.
2023-104 Lack of Controls Related to Filing Reports (initially reported 2023) 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: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H8K49674 (2023), C1439909 (2020), H2E50094 (2023), COVID-19 H8L50549 (2023) and COVID-19 H8G48569 (2022) 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. 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: The 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.
2023-105 Lack of Payroll Review and Approval (Also see financial statement finding 2023-004) 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: Period of Performance Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) 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. 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: We recommend that the Organization begin using the approval feature in the Time Clock program to document the supervisor's approval of time for hourly employees. We also recommend that the Organization develop a process that includes and documents the review of payroll by an employee at least one level above the preparer prior to payment. 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 Manger providing the final approval within ADP once all items are confirmed. This entire process is fully documented, with approvals recorded within the 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.
2023-106 Missing Documentation to Support Payroll Authorizations (Initially reported 2023) 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: Allowable Activities and Costs Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H8006452 (2022 and 2023), H2E45500 (2022), COVID-19 ARP H8F40324 (2021), H2E50094 (2023) and COVID-19 H8G48569 (2022) Finding Type: Significant Deficiency in Internal Control Questioned Costs: $0 Condition: The Organization could not provide one salary authorization form for sample selection of 40 employees. 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 Under compliance requirements for allowable activities and costs, management should ensure that costs can be supported by underlying accounting documentation. Cause: Filing errors resulting in staff being unable to provide the requested authorizations. Effect: The Organization would not be able to provide the related documentation to support allowable activities and costs under the program which could lead to loss in grant funding. Recommendation: We recommend that the Organization should put in a process to appropriately retain documentation to support allowable activities and costs under applicable grant programs. Views of Responsible Officials and Planned Corrective Actions: The Organization has implemented a process to ensure that all salary authorizations are properly obtained and stored. When there is any change in an employee's status or salary, an Employee Status Form is completed and signed by the employee, their supervisor, and Human Resources, and when required, by the COO and CEO. Additionally, the salary authorization form is added to a secure shared file drive. The shared file drive includes a section where all salary changes are listed. Both HR and Finance initial off to confirm that each salary change is supported by the proper documentation during the payroll review process.
2023-101 Lack of Internal Controls over the Application of the Sliding Fee Scale (prior two years 2022-101 and 2021-101) (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 (2022 and 2023), COVID-19 H8G48569 (2023) and COVID-19 ARP H8F40324 (2021) 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. - 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. - 14 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. Four of the sixty encounters were for lab services which were not documented on the billing system and therefore the correct amount of the sliding scale fee could not be determined. 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 six of the encounters above, was due to improper staff training or failure to properly monitor the process. Three of the encounters could not be determined for application of the correct sliding fee scale as lab fees were not documented in the billing system. 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.
2023-001 – REPORTING- ARPA GRANT Type of Finding: (F) –Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: Humanities Councils American Rescue Plan Funding (COVID-19 American Rescue Plan - Promotion of the Humanities - Federal/State Partnership) AL #: 45.129 Award #: ZSO-283159-21 ARP Award Period: November 1, 2021 – April 30, 2023. Questioned Costs: None Statement of Condition NMHC did not have adequate controls over the SF-425. The data in SF-425 financial report for the reporting period end date of April 30, 2023 did not agree to the NMHC’s accounting records. Management’s review of the report did not identify that the amounts reported under line 10(c) (cash on hand) were understated by $35,126 as of April 30, 2023. Additionally, 2 checks with unspent funds were received from subgrantees in the amount of $6,985 after the due date of the report, bringing the total amount to be returned to the grantor to $42,111. (The subrecipients, due to deficiencies in their own internal controls, had attested in writing at the time of the closing of their grants that they had spent their total subawarded ARPA dollars in an appropriate fashion.) Criteria In accordance with 24 CFR Part 85.41, the Federal Financial Report (SF-425) is required to be submitted for the Promotion of the Humanities - Federal/State Partnership (ARP) program. Recipients use the SF-425 as a standardized format to report expenditures under Federal awards, as well as, when applicable, cash status. Recipients are required to report both cash management information on lines 10(a) through 10(c) and financial status information on lines 10(d) through 10(o). In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Cause NMHC did not properly report cash on hand and the reviewer did not detect these errors or errors in the amounts due to be returned. The grant was not consistently tracked in the accounting system, making it hard to produce meaningful reports that could give accurate numbers for the report. Effect Weaknesses in internal controls related to the reporting requirements could result in sanctions by the National Endowment for the Humanities. Questioned costs are not applicable to this finding. Recommendation NMHC staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. The accounting records should track all revenue and expenses by grant to be able to perform timely and accurate reconciliation. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Official and Corrective Action Plan: NMHC management will perform more detailed reviews of future SF-425 forms to ensure they accurately reflect grant receipts and expenditures. NMHC ‘s Executive Director has already ensured that accounting records track all revenue and expenses by grant in order to be able to perform timely and accurate reconciliation through more regular reviews. The Executive Director will seek further training to ensure they are fully aware of the requirements. NMHC will quickly return to the National Endowment for the Humanities the understated amount, deemed to be $42,111. The NMHC Financial Officer will amend the current SF-425 for the NEH ARPA grant and the Executive Director will submit it to the NEH Office of Grant Management. Corrective Action Plan Timeline: Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline: The Executive Director will be responsible for ensuring implementation.
2023-002 ALLOWABILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: For two of the 40 transactions selected for testing, there was no documentation of review and approval of the expenditure for allowability and payment. Questioned Costs: None Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: Internal controls were not operating effectively to ensure the allowability of expenditures. Effect: Expenditures could be made that are not allowable. Identification as a Repeat Finding: Prior Year Finding 2022-002 Recommendation: We recommend that the Council implement controls to ensure that expenditures are properly reviewed and approved before being charged to a federal award. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-003 REPORTING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.302(b) states that “the financial management system of each non-Federal entity must provide for… accurate, current, and complete disclosure of the financial results of each Federal award or program…” Condition: For both of the SF-425 reports selected for testing, there was no documentation of review and approval of the SF-425 report prior to submission. For one of the SF-425 reports selected for testing, inaccurate data was input and submitted. Questioned Costs: None Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: The Council does not have adequate internal controls and policies and procedures in place to ensure that reports contain accurate financial information and are reviewed before submission. Effect: The Council is not reporting accurate financial information to its federal grantor. Identification as a Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Council implement controls and policies and procedures over financial reporting to ensure compliance with federal reporting requirements. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-004 SEFA REPORTING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.510(b) states that “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502.” Condition: The Council’s internal controls are not adequate to ensure the Schedule of Expenditures of Federal Awards (SEFA) accurately reports Federal assistance. The Council’s fiscal year 2023 SEFA for the Promotion of the Humanities Federal/State Partnership program included expenditures from other fiscal years. Questioned Costs: $4,015 Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: The Council does not have adequate internal controls in place to ensure the accuracy of the SEFA. Effect: The Council is not reporting accurate financial information in its SEFA. Identification as a Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Council implement controls over financial reporting, including the SEFA, to ensure accuracy of financial data. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-001 – REPORTING- ARPA GRANT Type of Finding: (F) –Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: Humanities Councils American Rescue Plan Funding (COVID-19 American Rescue Plan - Promotion of the Humanities - Federal/State Partnership) AL #: 45.129 Award #: ZSO-283159-21 ARP Award Period: November 1, 2021 – April 30, 2023. Questioned Costs: None Statement of Condition NMHC did not have adequate controls over the SF-425. The data in SF-425 financial report for the reporting period end date of April 30, 2023 did not agree to the NMHC’s accounting records. Management’s review of the report did not identify that the amounts reported under line 10(c) (cash on hand) were understated by $35,126 as of April 30, 2023. Additionally, 2 checks with unspent funds were received from subgrantees in the amount of $6,985 after the due date of the report, bringing the total amount to be returned to the grantor to $42,111. (The subrecipients, due to deficiencies in their own internal controls, had attested in writing at the time of the closing of their grants that they had spent their total subawarded ARPA dollars in an appropriate fashion.) Criteria In accordance with 24 CFR Part 85.41, the Federal Financial Report (SF-425) is required to be submitted for the Promotion of the Humanities - Federal/State Partnership (ARP) program. Recipients use the SF-425 as a standardized format to report expenditures under Federal awards, as well as, when applicable, cash status. Recipients are required to report both cash management information on lines 10(a) through 10(c) and financial status information on lines 10(d) through 10(o). In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Cause NMHC did not properly report cash on hand and the reviewer did not detect these errors or errors in the amounts due to be returned. The grant was not consistently tracked in the accounting system, making it hard to produce meaningful reports that could give accurate numbers for the report. Effect Weaknesses in internal controls related to the reporting requirements could result in sanctions by the National Endowment for the Humanities. Questioned costs are not applicable to this finding. Recommendation NMHC staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. The accounting records should track all revenue and expenses by grant to be able to perform timely and accurate reconciliation. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Official and Corrective Action Plan: NMHC management will perform more detailed reviews of future SF-425 forms to ensure they accurately reflect grant receipts and expenditures. NMHC ‘s Executive Director has already ensured that accounting records track all revenue and expenses by grant in order to be able to perform timely and accurate reconciliation through more regular reviews. The Executive Director will seek further training to ensure they are fully aware of the requirements. NMHC will quickly return to the National Endowment for the Humanities the understated amount, deemed to be $42,111. The NMHC Financial Officer will amend the current SF-425 for the NEH ARPA grant and the Executive Director will submit it to the NEH Office of Grant Management. Corrective Action Plan Timeline: Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline: The Executive Director will be responsible for ensuring implementation.
2023-002 ALLOWABILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: For two of the 40 transactions selected for testing, there was no documentation of review and approval of the expenditure for allowability and payment. Questioned Costs: None Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: Internal controls were not operating effectively to ensure the allowability of expenditures. Effect: Expenditures could be made that are not allowable. Identification as a Repeat Finding: Prior Year Finding 2022-002 Recommendation: We recommend that the Council implement controls to ensure that expenditures are properly reviewed and approved before being charged to a federal award. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-003 REPORTING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.302(b) states that “the financial management system of each non-Federal entity must provide for… accurate, current, and complete disclosure of the financial results of each Federal award or program…” Condition: For both of the SF-425 reports selected for testing, there was no documentation of review and approval of the SF-425 report prior to submission. For one of the SF-425 reports selected for testing, inaccurate data was input and submitted. Questioned Costs: None Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: The Council does not have adequate internal controls and policies and procedures in place to ensure that reports contain accurate financial information and are reviewed before submission. Effect: The Council is not reporting accurate financial information to its federal grantor. Identification as a Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Council implement controls and policies and procedures over financial reporting to ensure compliance with federal reporting requirements. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-004 SEFA REPORTING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number National Endowment for the Humanities Promotion of the Humanities Federal/State Partnership Grant Number: SO-289836-23 45.129 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.510(b) states that “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502.” Condition: The Council’s internal controls are not adequate to ensure the Schedule of Expenditures of Federal Awards (SEFA) accurately reports Federal assistance. The Council’s fiscal year 2023 SEFA for the Promotion of the Humanities Federal/State Partnership program included expenditures from other fiscal years. Questioned Costs: $4,015 Context: Total federal expenditures for the Promotion of the Humanities Federal/State Partnership program were $1,019,055 for the year ended October 31, 2023. Cause: The Council does not have adequate internal controls in place to ensure the accuracy of the SEFA. Effect: The Council is not reporting accurate financial information in its SEFA. Identification as a Repeat Finding: This is not a repeat finding from the prior year. Recommendation: We recommend that the Council implement controls over financial reporting, including the SEFA, to ensure accuracy of financial data. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
2023-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220007 Award Period: October 1, 2022 to September 30, 2023 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federallyfinanced program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified two instances out of a sample of sixty payroll transactions, totaling $41,872.98, in which employees were not paid according to their contract. For the two exceptions, the employees were underpaid a total of $1.48. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $1.48. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. While the prior year finding resulted in a net overpayment and current year finding resulted in a net underpayment, the fact that management is not adhering to their internal control processes requires this finding to be considered a repeat finding. This was reported as finding 2022-002 in the 2022 report. Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $111.52, while the likely net overpayment was $83.20. The likely underpayment and overpayment were determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
2023-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220007 Award Period: October 1, 2022 to September 30, 2023 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federallyfinanced program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified two instances out of a sample of sixty payroll transactions, totaling $41,872.98, in which employees were not paid according to their contract. For the two exceptions, the employees were underpaid a total of $1.48. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $1.48. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. While the prior year finding resulted in a net overpayment and current year finding resulted in a net underpayment, the fact that management is not adhering to their internal control processes requires this finding to be considered a repeat finding. This was reported as finding 2022-002 in the 2022 report. Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $111.52, while the likely net overpayment was $83.20. The likely underpayment and overpayment were determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
Condition: Texas Guaranteed Student Loan Corporation d/b/a Trellis Company (Trellis) as a guarantor works with borrowers who qualify for the teacher loan forgiveness program. Quarterly, Trellis will perform a quality review of five applications to verify the applicant was eligible for forgiveness. During fiscal year 2023, the quarterly review process was not completed from October through August. In addition, Trellis did not have a compensating control in place to monitor the completeness and accuracy of the teacher loan forgiveness process. When brought to the attention of management, Trellis performed the quarterly reviews for fiscal year 2023 in arrears prior to yearend. To verify remediation efforts, two quarters were sampled with no exceptions noted. Criteria or Requirement: 2 CFR 200.303 requires non-Federal entities receiving Federal awards to 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. Effective internal controls should include procedures to ensure teacher loan forgiveness applications are processed correctly. Cause: Trellis opted to not perform the quarterly quality review process over teacher loan forgiveness claims as the volume of loans has continued to decline over the last few years, there were no errors noted in prior quarterly reviews, and the personnel performing the processes remained consistent. Possible Asserted Effect: Trellis could have approved a teacher loan forgiveness application that was not eligible. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: Trellis should reinstitute the quality control process. Views of Trellis Officials: Trellis agrees with this recommendation. Trellis reinstituted in arrears for fiscal year 2023 and is currently performing the quality reviews as described above for fiscal year 2023.
Total Unused Lost Revenues Reporting Federal program: U.S. Department of Health and Human Services – ALN 93.498, COVID-19—Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution. Criteria: 2 CFR Part 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Specific criteria are established by the U.S. Department of Health and Human Services (HHS) with respect to allowable cost and reporting requirements for this program, including: - Funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. - Entities may elect to calculate and report lost revenue using one of three options. For entities electing to report lost revenues using Option i, quarterly actual patient care revenues are to be reported. Condition: In preparing the Reporting Period 4 and 5 General Distribution submission report to Health Resources & Services Administration (HRSA), the Corporation did not reduce the Unused Lost Revenues included within the ARP Distribution submission report from the Unused Lost Revenues in the General Distribution report in the Current Reporting Period. This resulted in the Total Unused Lost Revenues in the Reporting Period 4 and 5 General Distribution submission reports to be overstated by $723,754. Context: The Corporation reported Total Unused Lost Revenues in the Reporting Period 4 and 5 General Distribution submission reports of $42,297,586 and $42,276,693. Had the correct amounts of Total Unused Lost Revenues in the Reporting Period 4 and 5 General Distribution submission reports been reported, the Total Unused Lost Revenues would have been $723,754 less. The Total Unused Lost Revenues would still have exceeded PRF amounts received. Cause: In preparing the Reporting Period 4 and 5 General Distribution submission report to Health Resources & Services Administration (HRSA), the Corporation did not reduce the Unused Lost Revenues included within the ARP Distribution submission report from the Unused Lost Revenues in the General Distribution report in the Current Reporting Period. This resulted in the Total Unused Lost Revenues in the Reporting Period 4 and 5 General Distribution submission reports to be overstated by $723,754. Review processes were performed before the reports were submitted, but these reviews were not effective in detecting and correcting the errors before report submission. Effect: The Total Unused Lost Revenues in the Reporting Period 4 and 5 General Distribution submission reports were overstated by $723,754. Questioned costs: None Repeat finding: No Recommendation: We recommend that internal controls be strengthened related to review of the quarterly lost revenue calculations and reporting in the PRF reporting portal. We suggest these reviews include review of documentation supporting input included in the report. View of responsible officials of the auditee: Management agrees with the finding, has prepared an assessment of the root cause of this significant deficiency, and has developed a corrective action plan.
Information on the Federal Program: Assistance Listing Number 10.565—Commodity Supplemental Food Program, U.S. Department of Agriculture. Pass-Through Entities and Award Numbers: Minnesota Department of Health, award number 204642. Compliance Requirement: Allowable Costs. Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed, Allowable Costs and Cost Principles. Condition: Controls were not operating to ensure that CSFP box sign out signatures were properly reviewed and tracked against reported totals. Cause: One monthly signature log for a CSFP distribution site had fewer signatures on their box sign out sheet than were reported on the signature log cover sheet. These should never be different, as the log cover sheet should be a representation of the number of signatures in the sign out sheet. The site representative responsible for ensuring these amounts agree did not perform the designed control. Effect or Potential Effect: Unallowable costs or activities could be charged to the grant. Questioned Costs: None Context: The number of boxes distributed reported on the summary signature log did not agree to the supporting signature detail. Repeat Finding: No Recommendation: We recommend a separate review of signature log cover sheets be documented by an agent independent of the distribution site. Views of Responsible Officials: Agree and controls have been implemented.
Information on the Federal Program: Assistance Listing Number 10.565—Commodity Supplemental Food Program, U.S. Department of Agriculture. Pass-Through Entities and Award Numbers: Minnesota Department of Health, award number 204642. Compliance Requirement: Eligibility. Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Eligibility. Condition: Controls were not operating effectively over CSFP eligibility. Cause: Some signed enrollment forms for CSFP participants detailing eligibility status were not available upon request. The signatures present on these forms indicate the performance of the review control being performed by Second Harvest Heartland personnel. They should confirm all the information included on the form to be correct. Effect or Potential Effect: An ineligible individual could receive a CSFP box. Questioned Costs: None Context: Signed enrollment forms were not available for two of forty participants selected. Repeat Finding: No Recommendation: We recommend that Second Harvest Heartland digitalize their CSFP enrollment forms for convenient access and so that every form is reviewed for signatures during their upload. Views of Responsible Officials: Agree.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558 Reporting Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 93.558 on the Consolidated Schedule of Expenditures of Federal Awards Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no evidence of review and approval prior to submission of the six programmatic reports selected for testing. Cause: Goodwill-Easter Seals Minnesota has a review process in place but was not formally documented. Effect: Failure to perform an independent review of reporting could result in a reasonable possibility that Goodwill-Easter Seals Minnesota would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context/Sampling: Six programmatic reporting submissions out of eighteen total reports were selected for testing the program. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a formal documented review over reporting and that documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No: 2023-001 Activities Allowed or Unallowed/Allowable Costs Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.498 Program: COVID -19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Year: January 1, 2020 through December 31, 2022 (a) Criteria or Requirement The specific requirements for activities allowed or unallowed are unique to each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. This program allows expenditures to prevent, prepare for, and respond to coronavirus and COVID-19, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus. Per 2 CFR 200.303, a 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. (b) Condition Found, Including Perspective During our test work, we selected a sample of 60 non-payroll disbursements made during the fiscal year 2023 reporting period. We noted eight instances totaling $1,717 in which expenditures were approved for payment based on vendor invoices which included inaccurate calculations. In addition, we noted three instances of duplicate expenditures totaling $38,971 being transferred and charged to the program. Lastly, the University was unable to provide supporting documentation and evidence of the effective operation of the management review control for one of the 60 disbursements sampled totaling $803. (c) Possible Cause The University has a management review process to review invoices and related documentation before payments are disbursed. The University management review control that was in place did not operate effectively to prevent duplicate charges, inaccurate amounts and charges that lacked supporting documentation from being submitted for reimbursement by the federal agency. (d) Questioned Cost Duplicate expenditures totaling $38,971 and payment of inaccurate vendor invoices totaling $1,717. (e) Effect Federal funds were expended for duplicated or inaccurate amounts and supporting documentation and evidence of the effective operation of management review controls were not consistently maintained in accordance with Federal requirements. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year This finding also occurred in the prior year listed as Finding No. 2022-001. (h) Recommendation We recommend that the University strengthen controls over the management review process to prevent duplicate and inaccurate amounts from being charged to Federal programs and to enhance the retention of supporting documentation and evidence of management review and approval. (i) View of Responsible Officials Management concurs with the finding. While appropriate controls exist relative to management review and recalculation of expenditures, opportunities exist to retrain staff and further enhance controls related to procedures for submission, review, and approval of contract labor invoices. Specific instructions to recalculate each contract employees’ timesheet(s) and agree the totals to the related invoice prior to approval were distributed and outlined for department managers, accountants, and accounts payable staff. In addition, the process for reviewing and approving grant expenditures has since been enhanced subsequent to manager turnover during the fiscal year. Specifically, employees responsible for processing grant transfer documentation will ensure documents contain management approval(s), grants and contracts accounting approval, and appropriate documentation prior to keying and uploading documentation into the general ledger. The new practice will help compensate for employee turnover as documentation of historical review will be available to successors.