Finding Text
Finding 2022-002 Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions
Assistance Listing Numbers 93.224 Health Center Program
93.527 Affordable Care Act (ACA) for New and Expanded Services Under the Health Center Program
Federal Agency U.S. Department of Health and Human Services, Health Resources and Services Administration
Passthrough Agency N/A
Award Number/Year 2022
Criteria
The Organization is responsible for keeping adequate supporting documentation of its compliance with applicable federal compliance requirements including for expenditures charged to federally funded grants and sliding scale fees charged to patients.
Condition
For AL No. 93.224, Health Center Program and AL 93.527, Affordable Care Act (ACA) for New and Expanded Services Under the Health Center Program (the federal programs), a sample of forty (40) payroll transactions were tested for Activities Allowed or Unallowed and Allowable Costs/Cost Principles. During the testing of payroll transactions, there were no instances for which the Organization was able to provide approved timesheets or timecards documenting hours worked and charged to the grants within the federal programs. There were no instances in which the Organization was able to provide documentation of review and approval of payroll journal entries for the payroll charges to the grants within the federal programs.
For the federal programs, during our testing of Special Tests and Provisions, we tested sliding scale fees, for which we were unable to obtain support for patient poverty levels due to patients being allowed to self-certify their income without documentation.
It was also noted that one person prepared, reviewed and submitted all vouchers and reports which is an indication of improper segregation of duties.
Cause
The Organization experienced significant turnover of personnel during fiscal years 2021 and 2022 which resulted in a lack of effective transfer of knowledge to new accounting and grant administration personnel so that they would know where appropriate documentation of financial transactions was stored so that it could be readily available when required.
Sliding scale fees were not properly documented due to the allowance of telehealth visits and limited staff available to collect and maintain proper documentation while restrictions were in place during the COVID-19 pandemic.
Effect
The Organization was not in compliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Special Tests and Provisions requirements of its grant agreements within its federally funded programs as prescribed by Uniform Guidance.
Questioned Costs
See scope limitation.
Repeat Finding
Yes. See Findings 2021-003 and 2021-004 in the summary schedule of prior audit findings.
Recommendation
We recommend that the Organization implement the following corrective actions:
• Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations.
• Require that all personnel files have authorization and approval of current pay rates along with correspondence regarding to which grant an employee’s salary and fringe benefits should be expensed including any allocations if the employee worked on several grants.
• Require that all expenses have proper invoices with approvals and should be organized within the Organization’s office.
• Require that vouchers have all related invoices attached to them and be reconciled with monthly, quarterly and close-out financial reports.
• Require that all vouchers and reports be prepared by one individual and independently reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials.
• Require that all vouchers and reports should be filed timely in accordance with the various grant agreements.
• Require that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary when applicable.
• Ensure that the data collection form is filed the earlier of thirty (30) days after the report date or no later than nine months after the fiscal year-end.
Views of Responsible Officials and Planned Corrective Actions
See corrective action plan.