Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 93.224, 93.527; Health Center Program Cluster
Federal Award Identification Number and Year - H8LCS50692 and H80CS00190 - 2024
Pass-through Entity - N/A
Finding Type - Material weakness and material noncompliance with laws and regulations
Repeat Finding - No
Criteria - The 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish, document, and maintain effective 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. Additionally, in accordance with notice of awards and the Uniform Data System (UDS) Health Center Data Reporting Requirements, the health center is required to submit an annual performance report that includes data that reflects all activities in the HRSA health center project.
Condition - Internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, due to entries identified and recorded during the 2024 financial statement audit of the Company, the data submitted within the annual performance report was not accurate.
Questioned Costs - None
If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A
Identification of How Questioned Costs Were Computed - N/A
Context - During control testing of reporting (sample size of two), internal control procedures were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 31, 2025 were not communicated to the reporting agency timely.
Cause and Effect - Controls were not documented with enough evidence to support reports were being reviewed throughout the year. Additionally, the Company did not have controls in place to ensure financial statement adjusting entries that were known and adjusted for by the final reporting deadline of March 30, 2025 were communicated to the reporting agency timely. As a result, the reports filed with HRSA are materially incorrect.
Recommendation - We recommend the Company implement procedures to document the internal controls they have in place surrounding review of reports and implement controls to timely communicate financial statement adjustments to the reporting agency prior to the final deadline of March 31, 2025.
Views of Responsible Officials and Corrective Action Plan - Since the FY 2024 financial and single audit adjustments were not discovered and completed prior to the UDS submission deadline of March 31, 2025 and there is no mechanism to change UDS values after the deadline, we will move the audit engagement to earlier in the year in 2026 to allow time to correct any UDS issues prior to the March 31, 2026 deadline.