Finding 1179022 (2023-006)

Finding No. 2023-006 Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Schedule of Expenditures of Federal Awards (SEFA) Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined due to discrepancies between the Schedule of Expenditures of Federal Awards and the grant expense schedule, which prevented the identification of a complete and accurate population of expenditures for testing. Criteria: Uniform Guidance (2 CFR §200.510(b)) requires nonfederal entities to prepare a complete and accurate SEFA that agrees with underlying accounting records and grant expense schedules. The SEFA must be subject to appropriate review to ensure accuracy and completeness. Condition: The amount reported on the SEFA for AL No. 93.224 did not agree with the related grant expense schedule. As a result, the SEFA could not be reconciled to the underlying accounting records for audit purposes. Cause: The SEFA was not adequately reviewed or reconciled to the grant expense schedule prior to submission for audit. This condition was attributable to weaknesses in financial reporting controls and the absence of effective oversight to ensure the accuracy of federal award reporting. Effect: Because the SEFA did not reconcile to the grant expense schedule, Kagman Community Health Center, Inc. cannot demonstrate that federal expenditures were accurately and completely reported. This creates a reasonable possibility that material misstatements in the SEFA may not be prevented or detected on a timely basis and weakens internal controls over financial reporting. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over SEFA preparation by: 1. Reconciling the SEFA to grant expense schedules and accounting records prior to submission. 2. Implementing supervisory review procedures to verify the accuracy and completeness of SEFA amounts. 3. Maintaining documentation to support all federal expenditures reported on the SEFA. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.