Finding 1179024 (2023-008)

Federal Agency: U. S. Department of Health and Human Services Cluster: Health Centers Clusters AL No.: 93.224 Program Title: Community Health Centers Area: Cash Management Repeat Finding from Prior Audit? Yes Finding Type: Material Weakness in Internal Control over Compliance Questioned Cost: Unable to be determined Criteria: Under Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds. Specifically: • Non-federal entities receiving advance payments must limit drawdowns to immediate cash needs. • Trial balances should be reviewed for unearned revenue to assess whether advances are consistent with cash management requirements. • For cost-reimbursement arrangements, reimbursement requests should generally be limited to costs that have been disbursed or incurred in accordance with applicable regulations, including the Federal Acquisition Regulation (48 CFR §52.216-7(b)). Condition: Cash management testing for cash management could not be adequately performed. Trial balances, cash drawdown records, and supporting documentation necessary to determine whether federal funds were drawn and disbursed in compliance with cash management requirements were not available for audit review. Cause: Because adequate documentation was not available, the auditors were unable to determine whether Kagman Community Health Center, Inc. complied with federal cash management requirements for Assistance Listing No. 93.224. This increases the risk that federal funds may not have been drawn or disbursed in accordance with applicable regulations and weakens internal controls over compliance with cash management requirements. Effect: Because adequate documentation was not available, the auditors were unable to determine whether Kagman Community Health Center, Inc. complied with federal cash management requirements for AL No. 93.224. This increases the risk that federal funds may not have been drawn or disbursed in accordance with applicable regulations and weakens internal controls over compliance with cash management requirements. Recommendation: Kagman Community Health Center, Inc. should strengthen internal controls over federal cash management by: 1. Maintaining complete and accurate records of federal cash drawdowns, disbursements, and related trial balance activity. 2. Implementing procedures to regularly review unearned revenue balances to ensure compliance with cash management requirements. 3. Establishing formal turnover and record-retention procedures to ensure continuity of grant accounting and cash management documentation during personnel transitions. 4. Implementing supervisory review to ensure drawdowns and reimbursement requests comply with Uniform Guidance and applicable federal regulations. Views of the Officials: Kagman Community Health Center, Inc.’s response is documented in the corrective action plan.