Finding 1215567 (2025-004)

Finding #2025-004 – Significant Deficiency and Other Noncompliance. Applicable federal programs: U. S. Department of Health and Human Services, Direct Federal Funding, Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges, Assistance Listing #93.332, Contract #NAVCA240482-01-00, Contract year: 08/27/24 – 08/26/25. U. S. Department of Health and Human Services, Direct Federal Funding, Affordable Care Act (ACA) Personal Responsibility Education Program, Assistance Listing #93.092, Contract #90AK0075-03-03, Contract year: 09/30/23 – 09/29/25. Criteria: Reporting – The Uniform Guidance §200.508 and §200.510 requires management to prepare a schedule of expenditures of federal wards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended and amounts expended by subrecipients. Management is responsible for establishing and maintaining an effective system of internal control sufficient to prepare the SEFA in accordance with Uniform Guidance. Condition and context: Civic Heart had not performed a reconciliation of federal expenditures resulting in errors in reported expenditures. Additionally, subrecipient expenditures were not identified for two programs. There was no independent review of the SEFA. During the audit of the 2025 fiscal year, it was noted that the SEFA for the year ended August 31, 2024 overstated expenditures for the HIV Prevention Activities – Non-Governmental Organizational Based program (AL #93.939) by $52,013. The 2024 SEFA included expenditures that were allowable in accordance with the grant agreement but not billed to the federal agency for reimbursement. An audit adjustment reducing the current year expenditures was required. Cause: Transitions in the accounting and management team resulted in failure to follow Civic Heart’s policies and procedures related to preparation and review of the SEFA. Effect: Adjustments of approximately $52,600 were required to properly report expenditures and adjustments of approximately $76,600 were required to properly report subrecipient expenditures on the SEFA. Recommendation: Emphasize adherence to established policies and procedures to reconcile the federal expenditures to the federal program revenue on a routine basis and formalize the independent review process for the SEFA and grant billings. View of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.