Finding 35389 (2022-002)

Significant Deficiency

Requirement

Questioned Costs

Year

2022

Accepted

2023-03-23

Audit: 33693

Organization: Heartland Community Health Clinic D/b/a Heartland Health Services (IL)

Auditor: Cliftonlarsonallen LLP

AI Summary

Core Issue: The organization failed to document the rationale for its sole-source procurement method and did not verify vendor suspension and debarment quarterly as required.
Impacted Requirements: Non-compliance with procurement procedures (200.320) and suspension/debarment regulations (200.214) could lead to selecting inappropriate vendors.
Recommended Follow-Up: Revise procurement policies and establish internal controls to ensure proper documentation and compliance with procurement and vendor checks.

Finding Text

Finding 2022-002 ? Procurement and Suspension & Debarment Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Centers Cluster and Health Center Infrastructure Support Assistance Listing Number: 93.224 and 93.527; 93.526 Federal Award Identification Number: H8FCS40647-01; C8ECS44753-01 Award Periods: April 1, 2021 ? March 31, 2023; September 15, 2021 ? September 14, 2024, respectively Type of Finding: Compliance and significant deficiency in internal control over compliance Criteria: ? 200.320 Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. ? 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: The organization did not maintain proper documentation for 1) determining the rationale of the sole-source procurement methodology that it applied and 2) that suspension and debarment was checked quarterly per the Organization's policy for vendors reimbursed by the federal grant. Questioned Costs: None. Context: Two (2) of two (2) procurement transactions; Two (2) of two (2) suspension and debarment transactions Cause: The organization did not document its rationale for choosing the noncompetitive procurement method or its quarterly review of suspension and debarment of vendors. Effect: The Organization may inadvertently select vendors without regard to fair competition and cost analysis or vendors that may be federally suspended and disbarred. Repeat Finding: No. Recommendation: Management should adhere to or revise the Organization?s existing procurement policy and implement a system of processes and internal controls to ensure that the appropriate level of documentation is maintained based on the procurement methodology selected for a transaction of contract. Views of Responsible Officials: There is no disagreement with the audit finding.

Corrective Action Plan

2022-002 Health Centers Cluster ? Assistance Listing No. 93.224 and 93.527 Health Center Infrastructure Support ? Assistance Listing No. 93.526 Recommendation: Management should adhere to or revise the Organization?s existing procurement policy and implement a system of processes and internal controls to ensure that the appropriate level of documentation is maintained based on the procurement methodology selected for a transaction of contract. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: 1) Procurement ? missing documentation for sole source purchase justification or price comparisons. Heartland?s purchasing policies and procedures were reviewed for content and clarity. In addition to the policy and procedure review, we will implement a more robust documentation, review, and approval process regarding larger purchases and sole sourcing. Purchases that are grant related and > $2,500 where the 3 bid minimum decision-making process is being waived and sole source is being utilized will be documented by the purchasing manager and reviewed, approved, and signed by our CEO as to why this is the optimal vendor (1). (See attached template) 2) Suspension and Debarment- missing documentation for quarterly review of vendors. Vendors will be reviewed on a quarterly basis to ensure that they are not on the exclusion list. The Accounting Specialist will report to the Controller on a quarterly basis regarding the status of the vendor review, and documentation of the review will be provided to the Controller at that time. Name(s) of the contact person(s) responsible for corrective action: Michael Cohlman, CFO and Tony Bartlett, Controller Planned completion date for corrective action plan: 4/1/23

Other Findings in this Audit

35390 2022-003

Significant Deficiency
35391 2022-002

Significant Deficiency
35392 2022-003

Significant Deficiency
35393 2022-002

Significant Deficiency
35394 2022-003

Significant Deficiency
35408 2022-002

Significant Deficiency
611831 2022-002

Significant Deficiency
611832 2022-003

Significant Deficiency
611833 2022-002

Significant Deficiency
611834 2022-003

Significant Deficiency
611835 2022-002

Significant Deficiency
611836 2022-003

Significant Deficiency
611850 2022-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
93.527	Affordable Care Act (aca) Grants for New and Expanded Services Under the Health Center Program	$2.13M
93.224	Consolidated Health Centers (community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)	$1.86M
93.526	Affordable Care Act (aca) Grants for Capital Development in Health Centers	$671,100
93.332	Cooperative Agreement to Support Navigators in Federally-Facilitated and State Partnership Marketplaces	$66,934