Finding Text
Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Reporting, and Special Tests U.S. Department of Health and Human Services, CFDA No. 93.224 and No. 93.527, Health Center Program
Cluster
Criteria
Friend Health and Affiliates (Friend Health) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations.
Condition
For AL number 93.224 and 93.527, Health Center Program, we chose a sample size of 53 payroll and 7 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted eight instances where Friend Health was not able to provide support and approval for the pay rate in an employees’ personnel file. Friend Health was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted we were unable to verify a review and approval of the monthly payroll journal entries. For fourteen individuals, we were not able to verify the percent of his or her salary that should be charged to the grant. For twelve individuals, additional amounts were added to the payroll for retro pay or other adjustments that could not be traced to documentation. For Cash Management, we noted that no evidence was able to be provided for certifications of monthly pull downs. For period of performance, we noted four instances in our testing of July
2020 and June 2021 payroll in which the employee received retro pay or other pay without proper documentation, thus we were unable to determine that the period of performance was correct. For Reporting, one of our five reports selected for testing was not submitted timely. We were also unable to obtain verification of the date of submission for two of those reports. All selected reports were prepared, reviewed, and submitted by one individual with no review of another individual. In addition, we were unable to verify certain information on one of the reports. During our testing of sliding scale fees, for many instances we were unable to obtain support for patients’ poverty levels as during the Coronavirus 19 pandemic, individuals were generally self-certifying their income, or not bringing any verification of income to their appointments. There were several telehealth encounters, as well. In many cases, the price determined according to the sliding fee schedule was not collected. We chose a sample of 60, however, after testing 25, it was determined Friend Health was not in compliance and no additional testing was necessary. The data collection form for June 30, 2019 was not submitted timely in that it was submitted on May 13 2020
when it was due on January 17 2020. since the report date was December 18 2019. There was no extension requested or granted for the late submission. Cause Friend Health did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect Friend Health is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Reporting, and Special Tests requirements of the grant agreement and OMB Uniform Guidance. Questioned Costs See scope limitation.
Repeat Finding No. Recommendation We recommend that Friend Health implement the following:
Enforce its current specific internal control procedures to ensure compliance with applicable federal
regulations. All personnel files have authorization and approval of pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed.
Documentation for adjustments to pay each payroll should be kept.
Documentation of the preparation and review of journal entries for payroll should be kept.
All documentation for reports should be made accessible and kept so that it can reconcile to various
reports sent to granting agencies. Reporting schedules be maintained for timely filing and one individual prepare while a separate individual review. Proper support is retained to support patient poverty levels and collections are held to determined rates outlined by the sliding scale fee schedule. The data collection form be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end.
Views of Responsible Officials and Planned Corrective Actions See corrective action plan.