SOUTH BOSTON COMMUNITY HEALTH CENTER, INC.

Finding Number: 2023-001 Finding Type: Compliance related to cash management Information on the Federal Program: Program Name: COVID-19 Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program (AL 93.527) Federal Awards Project Title: FY 2023 Bridge Access Program Award Period: September 1, 2023 - December 31, 2024 Award Number: 1 H8LCS51310-01 Views of a Responsible Official and Corrective Action Plan: Management agrees with the finding. The Organization will modify procedures as appropriate to ensure grant funds are drawn in accordance with grant terms and conditions. Agency: U.S. Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA) Criteria: The Uniform Guidance §200.305(b)(1) requires that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: The Organization drew down the FY 2023 Bridge Access Program grant funds in full upon receipt of the award in the amount of $19,507 in advance of incurring federal expenses. The Organization identified allowable expenses which were incurred prior to receipt of the grant award and during 2024, management worked with HRSA to submit and obtain approval for a budget revision, enabling the Organization to apply the funds to the pre-award costs. Cause: Management were unaware preapproval was required to use the award for pre-award costs. Effect: Grant funds could be required to be returned with potential interest. Questioned Costs: None Repeat Finding: No Recommendation: Management should reinforce the importance of reviewing all grant agreement provisions, and implement a system of processes and controls for tracking compliance with all specific grant terms and conditions.

Finding: 2023-001 Condition: The Organization drew down the FY 2023 Bridge Access Program grant funds in full upon receipt of the award in the amount of $19,507 in advance of incurring federal expenses. The Organization identified allowable expenses which were incurred prior to receipt of the grant award and during 2024, management worked with HRSA to submit and obtain approval for a budget revision, enabling the Organization to apply the funds to the pre-award costs. lndividual(s) Responsible for Corrective Action: Kim Harrison, Chief Financial Officer Planned Corrective Action: 1. For any grant award, the person developing the budget, most often the CFO, will refer to the Grant Allocation file and ensure that any salaries charged to the grant are not covered by another grant for that same time period. 2. The CFO will review the budget with the Controller and Senior Accountant together and ensure the expenses to be charged to the grant and the time period for the grant is clear. 3. Prior to any HRSA drawdown, the CFO will request a list of expenses charged to the grant in question to ensure the money has been expended. 4. The CFO will share the drawdown data with the Controller. Anticipated Completion Date: Some of this is already occurring but the entirety of this will go into effect immediately.