SOUTHERN TIER COMMUNITY HEALTH CENTER NETWORK, INC.

Health Center Program Cluster ? CFDA Nos 93.224 and 93.527 U.S. Department of Health and Human Services Award Nos. H80CS24140-09-00 and H80CS24140-08-00 Criteria or Specific Requirement ? Procurement ? 45 CFR 75.329 Condition ? The Organization did not follow its policy governing procurement requirements for the purchase of goods or services charged to federal awards. The procurement policy is also not in line with Uniform Guidance. Questioned Cost ? None Context ? A sample of one procurement out of a population of ten procurements totaling $283,272. The sample was not, and is not intended to be, statistically valid. The procurement selected did not follow the Organization?s procurement policy for vendor selection and no bids were received. Effect ? Purchases were made that did not adhere to the Organization?s procurement policy. Cause ? The Organization did not comply with their federal procurement policy. Identification as a Repeat Finding, if Applicable ? Not applicable. Recommendation ? The Organization should review its procurement policy and ensure proper staff education on the policy is established. In addition, the Organization should review the policy on an annual basis to ensure it is consistent with Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions ? the COO has alerted the IT department of the up coming new policy and guidelines. They began to Quote all items, single purchase or total, of over $3k from multiple qualified suppliers. Chris Chase, CFO Action Steps and Timeframe: ? Review the Uniform Guidance and rewrite the procurement policy to be in line with UG by February 28, 2022. ? Present to the board for approval at the February 28, 2022, board meeting. ? Review the guidelines and policy with IT by February 28, 2022.

Health Center Program Cluster ? CFDA No. 93.224 U.S. Department of Health and Human Services Award Nos. H80CS24140-08-00 and H80CS24140-07-00 Grants for Capital Development in Health Centers ? CFDA No. 93.526 U.S. Department of Health and Human Services Award No. C8DCS29562-01-00 Criteria or Specific Requirement ? Equipment and Real Property Management (2 CFR section 200.313(d)(2)) Condition ? The Organization is required to prepare and maintain policies and procedures that facilitate the physical inventory process related to property and equipment purchased with grant funds at least every two years. Questioned cost ? None Context ? The Organization was unable to demonstrate that the required physical inventory procedures were completed within the past two years. Effect ? A physical inventory of federally funded property and equipment was not completed within the required time of two years from the first date of purchase and at least every other year thereafter. Cause ? The Organization did not have a mechanism in place to prompt the appropriate employees to complete a physical inventory of the federally funded property and equipment within the appropriate time range. Identification as a repeat finding ? 2018-004. Recommendation ? Management should modify its policies and procedures to ensure that a physical inventory of property and equipment purchased with grant funds is completed every two years. Views of Responsible Officials and Planned Corrective Actions ? The Organization has a mechanism in place to prompt the appropriate employees to complete a physical inventory of the federally funded property and equipment within the appropriate time range. This physical inventory will be reviewed quarterly for appropriateness. UPC has not completed a full inventory process for as it was interrupted by the COVID-19 business interruptions. UPC will complete this by October 15, 2020. Mike Malick is responsible for the 2020 inventory updates and completion.

Grants for Capital Development in Health Centers ? CFDA No. 93.526 U.S. Department of Health and Human Services Award No. C8DCS29562-01-00 Criteria or Specific Requirement ? Cash Management and Matching, level of effort, earmarking (45 CFR 75.305) Condition ? The Organization is required to prepare and maintain written policies and procedures to minimize the time elapsing between the transfer of funds to the Organization from the U.S. Treasury and the issuance of payments for program purposes by the Organization. These policies should include a reasonable and consistent methodology to support request for these funds and ensure that funds are drawn down as allowable costs are incurred within parameters of requiring matching for the federal program. Questioned cost ? None Context ? For draw of federal funds, the Organization drew down 100 percent of expenditures rather than the federal share percentage of 50 percent. Effect ? Grant funds were drawn in advance without consideration of the matching requirement of qualifying expenditures. This deferred grant revenue was subsequently obligated and expended. Cause ? The Organization did not fulfill the matching requirement of the federal program prior to drawing down the full grant award. Identification as a Repeat Finding ?2018-006 Recommendation ? The Organization should identify and comply with all applicable requirements for the federal program, including any applicable matching requirements. Views of Responsible Officials and Planned Corrective Actions ? The suggestion to change process for this finding was made by auditors in mid year 2019. We realize the audit represents a full year, however we made the appropriate changes after receiving the 2018 audit and fulfilled our previous years action plan. The Organization has implemented a process to review any new grants for all applicable requirements for the federal program, including any applicable matching requirements. Upon award of any matching grants (federal or other) a structured matching schedule will be established and followed. Mike Malick, CFO, completed this by the November 1, 2019 deadline.

Grants for Capital Development in Health Centers ? CFDA No. 93.526 U.S. Department of Health and Human Services Award No. C8DCS29562-01-00 Criteria or Specific Requirement ? Reporting (45 CFR 75.342) Condition ? The Organization is required to prepare and submit Quarterly Progress Reports (QPR), a Tangible Personal Property Report, a Project Completion Certification, a Final Budget Information and Equipment List and an annual Federal Financial Report (FFR) for each grant year. These reports are to be prepared using accurate financial information. Questioned cost ? None Context ? One report for each report type listed above was selected for testing with specific data from each report selected for testing. The sampling methodology used is not and is not intended to be statistically valid. The annual FFR was prepared appropriately, however it was not filed timely. The Organization was unable to provide supporting documentation that the annual FFR had been filed. Effect ? The annual FFR report was not filed timely. Cause ? The Organization was not properly monitoring reporting requirements related to the grant. Identification as a Repeat Finding ? 2018-007. Recommendation ? The Organization should revise policies and procedures over federal reporting to ensure reports that are prepared using accurate information and supporting documentation are filed timely. Views of Responsible Officials and Planned Corrective Actions ? The Organization will revise policies and procedures over federal reporting to ensure reports are prepared using accurate information and supporting documentation for federal grant reports should be maintained. A comprehensive system for reviewing documents by multiple staff will be established to ensure accuracy of information submitted. A file system to ensure all working papers are kept will be established. UPC completed the report timely however unable to produce confirmation reports were received on time. New procedures will be implemented to ensure confirmation of federal awards through email notification. George Barton, CEO will be responsible for this and it will be completed by November 1, 2020.

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