Martinsville Henry County Coalition for Health and WellnessNon-Profit

2022-002 ? Lack of review of underlying expenses supporting federal grant drawdowns/revenue. Finding type ? Significant deficiency in internal control related to the audit of the major federal awards program. Criteria ? Accounting principles generally accepted in the United States require internal controls over recording, processing and summarizing accounting data. Condition ? During our testing of the federal awards drawdowns schedule, which is the supporting client schedule for the schedule of expenditures of federal awards, it was determined that certain expense charges were supporting two different drawdowns or were double counted within the same drawdown for HRSA supplemental grants. In all cases, management was able to identify unassigned eligible expenses (i.e. not already allocated to a grant) that they in turn used to support one of the drawdowns; thereby, curing the double counting of certain expenses. As such, no noncompliance was identified. Cause ? In recent years, the Coalition has operated with a shortage of Accounting staff. They made hires in current and prior year that have cured this shortage; however, there appears to be a training and experience gap that needs to be addressed. Effect ? For the certain expenses that were double counted, management reclassed unassigned eligible expenses to support one of the drawdowns. As a result, no noncompliance was identified. We performed a sensitivity analysis on the untested HRSA supplemental drawdowns to ensure that there were enough available eligible unassigned expenses to cover any further double counting of expenses. As a result, no potential noncompliance was identified. Recommendation ? We recommend that an employee with suitable knowledge and skill review the underlying expenses supporting federal grants drawdowns/revenue to ensure that no expenses are supporting more than one drawdown or being double counted within the same drawdown. This employee should be someone other than the employee who prepared the drawdown. Additionally, we recommend external and on-the-job training of staff to further develop their financial accounting acumen. View of Responsible Officials ? The Coalition agrees with the finding as documented above and our recommendation.

2021-001 ? Lack of review of cost center coding of underlying expenses supporting federal grant drawdowns/revenue. Finding type ? Significant deficiency in internal control relating to the audit of the major federal awards program. Criteria ? Accounting principles generally accepted in the United States require internal controls over recording, processing and summarizing accounting data. Condition ? During our initial testing of the federal awards drawdowns schedule, which is the supporting client schedule for the schedule of expenditures of federal awards, it was determined that the cost center coding of certain underlying/supporting expenses was incorrect based on the grant classification (i.e. 330 main grant, SUD supplemental grant, Quality supplemental grant, etc.) of certain drawdowns/revenue within the client schedule and ultimately the schedule of expenditures of federal awards. Cause ? The Coalition operated most of the fiscal year with a shortage of Accounting staff. This shortage prevented certain review controls from being performed. Effect ? This condition resulted in investigation by the new CFO. After her investigation, she proposed and posted 12 cost center reclass entries to various expense accounts (primarily payroll expense, but also payroll taxes, contracted services, and medical supplies) to align the underlying/supporting expenses (by cost center) with the specific federal grant that they were incurred for. After these reclasses were posted, we expanded our sample of the federal awards drawdowns schedule. We noted no additional expense cost center coding errors in our testing. It should be noted that no instances of noncompliance related to this finding were identified. Recommendation ? We recommend that an employee with suitable knowledge and skill review the posting of the underlying expenses supporting federal grants drawdowns/revenue to ensure the cost center coding of the expenses is accurate. This employee should be someone other than the employee who posts the expenses. View of Responsible Officials ? The Coalition agrees with the finding as documented above and our recommendation.