Southbridge Medical Advisory Council, Inc. D/B/A Henrietta Johnson

During the course of the audit we noted the Organization would file the Data Collection Form to the Federal Audit Clearinghouse after the October 31, 2023 deadline.

Findings Reference Number Prior Year Finding Major Federal Program Federal Agency Federal Award Identification Number Type of Finding 2020-001 Yes Health Centers Cluster U.S. Department of Health and Human Services H80CS00385 Material Weakness ? Year-End Close Criteria: A strong system of internal controls and management review requires that general ledger account balances be properly reconciled to a subsidiary ledger or other adequate supporting documentation on a periodic basis, as well as during the year-end close financial close process in order to accurately and completely close the current year general ledger in a timely manner. Management is responsible for maintaining its accounting records in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) Condition: During the audit of the Organization?s financial statements, we identified material misstatements in the Organization?s general ledger account balances which necessitated the proposal of audit adjustments. Cause: The Organization does not have a formal and adequate year-end financial close process. Effect: The condition resulted in net patient service revenue and rent expense to be materially overstated. Recommendation: We recommend that management review its policies and procedures related to recognition of revenue and accrual of expenses and loss contingencies to ensure that the process has sufficient controls that are designed to ensure the proper recording these transactions. In addition, we suggest, the Organization create a closing checklist to assist with the preparation of audit schedules to ensure that they are complete, accurate, and reconcile to the Organization?s general ledger account balances. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number Prior Year Finding Major Federal Program Federal Agency Federal Award Identification Number Type of Finding 2020-002 Yes Health Centers Cluster U.S. Department of Health and Human Services H80CS00385 Significant Deficiency ? Logical Access to Information Technology (IT) Systems Criteria: COSO Internal Control Framework states that an organization should select and develop general control activities over technology to support the achievement of objectives. Logical access controls should be in place to prevent or detect improper use, disclosure, modification, or loss of critical financial information that would adversely affect the reliability of financial reporting. Condition: Members of accounting and the officials of the organization were provided administrative access to the organization?s general ledger system and payroll processing system. Cause: The Organization does not have an adequate control in place to properly segregate duties in the IT environment. Effect: The condition led personnel having improper access to the IT systems which could result in appropriate transactions being recorded or loss of data. Recommendation: We recommend management assign administrative access to personnel outside of accounting or officials of the organization. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number Prior Year Finding Major Federal Program Federal Agency Federal Award Identification Number Type of Finding Compliance Requirement 2020-003 Yes Health Centers Cluster U.S. Department of Health and Human Services H80CS00385 Significant Deficiency Period of Performance Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. Condition: During our test work, we noted that the Organization spent funds which were outside the period of performance. Approximately $78,000 of the draw was utilized to cover payroll expenditures incurred prior to February 1, 2019. In addition, the Organization does not have a control in place to ensure draws are spent on allowable costs. Cause: The Organization does not have adequate procedures in place to ensure funds are expended during the period of performance and on allowable costs. Effect: Without adequate controls in place to ensure cost are properly reviewed for period of performance, the Organization could be noncompliant with the period of performance requirement and could request funds for costs that are not in the period of performance. Furthermore, without a control in place to ensure funds are used for allowable costs, funds could be used for costs that are unallowable. Questioned Costs: Although the Organization spent funds on expenditures incurred outside the period of performance, total allowable costs exceeded federal expenditures by more than the $78,000 identified. Therefore, no questioned costs have been identified. Context: This is a condition identified per review of DHHS? compliance with specified requirements using a statistically valid sample. Recommendation: We recommend that the Organization enhance its processes and controls to ensure that only expenses incurred within the period of performance are charged to the program and implement a control to ensure draws are reviewed to ensure funds are utilized for allowable costs. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-001 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Material Weakness ? Year-End Close Criteria: A strong system of internal controls and management review requires that general ledger account balances be properly reconciled to a subsidiary ledger or other adequate supporting documentation on a periodic basis, as well as during the year-end close financial close process in order to accurately and completely close the current year general ledger in a timely manner. Management is responsible for maintaining its accounting records in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) Condition: During the audit of the Organization?s financial statements, we identified material misstatements in the Organization?s general ledger account balances which necessitated the proposal of audit adjustments. Additionally, the Organization identified an excessive amount of misstatements to the general ledger account balances subsequent to providing us with the final trial balance for the audit. Cause: The Organization does not have a formal and adequate year-end financial close process that is performed timely. Effect: The condition resulted in net patient service revenue and accounts receivable to be materially overstated. In addition, other areas were misstated resulting in numerous adjusting journal entries which included entries proposed by the Organization and proposed by us subsequent to receiving the Organization?s final trial balance. Recommendation: We recommend that management review its policies and procedures related to recognition of revenue and ensure that the process has sufficient controls that are designed to ensure the proper recording of revenue. In addition, we recommend, the Organization create a closing checklist to assist with the preparation of audit schedules to ensure that they are complete, accurate, and reconcile to the Organization?s general ledger account balances. Additionally, ensure that a system is in place to allow the Organization to perform this in a timely manner. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-002 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency ? Logical Access to Information Technology(IT) Systems Criteria: COSO Internal Control Framework states that an organization should select and develop general control activities over technology to support the achievement of objectives. Logical access controls should be in place to prevent or detect improper use, disclosure, modification, or loss of critical financial information that would adversely affect the reliability of financial reporting. Condition: Members of accounting and the officials of the organization were provided administrative access to the organization?s general ledger system and payroll processing system. Cause: The Organization does not have an adequate control in place to properly segregate duties in the IT environment. Effect: The condition led personnel having improper access to the IT systems which could result in appropriate transactions being recorded or loss of data. Recommendation: We recommend management assign administrative access to personnel outside of accounting or officials of the organization. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-003 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. The Uniform Guidance in 2 CFR Section 200.303, requires amounts reported in the SF-425 Federal Financial Report (?SF-425?) to agree to accounting records that support the financial statements. Condition: Health Center Program award recipients are required to submit a Federal Financial Report (FRR) SF-425 to report on progress of the budget period and un-obligated funds. SF-425 originally submitted to the federal government reported an inaccurate program income amount on Line 10 I and was submitted three days late. In addition, in conjunction with the SF-425, the organization is required to submit request to carry over supplemental federal awards within 90 days of fiscal year end. The Organization submitted its request to carry over unspent supplemental federal Awards in November 2019. Cause: Inaccurate reporting was caused by the program income being misstated in the general ledger due to the Organization not having a timely year end close process. The Organization does not have adequate procedures in place to ensure the report and carryover requests are submitted in a timely manner. Effect: Program income, Line 10 I on the SF-425, was inaccurately reported to the federal government. Without adequate controls in place to ensure the report and related carryover requests are submitted timely, the Organization could risk losing Federal Awards previously awarded to them and a non-responsive progress report may result in a delay or a lapse in future funding. Questioned Costs: None noted. Context: This is a condition identified per review of DHHS? reporting compliance with specified requirements. Recommendation: We recommend the year end close process be closed in a more effective and timely manner to allow time to review the preparation of the SF-425 for accuracy before submitting to the federal government. In addition, management should establish a control in order to ensure any reporting requirements are submitted in a timely manner. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-004 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. Condition: The Uniform Data System (UDS) is a core set of information appropriate for review the operation and performance of health centers. The UDS tracks a variety of information, including patient demographics, services provided, staffing, clinical indicators, utilization rates, costs and revenues. The Organization could not provide adequate documentation to support the figures reported on the UDS report. Cause: Inadequate documentation was maintained to support a figure reported on the UDS report. Effect: BDO could not validate a figure reported on the UDS report that were reported to the Federal agency. Questioned Costs: None noted. Context: This is a condition identified per review of DHHS? reporting compliance with specified requirements. Recommendation: Management should establish a control in order to maintain adequate documentation to support the UDS report. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-005 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. Health Center Program award recipients are required to submit an annual Budget Period Progress Report (BPR) to report on progress made from the beginning of an aware recipient?s most recent budget period until the date of BPR submission; the expected progress for the remainder of the budget period; and any projected changes for the following budget period. Condition: Health Center Program award recipients are required to submit an annual Budget Period Progress Report (BPR) to report on progress made during the budget period. The BPR report was submitted untimely and was one day late. Cause: The Organization does not have adequate procedures in place to ensure the BPR is submitted timely. Effect: The BPR report was submitted late to the Federal Agency. Failure to submit the BPR by the established deadline or submission of an incomplete or non-responsive progress report may result in a delay or a lapse in funding. Questioned Costs: None noted. Context: This is a condition identified per review of DHHS? reporting compliance with specified requirements. Recommendation: Management should establish a control in order to ensure any reporting requirements are submitted in a timely manner. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-006 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition: The organization utilizes its funding to supplement salaries and wages for staff of the Organization. During our testing of payroll, we noted the following exceptions: ? The Organization could not provide documentation to support the pay rates for six out of the 40 employees selected for testing, ? The Organization could not provide the I-9 for two out of the 40 employees selected for testing Cause: The Organization does not have adequate procedures in place to ensure the payroll documentation is properly maintained. Effect: BDO could not validate whether employees were paid the correct wage rate. Questioned Costs: Although the Organization could not provide documentation to support the pay rates of the five employees, total allowable costs exceeded federal expenditures by more than gross wages paid to those employees. Therefore, no questioned costs have been identified. Context: We tested 40 pay checks and found the exceptions as noted in the condition. This is a condition identified per review of DHHS? compliance with specified requirements using a statistically valid sample. Recommendation: Management should establish a control in order to ensure payroll documentation is properly maintained. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

Findings Reference Number: 2019-007 Prior Year Finding: Yes Major Federal Program: Health Centers Cluster Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: H80CS00385 Type of Finding: Significant Deficiency Compliance Requirement: Period of Performance and Allowable Costs/Cost Principles Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal Statues, regulations and term and conditions of the Federal Award. Condition: During our testwork, we noted that the Organization spent funds which were outside the period of performance. Approximately $49,000 of the draw was utilized to cover payroll expenditures incurred prior to February 1, 2018. In addition, the Organization does not have a control in place to ensure draws are spent on allowable costs. Cause: The Organization does not have adequate procedures in place to ensure funds are expended during the period of performance and on allowable costs Effect: Without adequate controls in place to ensure cost are properly reviewed for period of performance, the Organization could be noncompliant with the period of performance requirement and could request funds for costs that are not in the period of performance. Furthermore, without a control in place to ensure funds are used for allowable costs, funds could be used for costs that are unallowable. Questioned Costs: Although the Organization spent funds on expenditures incurred outside the period of performance, total allowable costs exceeded federal expenditures by more than the $49,000 identified. In addition, we noted no funds utilized for costs that were unallowable. Therefore, no questioned costs have been identified. Context: This is a condition identified per review of DHHS? compliance with specified requirements using a statistically valid sample. Recommendation: We recommend that the Organization enhance its processes and controls to ensure that only expenses incurred within the period of performance are charged to the program and implement a control to ensure draws are reviewed to ensure funds are utilized for allowable costs. Views of Responsible Officials: Management agrees with this finding. See management?s corrective action plan.

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