VALLEY SPECIAL NEEDS PROGRAM, INC. D/B/A VALLEY COMMUNITY SERVICES

Finding 2021-001 ? Allowable Cost Federal Agency: Department of Health and Human Services Pass-through Agency: PA Department of Human Services Program: Medical Assistance Program (Medicaid; Title XIX) ? ALN 93.778 Condition: Valley Community Services did not have adequate internal control procedures in place to ensure that compensation paid agreed to approved pay rate documentation. As a result, supporting documentation maintained did not agree to the pay rates for 3 out of the 40 employees tested. Criteria: In accordance with the Uniform Guidance Cost Principles, allowable costs must be adequately documented. In addition, internal controls over financial reporting would require that employee compensation be properly supported. Cause: Procedures were not in place to ensure the approved pay rate documentation agreed to the rate being paid to employees. Effect: The approved pay rate documentation was incorrect and did not agree to the amount paid to 3 out of 40 employees tested. The correct pay rate was paid to the employees tested. Repeat Finding: Not a repeat finding. Recommendation: We recommend that the Organization implement internal control procedures to ensure that approved pay rate documentation agrees to the compensation paid to employees. Questioned Costs: None Views of Responsible Official and Planned Corrective Action: Management agrees with the finding. See separate corrective action plan.

2020-001 Significant Deficiency ? Procurement, Suspension and Debarment Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 93.778 Program Name: Medical Assistance (Medicaid; Title XIX) Area: Procurement and Suspension and Debarment Criteria: Recipients of federal awards are required by federal procurement standards to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended or otherwise excluded from receiving federal funds or working on federally funded projects. Condition: During testing we noted that there were two vendors not included on the list used by management to verify that the vendors were not debarred or excluded from receiving federal funds. Cause: Suspension and debarment procedures, which require the addition of vendors to the Organization?s vendor list, were not strictly enforced. Effect: For the fiscal year under review, the Organization did not comply with verification requirements. The possible effect on this condition is that there is an increased risk that the Organization passed federal funding through to entities which are prohibited from receiving federal funds. Identification of a repeat finding: This is a repeat finding from the immediate previous audit, 2019-01. Recommendation: We recommend that the Organization continue to implement and adhere to its policies regarding adding vendors to the list and performing routine searches of the database. Views of Responsible Officials: The Organization will ensure that all vendors with whom they transact business will be verified by their legal business name.

2020-002 Significant Deficiency ? Allowable Cost ? Documentation Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 93.778 Program Name: Medical Assistance (Medicaid; Title XIX) Area: Allowable Costs ? Documentation Criteria: The Organization is required to implement processes to ensure that costs are properly documented in accordance with 2 CFR 230, Basic Considerations, the objective of which will provide reasonable assurance regarding the achievement of certain objectives for federal awards. Condition: During testing we noted that there was one invoice out of sixty invoices reviewed that was missing. A purchase requisition was available for review; however, the requisition did not contain any detail regarding the goods or services purchased. Questioned costs: $60. This amount was determined by reviewing the purchase requisition. Cause: Documentation procedures were not strictly enforced. Effect: For the fiscal year under review, the Organization did not comply with federal regulations to properly document costs. Recommendation: We recommend that the Organization continue to strengthen their procedures to ensure that all invoices are retained. Views of Responsible Officials: This oversight has been reviewed with the appropriate fiscal staff and will be corrected.

2020-003 Significant Deficiency ? Allowable Costs ? Cost Allocation Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 93.778 Program Name: Medical Assistance (Medicaid; Title XIX) Area: Allowable Costs ? Cost Allocation Criteria: The Organization is required to implement process in accordance with 2 CFR 200, the objective of which will provide reasonable assurance regarding the achievement of certain objectives for Federal Awards, including the methods for allocating costs are in accordance with the cost principles and produce an equitable and consistent distribution of the costs. Condition: It was noted during testing that there was on individual whose mileage expenses were recorded using an allocation plan; however, per review of the mileage logs this locations to which the employee traveled were not part of the allocation plan. This finding was noted for the same employee in December 2019 and May 2020. Questioned costs: $351.45. This amount was calculated using the value of invoices tested. Cause: The allocation plan was not updated for this employee. Effect: The possible effect on this condition is that expenses will not be allocated to activities benefitting from indirect costs. Recommendation: We recommend that the Organization continue to evaluate cost allocation plans on an ongoing basis. Views of Responsible Officials: The employee in question has an allocation plan that was based on the locations where the employee typically worked. This employee was asked to temporarily travel to other locations which were not part of the employee?s allocation plan. In the future, cost allocation plans will be adjusted, as appropriate.

2020-004 Significant Deficiency ? Allowable Costs ? Compensation and Staffing Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 93.778 Program Name: Medical Assistance (Medicaid; Title XIX) Area: Allowable Costs- Compensation and Staffing Criteria: Pennsylvania Code Title 55 Chapter 6211 Section 6211.73 requires that payment will not be made to exceed an overall ratio of one direct care staff to one certified bed, unless documentation supports the need the exceed the ratio to establish and maintain certification. Condition: During testing we noted that the Organization is unable to provide adequate substantiation to verify that the calculated ratio of direct care staff to certified beds is inclusive of all appropriate direct care hours. Cause: The reports provided to substantiate the calculation performed by management were not in agreement with management?s calculation. Effect: The possible effect on this condition is that there is an increased risk that the Organization?s direct cares staff hours were in excess of those required to keep the ratio of one direct care staff to one certified bed. Identification of a repeat finding: This is a repeat finding from the immediate previous audit, 2019-03. Recommendation: We recommend that the Organization retain the reports used to prepare their calculation Views of Responsible Officials: The Organization will ensure that original payroll reports used to prepare the calculation are kept with the calculation. Additionally, management will run an annualized payroll report at fiscal-year-end to verify clerical accuracy of the calculation.

2020-005 Significant Deficiency ? ICF Purchase Bid Requirements Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 93.778 Program Name: Medical Assistance (Medicaid; Title XIX) Area: Contract Related Issues Criteria: Federal procurement standards and Pennsylvania Code Title 55 Chapter 6211 Section 6211.84 requires that contracted costs that exceed $5,000 annually must be made through the competitive bidding process. Condition: During review of the ICF program requirements as set forth in the Pennsylvania DHS Guide to the ICF Program, it was noted that only two bids could be provided for contracted cleaning services. Cause: Management states that three bids were obtained; however, they were only able to locate two of the bids. Effect: The possible effect on this condition is that the Organization is unable to support that they complied with competitive bid requirements. Recommendation: We recommend that the Organization obtain three bids for all contracted services for which costs will exceed $5,000 annually. Views of Responsible Officials: The Organization maintains that three bids for contracted cleaning services were obtained; however, only two could be located at the time of audit. The agency will ensure that all bids for contracted services are available for review to comply with competitive bid requirements.

2020-006 Significant Deficiency ? Internal Control over Compliance Program Information: Federal Agency: U.S. Department of Treasury Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number: 21.019 Program Name: Coronavirus Relief Fund Area: Internal Controls Criteria: The Organization is required to implement controls in accordance with 2 CFR 200.303, the objective of which is to establish and maintain effective internal control over Federal awards that will provide reasonable assurance that an entity is managing the award in compliance with Federal statutes, regulations and the terms and conditions of the award. Condition: During testing, we noted that management was unaware of fact that monies relating to the Pennsylvania Coronavirus Relief Funds (CRF), distributed by the Department of Human Services pursuant to Act 24 of 2020, were Federal in nature. Cause: Lack of controls over identifying federal awards. Effect: The possible effect on this condition is that there is an increased risk that awards are not identified and that there would be noncompliance with terms and conditions of the award. Recommendation: We recommend that the Organization continue to strengthen their internal controls surrounding the identification of federal funding. Views of Responsible Officials: The Organization will continue to strengthen its internal controls surrounding the identification of federal funding due to the distribution of PA Coronavirus Relief Funds and any other sources of federal funds that it may receive.

2019-1 Significant Deficiency ? Procurement, Suspension and Debarrment Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity:Pennsylvania Department of Human Services CFDA Number:93.778 Program Name:Medical Assistance (Medicaid; Title XIX) Area:Procurement and Suspension and Debarrment Criteria: Recipients of federal awards are required by federal procurement standards to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended or otherwise excluded from receiving federal funds or working on federally funded projects. Condition: During testing we noted that there were two vendors not included on the list used by management to verify that the vendors were not debarred or excluded from receiving federal funds. Cause: Suspension and debarrment procedures which require the addition of vendors to the Organization?s vendor list were not strictly enforced. Effect: For the fiscal year under review, the Organization did not comply with verification requirements. The possible effect on this condition is that there is an increased risk that the Organization passed federal funding through to entities which are prohibited from receiving federal funds. Recommendation: We recommend that the Organization continue to implement and adhere to its policies regarding adding vendors to the list and performing routine searches of the database. Views of Responsible Officials: In the case of one of the two vendors involved, they underwent a name change. As the Organization has been dealing with them for many years, the Accounts Payable department was unaware they needed to be verified again. The Organization?s Accounts Payable department will ensure that all new vendors as well as all vendors who undergo a name change are verified before the Organization conducts business with them.

2019-2 Significant Deficiency ? Noncompliant Recordkeeping Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number:93.778 Program Name:Medical Assistance (Medicaid; Title XIX) Area:Noncompliant Recordkeeping Criteria: All employers are required to keep all record of employment taxes, including Forms W-4, for at least four years after filing the 4th quarter for the year. In addition, all employers must ensure proper completion of Form I-9, Employment Eligibility Verification, for each individual they hire along with employee personnel files in order to satisfy the requirements to justify pay scales, wages rates and salary levels. Condition: During testing we noted that there was one personnel file out of sixty files reviewed that had been misplaced. Cause: Per discussion with management, the HR department had moved their office to a new building during the fiscal year. The file was misplaced during the move. Effect: For the fiscal year under review, the Organization did not comply with federal regulations to maintain employee records. Recommendation: We recommend that the Organization ensure that all files are complete. If instances come up where forms cannot be located, the Organization should get in contact with the employee to obtain new forms. Views of Responsible Officials: The finding has been resolved. The HR department contacted the employee and completed a new file that included Form W-4 and Form I-9 for auditor review before testing was completed.

2019-3 Significant Deficiency ? Allowable Costs ? Compensation and Staffing Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number:93.778 Program Name:Medical Assistance (Medicaid; Title XIX) Area:Allowable Costs ? Compensation and Staffing Criteria: Pennsylvania Code Title 55 Chapter 6211 Section 6211.73 requires that payment will not be made to exceed an overall ratio of one direct care staff to one certified bed, unless documentation supports the need the exceed the ratio to establish and maintain certification. Condition: During testing we noted that the Organization is unable to provide adequate substantiation to verify that the calculated ratio of direct care staff to certified beds is inclusive of all direct care staff hours worked during the fiscal year. Cause: During the year the Organization switched payroll providers. The reports used to accumulate hours from the new payroll provider, PeopleGuru, do not include the time period covered by the report. The Organization has since switched to back to their old payroll provider, ADP. Effect: The possible effect on this condition is that there is an increased risk that the Organization?s direct care staff hours were in excess of those required to keep the ratio of one direct care staff to one certified bed. Recommendation: We recommend that the Organization use reports that include relevant time period information when accumulating hours to calculate the direct care staff to certified beds ratio. Views of Responsible Officials: The Organization terminated their services with PeopleGuru in December 2019. For the 2019/2020 fiscal year ratio, the Organization will be using reports from PeopleGuru for the first half of the year. The Organization will use reports that include relevant time period information when accumulating hours to calculate the direct care staff to certified beds ratio.

2019-4 Significant Deficiency ? Approval of Expenditures Program Information: Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Pennsylvania Department of Human Services CFDA Number:93.778 Program Name:Medical Assistance (Medicaid; Title XIX) Area:Activities Allowed or Unallowed Criteria: The Organization is required to implement processes to maintain internal control over compliance requirements for Federal Awards in accordance with 2 CFR 200.62. the objective which will provide reasonable assurance regarding the achievement of certain objectives for Federal Awards including that funds, property or other assets are safeguarded against loss from unauthorized use or disposition. The Organization?s policy is that all requisition forms for amounts greater than $500 be approved by the Executive Director. Condition: During testing we noted that there was one invoice out of sixty invoices reviewed that did not contain proper management approval in line with the Organization?s policies. Cause: Approval procedures were not strictly enforced. Effect: The possible effect on this condition is that there is an increased risk that activities or costs that are not allowed or allowable could potentially be paid. Recommendation: We recommend that the Organization continue to strengthen their procedures to ensure that all invoices over their designated threshold are reviewed in accordance with their policy. Views of Responsible Officials: The Organization has changed its internal policy to increase the amount required to be approved by the Executive Director from $500 to $5,000.

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