Open Cities Health Center, Inc.Non-Profit

Assistance Living Number 93.224 Community Health Centers Grant Award Number H80CS00112 US Department of Health and Human Services Finding 2024-003 Compliance Requirement: Allowable Cost/Cost Principles Type of Finding: Material Weakness Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to payroll and personnel which should be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and are incorporated into the official records of the recipient organization. Condition: A walkthrough of fourteen individuals was performed to review personnel files and payroll related to salary for the Organization. Of the fourteen files reviewed, eight had no approved current pay rate documented, one was paid at a rate different from current rate in the file, two files did not contain an I-9 Form, and one was missing Form W-4. Also, there was no time sheet provided to support the time charged to the federal grant for three of the fourteen individuals tested. Cause: Management of the Organization’s human resources and payroll departments experienced substantial turnover during the year, and personnel files were not prioritized to keep them in good order. Payroll documentation was not maintained properly. Also, new administrators were unaware that salaried employees who are paid with federal funds must maintain documentation to support time allocated. Effect or Potential Effect: Without proper documentation, it is not possible to support the appropriate wage rate being paid to an individual. Also, it is not possible to prove an accurate allocation of time charged to a federal grant without time sheets, in accordance with the system that was in use. Questioned Costs: $330,330 Repeat Finding: The finding is a repeat finding (see prior year finding number 2023-002). Recommendation: We recommend that administrators become familiar with time and effort reporting requirements. Consider the use of a checklist within each personnel file as an additional procedure to ensure that each file contains all necessary documents and that the file has been updated for current rates of pay. Views of Responsible Officials: Management agrees with the recommendation and will implement the use of a checklist to improve compliance.

Assistance Listing Numbers 93.224 Community Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2024-004 Compliance Requirement: Reporting Type of Finding: Material Weakness Criteria: Per CFR Subpart F, the audit, data collection form, and the reporting package must be submitted within 30 calendar days after receipt of report, or nine months after the end of the audit period. Condition: The report for the year ended December 31, 2024, was not filed within the required report submission period. Cause: This condition can be attributed to the extensive turnover in the Clinic’s administrative positions which included the Senior Accountant. Financial statements did not receive sufficient attention to be completed and submitted to the independent auditor in time to meet the reporting deadline. Effect or Potential Effect: Tardiness in financial reporting prevents management from identifying and addressing errors and issues in a timely manner. Late submission of reports to the Clearinghouse prevents the organization from maintaining compliance with OMB guidelines. Questioned Costs: None Repeat Finding: The finding is a repeat finding (see prior year finding number 2023-004). Recommendation: The Organization must give higher priority to its financial reporting cycle to avoid obvious challenges. Views of Responsible Officials: Management agrees with the finding.

Assistance Listing Numbers 93.224 Community Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2024-005 Compliance Requirement: Auditee Responsibility Type of Finding: Material Weakness Criteria: The Uniform Guidance requires that auditees must identify in its accounts all federal awards received and expended, as well as the federal programs under which they were received and the period under which they were expended. Condition: The Schedule of Federal Awards (SEFA) prepared for the audit did not include pass through funds received from the State of Minnesota. Also, The SEFA for the current year contains expenditures of the prior period (COVID-19) which should have been included on the prior year SEFA. Cause: The Organization’s staff does not have adequate training on single audit guidelines and federal grant management. The Grants Manager was unaware of the need to report federal funding received from pass through sources. Effect or Potential Effect: Noncompliance with grant requirements may occur if funds have not been accurately identified and reported within their period of expenditure. Questioned Costs: None Repeat Finding: No Recommendation: The Organization’s staff should obtain additional training on single audit guidelines and federal grant management. Views of Responsible Officials: Management agrees with the finding and recommendation and will commit to providing additional training opportunities to those responsible for the management of federal funding.

Assistance Listing Numbers 93.224 Community Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2024-006 Compliance Requirement: Special Tests and Provisions-Sliding Fee Discounts Type of Finding: Significant Deficiency Criteria: Health centers are required to adjust the amounts owed for health center services based of the patient’s ability to pay and their eligibility. A patient’s eligibility to pay is determined on the basis of the official poverty guidelines. Condition: Of the twenty-five patients selected for testing the Federal Poverty Guideline (FPG) was inaccurately applied for two patients. Cause: The condition can be attributed to turnover in patient management personnel which resulted in the use of an outdated Sliding Fee Table. Effect or Potential Effect: Two patients received discounts greater than the amount they were eligible to receive. Questioned Costs: None Repeat Finding: The is not a repeat finding. Recommendation: The Organization should be implementing and monitoring procedures to ensure that information used to determine sliding fee is based on guidelines that are current. Views of Responsible Officials: Management agrees with the finding.

Assistance Living Number 93.224 Health Center Programs Grant Award Number H80CS00112 US Department of Health and Human Services Finding 2023-002 Compliance Requirement: Allowable Cost/Cost Principles Type of Finding: Material Weakness Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to payroll and personnel which should be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and are incorporated into the official records of the recipient organization. Condition: A walkthrough of fourteen individuals was performed to review personnel files and payroll related to salary for the Organization. Of the fourteen files reviewed, two had no approved current pay rate documented, and the salary or hourly rate paid was not the rate contained in the file. Also, there was no timesheet provided to support the time charged to the federal grant for eleven of the fourteen individuals tested. Cause: Management of the Organization’s human resources and payroll departments experienced substantial turnover during the year and personnel files were not prioritized to keep them in good order. Payroll documentation was not maintained properly. Also, new administrators were unaware that salaried employees who are paid with federal funds, must maintain documentation to support time allocated. Effect or Potential Effect: Without proper documentation, it is not possible to support the appropriate wage rate being paid to an individual. Also, it is not possible to prove an accurate allocation of time charged to a federal grant without time sheets, in accordance with the system that was in use. Questioned Costs: $142,546 Repeat Finding: The finding is a repeat finding (see prior year finding number 2022-005) Recommendation: Recommend that administrators become familiar with time and effort reporting requirements. Consider the use of a checklist within each file as an additional procedure to ensure that each file contains all necessary documents and that the file has been updated for current rates of pay. Views of Responsible Officials: Management agrees with the recommendation and will implement the use of a checklist to improve compliance.

Assistance Listing Numbers 93.224 Consolidated Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2023-003 Compliance Requirement: Special Tests and Provisions-Sliding Fee Discounts Type of Finding: Material Weakness Criteria: Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay and their eligibility. A patient’s eligibility to pay is determined on the basis of the official poverty guidelines. Condition and Context: Documents to verify income could not be located for six of the twenty-five patients selected for testing. Also, there was no documentation of family size for five of the patients in this sample. The result is that we were unable to determine eligibility for a total of seven of the fourteen tested. Cause: The condition can be attributed to turnover in patient management personnel and the fact that various files were moved off-site and stored without adequate communication to incoming personnel. Effect or Potential Effect: Sliding fee discounts given could potentially be incorrect, or the patient could be ineligible. Questioned Costs: None Repeat Finding: The finding is a repeat finding (see prior year finding number 2022-006) Recommendation: The Organization should be implementing and monitoring procedures to ensure that all supporting documents are kept for determining patient eligibility. Views of Responsible Officials: Management agrees with the finding.

Assistance Listing Numbers 93.224 Consolidated Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2023-004 Compliance Requirement: Reporting Type of Finding: Material Weakness Criteria: Per CFR Subpart F, the audit, data collection form, and the reporting package must be submitted within 30 calendar days after receipt of report, or nine months after the end of the audit period. Condition: The report for the year ended December 31, 2023, was not filed within the required report submission period. Cause: This condition can be attributed to the extensive turnover in the Clinic’s administrative positions which included the Chief Financial Officer. Financial statements did not receive sufficient attention to be completed and audited in a timely manner. Effect or Potential Effect: Tardiness in financial reporting prevents management from identifying and addressing errors and issues in a timely manner. Late submission of reports to the Clearinghouse prevents the organization from maintaining compliance with OMB guidelines. Questioned Costs: None Repeat Finding: The finding is a repeat finding (See prior year finding number 2022-007) Recommendation: The Organization must give a higher priority to its financial reporting cycle to avoid obvious challenges. Views of Responsible Officials: Management agrees with the finding. Finding 2022-007 Compliance Requirement: Reporting Type of Finding: Material Weakness Criteria: Per CFR Subpart F, the audit, data collection form, and the reporting package must be submitted within 30 calendar days after receipt of report, or nine months after the end of the audit period. Condition: The report for the year ended December 31, 2022 was not filed within the required report submission period. Cause: This condition can be attributed to the extensive turnover in the Clinic’s administrative positions which included the Chief Financial Officer. Financial statements did not receive sufficient attention to be completed and audited in a timely manner. Effect: Tardiness in financial reporting prevents management from identifying and addressing errors and issues in a timely manner. Late submission of reports to the Clearinghouse prevents the organization from maintaining compliance with OMB guidelines. Questioned Costs: None Repeat Finding: No Recommendation: The Organization must give a higher priority to its financial reporting cycle to avoid obvious challenges. Management’s Response: Management agrees with the finding.

Assistance Living Number 93.224 Health Center Programs Grant Award Number H80CS00112 US Department of Health and Human Services Finding 2022-005 Compliance Requirement: Allowable Cost/Cost Principles Type of Finding: Material Weakness Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to payroll and personnel which should be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and are incorporated into the official records of the recipient organization. Condition: A walkthrough of fourteen individuals was performed to agree personnel files and to payroll. Of the fourteen files reviewed, six had no approved current pay rate documented, and the salary or hourly rate paid was not the rate contained in the file. Also, there was no timesheet provided to support the time charged to the federal grant for two of the fourteen individuals tested. Cause: Management of the Organization’s human resources and payroll departments experienced substantial turnover during the year and personnel files were not prioritized to keep them in good order. Payroll documentation was not maintained properly. Effect: Without proper documentation, it is not possible to support the appropriate wage rate being paid to an individual. Also, it is not possible to prove an accurate allocation of time charged to a federal grant without time sheets, in accordance with the system that was in use. Questioned Costs: $539,000 Repeat Finding: Yes Recommendation: Recommend use of a checklist within each file as an additional procedure to ensure that each file contains all necessary documents and that the file has been updated for current rates of pay. Management’s Response: Management agrees with the recommendation and will implement the use of a checklist to improve compliance.

Finding 2022-006 Compliance Requirement: Special Tests and Provisions-Sliding Fee Discounts Type of Finding: Material Weakness Criteria: Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay and their eligibility. A patient’s eligibility to pay is determined on the basis of the official poverty guidelines. Condition and Context: Supporting documents could not be located for six of the twenty-five patients selected for testing. As such, we were unable to determine eligibility for those patients. Cause: The condition can be attributed to turnover in patient management personnel and the fact that various files were moved off-stie and stored without adequate communication to incoming personnel. Effect: Sliding fee discounts given could potentially be incorrect, or the patient could be ineligible. Questioned Costs: None Repeat Finding: Yes Recommendation: The Organization should be implementing and monitoring procedures to ensure that all supporting documents are kept for determining patient eligibility. Management’s Response: Management agrees with the finding.

Assistance Listing Numbers 93.224 Consolidated Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2022-007 Compliance Requirement: Reporting Type of Finding: Material Weakness Criteria: Per CFR Subpart F, the audit, data collection form, and the reporting package must be submitted within 30 calendar days after receipt of report, or nine months after the end of the audit period. Condition: The report for the year ended December 31, 2022 was not filed within the required report submission period. Cause: This condition can be attributed to the extensive turnover in the Clinic’s administrative positions which included the Chief Financial Officer. Financial statements did not receive sufficient attention to be completed and audited in a timely manner. Effect: Tardiness in financial reporting prevents management from identifying and addressing errors and issues in a timely manner. Late submission of reports to the Clearinghouse prevents the organization from maintaining compliance with OMB guidelines. Questioned Costs: None Repeat Finding: No Recommendation: The Organization must give a higher priority to its financial reporting cycle to avoid obvious challenges. Management’s Response: Management agrees with the finding.

Assistance Living Number 93.224 Health Center Programs Grant Award Number H80CS00112 US Department of Health and Human Services Finding 2021-005 Compliance Requirement: Allowable Cost/Cost Principles Type of Finding: Material Weakness Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to payroll and personnel which should be supported by internal controls to ensure that employees working for the Organization have the proper documentation in personnel files to support employment activities. All personnel files should contain approved wage rates, I-9 forms, W-4 forms and applications or resumes. Condition: A walkthrough of fourteen individuals was performed to agree personnel files and to payroll. Of the fourteen files reviewed, seven had no approved current pay rate documented, and the salary or hourly rate paid was not the rate contained in the file. Cause: Management of the Organization’s human resources area turned over several times during the past few years, and personnel files were not prioritized to keep them in good order and in accordance with the Organization’s policy. Effect: Without proper documentation, it is not possible to support the appropriate wage rate being paid to an individual, the proper amounts of withholdings, or even their eligibility for employment. Questioned Costs: $330,000 Repeat Finding: Yes Recommendation: Recommend use of a checklist within each file as an additional procedure to ensure that each file contains all necessary documents and that the file has been updated for current rates of pay. Management’s Response: Management agrees with the recommendation and will implement the use of a checklist to improve compliance.

Assistance Listing Numbers 93.224 Consolidated Health Centers Grant Number H80CS00112 US Department of Health and Human Services Finding 2021-006 Compliance Requirement: Special Tests and Provisions-Sliding Fee Discounts Type of Finding: Material Weakness Criteria: Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay and their eligibility. A patient’s eligibility to pay is determined on the basis of the official poverty guidelines. Condition and Context: Supporting documents could not be located for four of the thirty patients selected for testing. As such, we were unable to determine eligibility. Cause: The condition can be attributed to changeover in patient management software, personnel, and passage of time. Various files were moved off-stie and stored without adequate communication to incoming personnel. Effect: Sliding fee discounts given could potentially be incorrect, or the patient could be ineligible. Questioned Costs: None Repeat Finding: Yes Recommendation: The Organization should be implementing and monitoring procedures to ensure that all supporting documents are kept for determining patient eligibility. Management’s Response: Management agrees with the finding.

Assistance Listing Numbers 93.224 and 93.527 – Health Center Program Cluster Award Numbers: H80CS00112, H8CCS34790, H8DCS36181 and H8ECS38688 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Condition and Context: Five individuals were selected to review personnel files and payroll related to salary for the Organization. Of the five files reviewed, one file support could not be located to verify existence. Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to salaries for the Organization which should be properly supported by internal controls to ensure that personnel documentation properly supports the salaries that were paid to qualified individuals and that compensation to individual employees must be reasonable for the services rendered. Effect: There was exposure which could have resulted in errors occurring in the payroll that was incurred during the year. Cause: The Center did not have a formal policy to retain documentation of approved wage rates for all employees. Questioned Costs: $97,115 Repeat Finding: Repeat finding of 2019-005 Recommendation: The Organization’s human resources staff should use a checklist to ensure that all necessary documents are kept in the personnel files, including applications or resumes, approved pay rate, Form I-9, and Form W-4. Views of Responsible Official: Management of the Organization concurs with the audit finding

Assistance Listing Numbers 93.224 and 93.527 – Health Center Program Cluster Award Numbers: H80CS00112, H8CCS34790, H8DCS36181 and H8ECS38688 Compliance Requirement: Special Tests and Provisions-Sliding Fee Discounts Type of Finding: Material Weakness Condition and Context: Supporting documents could not be located for two of the forty patients selected for testing. As such, we were unable to determine eligibility. Criteria: Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay and their eligibility. A patient’s eligibility to pay is determined on the basis of the official poverty guidelines. Effect: Sliding fee discounts given could potentially be incorrect, or the patient could be ineligible. Cause: The condition can be attributed to changeover in patient management software, personnel, and passage of time. Questioned Costs: None Repeat Finding: Repeat finding of 2019-006 Recommendation: The Organization should be implementing and monitoring procedures to ensure that all supporting documents are kept for determining patient eligibility. Views of Responsible Official: Management of the Organization concurs with the audit finding.

CFDA#93.224 Consolidated Health Centers and CFDA #93.527 Affordable Care Act Grants for New and Expanded Services under the Health Centers Program Grant Number H80CS00112 US Department of Health and Human Services Finding 2019-005 Allowable Costs/Cost Principles Material Weakness Criteria: Uniform Guidance Allowable Costs/Cost Principles addresses activities related to salaries for the Organization which should be properly supported by internal controls to ensure that personnel documentation properly supports the salaries that were paid to qualified individuals and that compensation to individual employees must be reasonable for the services rendered. Condition and Context: Fourteen individuals were selected to review personnel files and payroll related to salary for the Organization. Of the fourteen files reviewed, five were missing Form W-4, two were missing Form I-9, all fourteen had no approved pay rate documented, and five did not contain an application or resume. It was noted that the former CEO of the Organization appointed himself to the position of medical director despite the fact that he did not have the qualifications for this position. He was paid an additional salary for this position. Cause: The Organization?s human resources area changed over several times in the last several years, and personnel files were not kept in good order. In addition, the former CEO falsified his credentials and overrode existing controls. Effect: An individual was being paid by the Organization for a position that he was not qualified to hold. There was exposure which could have resulted in errors occurring in the payroll that was incurred during the year. Questioned Costs: $50,000 Repeat Finding: No Recommendation: The Organization?s human resources staff should perform better background checks and credential references to ensure that individuals are qualified for the positions for which they are hired. The Organization?s human resources staff should use a checklist to ensure that all necessary documents are kept in the personnel files, including applications or resumes, approved pay rate, Form I-9, and Form W-4. Also, the Board of Directors must enhance the control environment to prevent management override of existing internal controls. Views of Responsible Officials: Open Cities Health Center, Inc. agrees with this finding. Planned Corrective Action: In 2020, Open Cities Health Center, Inc. hired a consultant to review and implement changes needed to obtain compliance of its personnel files. Open Cities Health Center, Inc. has implemented a formal onboarding process for new employees supported by checklist to ensure all onboarding process and procedures are completed. The processes include obtaining W-4 and I-9 forms in addition to other required documents that are to be kept in each personnel file, along with the checklist. Background checks and credentialling verification are conducted on all new personnel and a copy of the support along with a copy of the applicants resume or application are stored in the file. Open Cities Health Center, Inc. has implemented an approval structure for all pay rate changes. All payrate changes are approved by the Chief Executive Officer through a standardized form and changed in the payroll system by the Human Resources Department. The Finance Department then processes payroll and runs an audit report that shows all changes in the system and reviews the report with the CEO each payroll to ensure no unauthorized changes have been made. The Consultant completed an audit of all personnel files and verified that all required documentation is included in each employee?s personnel file. The Consultant has signed an employment agreement and will be a full-time employee as of February 2021. The above is intended to mitigate management override if internal controls.

CFDA#93.224 Consolidated Health Centers and CFDA #93.527 Affordable Care Act Grants for New and Expanded Services under the Health Centers Program Grant Number H80CS00112 US Department of Health and Human Services Finding 2019-006 Special Tests and Provisions-Sliding Fee Discounts Material Weakness Criteria: Health centers are required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient?s ability to pay and their eligibility. A patient?s eligibility to pay is determined on the basis of the official poverty guidelines. Condition and Context: Supporting documents could not be located for six of the twenty-three patients selected for testing. As such, we were unable to determine eligibility. Cause: The condition can be attributed to changeover in patient management software, personnel, and passage of time. Effect: Sliding fee discounts given could potentially be incorrect, or the patient could be ineligible. Questioned Costs: None Repeat Finding: No Recommendation: The Organization should be implementing and monitoring procedures to ensure that all supporting documents are kept for determining patient eligibility. Views of Responsible Officials: Open Cities Health Center, Inc. agrees with this finding. Planned Corrective Action: Open Cities Health Center, Inc. implemented a new electronic medical record system in December 2019. All documents related to the sliding fee application are now stored in the new system.

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