COMMUNITY HEALTH AND EMERGENCY SERVICES, INC.Non-Profit

Finding Number 2024-004 – Inaccurate Schedule of Expenditures of Federal Awards Criteria Entities that receive federal grants or programs are required to know the source of all grants and awards as the requirements of the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Final Rule (Uniform Guidance). Entities must be able to document the key components of the schedule of expenditures of federal awards. Condition The schedule of expenditures of federal awards provided by management was incomplete. It did not include all federal grants expended during the fiscal year.Context Management has all the information to complete the schedule of expenditures of federal awards in compliance with the Uniform Guidance but had inaccuracies discovered during audit procedures. Federal expenditures of $97,080 were excluded from the schedule but were determined to have been reported as spent during the fiscal year. An additional $51,388 was incorrectly reported as federal expenditures that was for state funding. There were also $1,072,724 in federal expenditures reported under an incorrect CFDA number within the Health Center Cluster. Cause In most cases, the grants were properly recorded in the financial statements but the portion that was federal was not clearly identified on the schedule of expenditures of federal awards. Effect The audit firm assisted with compiling all the necessary information to ensure the schedule of expenditures of federal awards was complete and accurate. In addition, if the error in federal awards had not been discovered, the result could have been inaccurate reporting of federal expenditures. Recommendation We recommend management review all grant agreements and correspondence from grantors to ensure the proper CFDA number and amount considered federal is included on the schedule of expenditures of federal awards. Management’s Response Management will prepare the schedule of expenditures of federal awards as part of the year end closing process each year to determine their audit requirements under the Uniform Guidance and provide the schedule and all backup used to prepare it to the audit firm during the financial audit process.

Finding Number 2024-005 – Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-22-00 CFDA # 93.224/93.527 Federal Agency Department of Health and Human Services Criteria The Corporation is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay as follows: • Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); • A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; • Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and • No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition During the compliance testing of the Uniform Guidance “Special Tests and Provisions – Sliding Fee Applications” requirements, we noted the following exception: • One (1) out of thirteen (13) sampled had an expired application but the system continued to apply the slide fee discount. Questioned Costs: Not applicable. Context The population of patients receiving slide adjustments is approximately 75 patients, 130 encounters and gross charges of approximately $17,000. The sample size represented 13 encounters $2,455 in charges of which 1 encounter ($102 in charges) was found to have compliance issues noted above. Cause The billing system continues to apply the discount until manually changed. The staff missed removing the discount when a new application was not provided by the patient. Effect Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Recommendation Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management’s Response Management agrees with the finding. The charge in the system outlined above had not yet been paid so management removed the slide discount to show full charges due by the patient.

Finding Number 2023-003 – Inaccurate Schedule of Expenditures of Federal Awards Criteria Entities that receive federal grants or programs are required to know the source of all grants and awards as the requirements of the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Final Rule (Uniform Guidance). Entities must be able to document the key components of the schedule of expenditures of federal awards.Condition The schedule of expenditures of federal awards provided by management was incomplete. It did not include all federal grants expended during the fiscal year and in some instances overstated the federal expenditures for certain grants. Context Management has all the information to complete the schedule of federal awards in compliance with the Uniform Guidance but had inaccuracies discovered during audit procedures. Federal expenditures of $1,560,441 were excluded from the schedule but were determined to have been reported as spent during the fiscal year. There were also $99,895 in federal expenditures reported for other grants that were determined to be overstated. Cause In most cases, management failed to add additional federal grants that were either new to the Corporation or had not had expenditures in the prior year. Effect The audit firm assisted with compiling all the necessary information to ensure the schedule of federal awards was complete and accurate. In addition, if the error in federal awards had not been discovered, the result could have been inaccurate reporting of federal expenditures. Recommendation We recommend management incorporate proper training and education on the information and amounts that must be outlined in the schedule of federal awards. Management’s Response Management will prepare the schedule of expenditures of federal awards as part of the year end closing process each year to determine their audit requirements under the Uniform Guidance and provide the schedule and all backup used to prepare it to the audit firm during the financial audit process.

Finding Number 2023-004 – Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-22-00 CFDA # 93.224/93.527 Federal Agency Department of Health and Human Services Criteria The Corporation is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay as follows: • Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); • A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; • Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and • No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition During the compliance testing of the Uniform Guidance “Special Tests and Provisions – Sliding Fee Applications” requirements, we noted the following exceptions: • Three (3) out of eighteen (18) sampled did not have the slide fee applied to the lab portion. • Two (2) out of eighteen (18) sampled were calculated incorrectly based on the sliding fee schedule (wrong sliding fee applied based on application). • Two (2) out of eighteen (18) sampled were missing applications. • One (1) out of eighteen (18) sampled were incorrectly in the system with a medical slide A on a dental charge. This patient was also one of the sampled items missing an application so it could not be determined if slide A would have been correct. Questioned Costs: Not applicable. Context The population of patients receiving slide adjustments is approximately 70 patients, 170 encounters and gross charges of approximately $25,000. The sample size represented 18 encounters $2,455 in charges of which 18 encounters (approximately $1,000 in charges) were found to have compliance issues noted above. Cause Lack of oversight and turnover in key positions resulting in lack of training over sliding fee applications and calculations. Effect Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Recommendation Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management’s Response Management agrees with the finding.

Finding Number 2023-005 – Inaccurate Tracking and Reporting of Federal Expenditures Federal Program Name COVID-19 Provider Relief Fund CFDA # 93.498 Federal Agency Department of Health and Human Services Criteria The Corporation is responsible for determining whether an expense is eligible for reimbursement through the Provider Relief Fund. To be considered an allowable expense under the Provider Relief Fund, the expense must be used to prevent, prepare for, and respond to coronavirus. In addition, the Corporation is required to maintain adequate documentation to substantiate that these funds were used for health care-related expenses attributable to coronavirus or COVID-19, and that those expenses were not reimbursed from other sources and other sources were not obligated to reimburse them. At the end of the reporting period, the Corporation is required to submit a report to the Health Resources & Services Administration (HRSA) indicating how the Provider Relief Funds were spent and in what timeframe under the prescribed period of availability. Condition During the compliance testing of the Uniform Guidance “Allowable Costs/Cost Principles” and “Reporting” requirements, we noted the following exceptions were noted regarding the initial report of expenditures reported to HRSA for period 5: • There were no amounts indicated as being spent between January 1, 2020 through June 30, 2022. • The report to HRSA indicated that $1,461,109 was spent during the fiscal year 2023 however only $558,598 was allocated to Provider Relief Funds on the Corporations general ledger. • The amounts indicated on the report to HRSA as being qualified expenditures did not appear to have been based on specific needs to prevent, prepare for and respond to coronavirus: o There was not a clear cost allocation documented to allocate items such as mortgage/rent, insurance, utilities or other general administration. o Personnel costs and related fringe benefits appeared to be remaining amounts not already reimbursed by other grants/programs rather than based on time spent specific to coronavirus. o Supplies submitted were not clearly identifiable as necessary to prevent, prepare for and respond to coronavirus. Condition Upon notification of the above compliance issues, management provided an updated detail of expenses incurred in the period of availability (January 1, 2020 through June 30, 2023) indicating a total of $1,405,474 spent on qualified expenditures during period 5. This detail included a cost allocation based on square footage dedicated to coronavirus areas of each facility to determine cost allocation of the administration/overhead amounts. The new population was sampled and we determined the following items to be ineligible: • We determined that costs from April 2020 through April 2021 of $283,525 should be excluded as they appeared to have been submitted as support for Period 1. • We determined that equipment of $51,794 was excluded as it was found to have been reimbursed by another funding source. • We excluded $407,277 in personnel and fringe benefits as they were not clearly identifiable as related to the prevention of or preparation for coronavirus. Most of the Corporations personnel costs are covered by the Health Center Program. Questioned Costs: Total costs of $1,461,109 submitted to HRSA could not be substantiated in the period of availability. Management subsequently identified and documented $662,878 of expenses as qualifying expenditures that have not been submitted to HRSA. Context The Corporation received $1,461,109 in federal Provider Relief Funds in period 5. The federal funds are considered available for expenses incurred between January 1, 2020 through June 30, 2023 with reports indicating how it was spent due to HRSA by September 30, 2023. The report does not include an option to amend or correct so it is important to ensure the initial report is accurate. Cause Management did not have a clear understanding of the requirements for use of Provider Relief Funds. In addition, expenditures were not tracked timely that were directly related to the preparation for and prevention of coronavirus. Effect Lack of effective understanding of grant and program requirements resulted in unintentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties and result in lost funding or return of grant funds. Recommendation Management should initiate conversation with a HRSA representative immediately to implement a corrective action plan including having the updated list of eligible expenditures and support readily available for audit by the oversight agency. Management’s Response Management agrees with the finding.

FINDING NO. 2022-003: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay as follows: • Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); • A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; • Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and • No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition: During the compliance testing of the Uniform Guidance “Special Tests and Provisions – Sliding Fee Applications” requirements, we noted the following exceptions: • Three (3) out of thirty-four (34) were missing applications. • Fourteen (14) out of thirty-four (34) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. • One (1) out of thirty-four (34) sliding fee adjustments were not properly applied to the patient’s account. Questioned Costs: N/A Context: Exceptions were noted in 18 of the 34 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and lack of training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management’s Response: Management agrees with the finding.

FINDING NO. 2022-004: Ineffective Internal Controls over Expenditure Report Preparation Federal Program Name Health Center Program Project NO. H80CS00680-21-00, H80CS00680-20-03 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance) requires that a non-federal entity’s financial management system, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of the reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to federal statutes, regulations, and the terms and conditions of the federal award. Health Resources & Services Administration (HRSA) also implements various quarterly and annual reporting deadlines at the grant agency level. Condition: The Organization’s internal controls over the preparation and review of grant expenditure reports were not properly followed during the current fiscal year. Certain expenditure reports submitted to HRSA were not timely filed: • The Medicaid cost report is due to Illinois Healthcare and Family Services (HFS) within 180 days after the close of the Clinic’s fiscal year. The Organization filed this report on September 8, 2022 for year-end June 30, 2021. • The Medicare cost report is due to Centers for Medicare & Medicaid Services (CMS) on November 30, 2021 but was not submitted until December 6, 2021. Questioned Costs: N/A Context: Exceptions were noted in 2 of the 4 reports tested. Effect: Untimely or inaccurate expenditure reporting could result in either overstatements or understatements of expenditures to granting agencies. A return of grant funds could be requested from the granting agencies. Cause: Lack of oversight by the Organization’s personnel. Recommendation: The Organization should create a system of internal controls to ensure all expenditure reports are submitted accurately and timely filed. Management’s Response: Management agrees with the finding.

FINDING NO. 2021-003: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-18-03, H80CS00680-19-02 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay as follows: ? Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); ? A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; ? Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and ? No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG. Condition: During the compliance testing of the Uniform Guidance ?Special Tests and Provisions ? Sliding Fee Applications? requirements, we noted the following exceptions: ? One (1) out of thirty-three (33) applications was not signed by the patient. ? Six (6) out of thirty-three (33) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. ? Four (4) out of thirty-three (33) sliding fee adjustments were not properly applied to the patient?s account. Questioned Costs: N/A Context: Exceptions were noted in 11 of the 33 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors that may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and lack of training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management?s Response: Management agrees with the finding.

"SECTION III ? FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS FINDING NO. 2020-002: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-18-03; H80CS00680-19-02 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements sufficient to prevent or detect errors and fraud. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay as follows: ? Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); ? A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; ? Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and ? No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent or more of the FPG Condition: During the compliance testing of the Uniform Guidance ?Special Tests and Provisions ? Sliding Fee Applications? requirements, we noted the following exceptions: ? Six (6) out of forty (40) applications were not signed off as approved by the employee. ? One (1) out of forty (40) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. ? Thirteen (13) out of forty (40) sliding fee adjustments were not properly applied to the patient?s account. Questioned Costs: N/A Context: Exceptions were noted in 22 of the 35 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors or misappropriations of assets, in which the errors or fraud could affect the financial statements and may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management?s Response: Management agrees with the finding. "

SECTION III ? FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS FINDING NO. 2019-003: Ineffective Internal Controls over Sliding Fee Revenues Federal Program Name Health Center Program Project NO. H80CS00680-17-10, H80CS00680-18-00 CFDA # 93.224 Federal Agency Department of Health and Human Services Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over sliding fee and clinic service eligibility requirements sufficient to prevent or detect errors and fraud. Specifically, health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay as follows: ? Sliding fee discounts are applied to fees for health center services provided to all individuals and families with annual incomes at or below 200 percent of the Federal Poverty Guidelines (FPG); ? A full discount is applied to fees for health center services provided to individuals and families with annual incomes at or below 100 percent of the FPG, or the health center applies only a nominal charge; ? Fees for health center services are discounted based on graduations in family size and income for individuals and families with incomes above 100 and at or below 200 percent of the FPG; and ? No sliding fee discount is applied to fees for health center services provided to individuals and families within 200 percent of the FPG Condition: During the compliance testing of the Uniform Guidance ?Special Tests and Provisions ? Sliding Fee Applications? requirements, we noted the following exceptions: ? For seven (7) out of thirty-five (35) applications tested, the annual income of the patient was not verified by the employee certifying the application. ? Nine (9) out of thirty-five (35) applications were not signed off as approved by the employee. ? Ten (10) out of thirty-five (35) sliding fee adjustments were calculated incorrectly based on the sliding fee schedule. ? Two (2) out of thirty-five (35) sliding fee adjustments were not properly applied to the patient?s account. Questioned Costs: N/A Context: Exceptions were noted in 22 of the 35 sliding fee patients tested. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors or misappropriations of assets, in which the errors or fraud could affect the financial statements and may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Lack of oversight and training over sliding fee applications and calculations. Recommendation: Management should take steps to ensure procedures over sliding fee applications are properly designed and operating effectively. Management?s Response: Management agrees with the finding.

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