Mid-Atlantic Association of Community Health Centers, Inc.Non-Profit

Finding - 2020-001 U.S. Department of Health and Human Services CFDA #93.129 State and Regional Primary Care Associations - HRSA Non-Compliance - Activities Allowed or Unallowed and Allowable Cost/Cost Principle Condition: The Association has overages in approved budget categories and had activities/cost in the categories not approved by the grant budget for which no prior approval from the grant award agency has been obtained. The Association was in compliance with the total budget for the year. The Association was in compliance with the total budget for the year. Criteria: Per the Uniform Guidance - Administrative and Financial Management requirements, the Association is required to track their actual use of HRSA funds and reconcile those with the approved grant budget. The Association is required to report any deviations from the budget and request prior approvals from the grant award agency. Context: Compliance with approved budgets and prior approval for adjustments or revision by the grant award agency. Effect: The Association is not in compliance with the compliance requirement of Activities Allowed or Unallowed and Allowable Cost/Cost Principle. Cause: The Association experienced turnover in two of the management level positions responsible for supervising the grant and performing and reviewing the budget vs actual use of grant award and obtaining the preapproval from the grant award agency. Repeat Finding: No Questioned Costs: None. Recommendation: We recommend that the Association report the deviation and request approval from the grant award agency. We also recommend that the Association use the approved grant budget as a guide to spend the grant funds. Any deviations should be promptly reported and prior approval from the grant award agency should be obtained. Reconciling frequently, quarterly, or monthly, will help identify issues closer to when they occur, thereby resolving any overages in approved categories or costs requiring preapproval on a timely basis. We also recommend that the Association maintain written policies and procedures for their accounting and financial management system practices. Management should identify and implement actions needed to carry out specific responses to risks including but not limited to budget overages. Views of Responsible Officials and Planned Corrective Actions: The Association experienced turnover in two of the management level positions responsible for supervising the grant award and performing and reviewing the budget vs actual, including obtaining the preapproval from the grant award agency for any deviations. These positions have now been filled and reviews are now being performed on a monthly basis to ensure compliance with the approved grant budgets. Management is also reviewing its policies and procedures for accounting and financial management system practices and strengthening controls around this compliance requirement. Management will report and request approval for the deviations from the budget.

Finding - 2020-002 U.S. Department of Health and Human Services CFDA #93.129 State and Regional Primary Care Associations - HRSA Non-Compliance Allowable Cost/Cost Principle/Cash Management Condition: The Association has requested drawdowns for costs to cover future periods outside of the grant award period and for costs not fully supported by the accounting records and source documentation for which no prior approval from the grant award agency has been obtained. Criteria: Per the Uniform Guidance - Allowability of Costs Requirements, the Association must only charge expenses to the grant award for expenses incurred during the grant award period and not to cover future expenses. The Association must also clearly document the flow of money from the approved grant budget, to the accounting records, to receipts and supporting documentation. Context: Compliance with requirements of Allowable Cost/Cost Principle/Cash Management. Effect: The Association is not in compliance with the compliance requirement Allowable Cost/Cost Principle/Cash Management. Cause: The Association experienced turnover in two of the management level positions responsible for supervising and administering of the compliance requirements of Allowable Cost and Cash Management compliance per uniform guidance. Repeat Finding: No Questioned Costs: $32,127 Recommendation: We recommend that the Association report the deviation and request approval from the grant award agency. We also recommend that the Association maintain written policies and procedures for their accounting and financial management system practices. Management should identify and implement actions needed to carry out specific responses to risks including but not limited to Allowable Cost/Cost Principle/Cash Management We also recommend that the Association strengthen their controls around the record retention and access to ensure the cost is supported by adequate documentation. Views of Responsible Officials and Planned Corrective Actions: These are isolated incidents and occurred during the time frame when the Association experienced turnover in two of the management level positions responsible for supervising and administering the compliance requirements of Allowable Cost and Cash Management compliance per uniform guidance. These positions have now been filled and reviews are now being performed on a monthly basis to ensure compliance. Management is also reviewing its policies and procedures for accounting and financial management system practices and strengthening controls around this compliance requirement. Management will report and request approval from the grant award agency.

Finding - 2020-003 U.S. Department of Health and Human Services CFDA #93.129 State and Regional Primary Care Associations - HRSA Non-Compliance Over Timely Submission of Data Collection Form Condition: The March 31, 2019 financial statements were not prepared in a timely manner, therefore, the Data Collection Form (Form) and reporting package were not submitted by the stipulated due date of December 31, 2019 to the Federal Audit Clearinghouse Criteria: Per the Uniform Guidance, the Association is required to submit the Form and the reporting package within the earlier of thirty (30) calendar days after receipt of the signed audit report or nine (9) months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. Context: Timely submission of the single audit report package and the Form was tested for compliance. Effect: The March 31, 2019 Form and single audit reporting package was not submitted timely to the Federal Audit Clearinghouse. Cause: The late filing was due to turnover in the management level position responsible for reporting compliance, which resulted in delayed production of the financial records required for the audit for the year ended March 31, 2019. Repeat Finding: No Questioned Costs: None. Recommendation: The Association should ensure that financial statements are prepared in a timely manner for the annual single audit and for the timely submission of the Data Collection Form within the required filing period. Views of Responsible Officials and Planned Corrective Actions: The late filing was due to turnover in the management level position responsible for the reporting compliance requirement. The position is now filled, and the Association is working diligently with the external auditor to ensure completion of the current audit and complete and timely submission of the Data Collection Form.

Finding - 2020-004 U.S. Department of Health and Human Services CFDA # 93.129 State and Regional Primary Care Associations - HRSA Internal Control Over Compliance Requirements of Major Federal Program Condition: Deficiency in design and operation of internal control over compliance which did not allow the management or employees in normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of the major federal program on a timely basis, resulting in a questioned cost. Criteria: The Association must establish and maintain effective internal control over the federal awards that provides reasonable assurance that the Association is managing the federal awards in compliance with Federal statutes, regulations and the terms and conditions of the major federal program. Context: Recipient responsibilities on Internal Controls as outlined under Uniform Guidance and in 45 Code of Federal Regulations. Effect: Noncompliance with compliance requirements of the major federal program. Cause: The Association experienced turnover in two of the management level positions responsible for designing and operation of internal controls over compliance requirements of the major federal program. Repeat Finding: No Questioned Costs: $32,127 Recommendation: We recommend that the Association review their current written policies and procedures for their Financial Management and Internal Controls system and should establish and maintain effective internal control over compliance with the compliance requirement applicable to the major federal program. Views of Responsible Officials and Planned Corrective Actions: These are isolated incidents and occurred during the time frame when the Association experienced turnover in two of the management level positions responsible for the design and operation of internal controls over compliance requirements of the major federal program. These positions have now been filled. Management is reviewing the written policies and procedures for their Financial Management and Internal Controls system and will establish and maintain effective internal control over compliance with the compliance requirement applicable to the major federal program.