HOT SPRINGS HEALTH PROGRAM, INC.

U.S. Department of Treasury Passed through the North Carolina Community Health Center Association COVID 19 Coronavirus Relief Fund CFDA # 21.019 Finding 2021-002 SIGNIFICANT DEFICIENCY Uniform Guidance policies Criteria: When spending federal grant and loan award funds, non-federal entities are required to adopt written Uniform Guidance policies that conform to applicable federal law and the Uniform Guidance (various sections of 2 C.F.R. 200). Condition: Hot Springs Health Program, Inc. did not have written policies and procedures to comply with the Uniform Guidance standards and federal awards were received and expended during the year ended April 30, 2021. Prior to the current year, Hot Springs Health Program did not receive any Uniform Guidance funding. As a result of the COVID-19 pandemic, funds were made available prior to completion of written policies. Effect: Hot Springs Health Program, Inc. could be noncompliant with Uniform Guidance policies. Cause: Employees were unaware of the Uniform Guidance policy requirements. Recommendation: We recommend that Hot Springs Health Program, Inc. implement written policies and procedures to ensure compliance with the Uniform Guidance. Views of responsible officials and planned corrective actions: Management of Hot Springs Health Program, Inc. agree with this finding. Subsequent to year end, management at Hot Springs Health Program, Inc. presented detailed information and written policies that comply with Uniform Guidance standards to the Board of Directors at the June 2021 Board meeting and those Uniform Guidance policies were approved and adopted.

Finding: 2021-002 Name of contact person: Teresa Strom, Executive Director Corrective Action: Subsequent to year end, management at Hot Springs Health Program presented detailed information and written policies that comply with Uniform Guidance standards to the Board of Directors at the June 2021 Board meeting and those Uniform Guidance policies were approved and adopted. Proposed Completion Date: Immediately.

U.S. Department of Treasury Passed through the North Carolina Community Health Center Association COVID 19 Coronavirus Relief Fund CFDA # 21.019 Finding 2021-003 SIGNIFICANT DEFICIENCY Inadequate segregation of duties - reporting Criteria: Segregation of duties should exist between those preparing and those reviewing and filing required reports. When performing compliance testing, it was noted that once expense reimbursement reports were created, there was no review and approval process in place prior to submission. Condition: Hot Springs Health Program, Inc. did not have adequate segregation of duties in relation to grant reporting. The same individual preparing the reports was submitting them as well with no review and approval process in place. Effect: Hot Springs Health Program, Inc. could experience increased risk of fraud or noncompliance relating to grants and reimbursable expenses. Cause: The employee creating the report could inadvertently include expenses unrelated to the program in the reimbursement report. Errors in reporting could be undetected. Recommendation: We recommend that Hot Springs Health Program, Inc. implement written policies and procedures to ensure segregation of duties in regard to preparation and review and approval of grant expense reimbursement reports. Views of responsible officials and planned corrective actions: Management of Hot Springs Health Program, Inc. agree with this finding. Management intends to implement new monitoring procedures that would segregate the preparation of grant reports and the review and approval of those reports prior to submission to grantor agencies. The CFO did not start employment until June 2020. The CEO applied for funds in order for the Hot Springs Health Program to continue to operate during the pandemic.

Finding: 2021-003 Name of contact person: Teresa Strom, Executive Director Corrective Action: Management at Hot Springs Health Program will implement new monitoring procedures that would segregate the preparation of grant reports and the review and approval of those reports prior to submission to grantor agencies. The CFO did not start employment until June 2020. The CEO applied for funds in order for Hot Springs Health Program to continue to operate during the pandemic. Proposed Completion Date: Immediately.