Commonwealth Healthcare CorporationState Government

Federal Agency: U.S. Department of Interior CFDA Program: 15.875 Economic, Social, and Political Development of the Territories Award Number: D18AP00138 and D20AP00049 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Lastly, 2 CFR 200.313(d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For 11 (or 100%) of 11 capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does not include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance. Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance are not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. 3. CHCC should ensure that the results of the periodic maintenance procedures include all information, including unique identifiers for capital assets, necessary to properly and timely trace capital assets between the capital assets listing and the maintenance results listing. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.

Federal Agency: U.S. Department of Interior CFDA Program: 15.875 Economic, Social, and Political Development of the Territories Award Number: D18AP00137 and D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $551,917 Criteria: In accordance with 2 CFR 180.300, entities that enter into covered transactions must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Additionally, according to 2 CFR 180.220(b)(1), a procurement transaction is considered a covered transaction if the contract amount is expected or to equal or exceed $25,000. Condition: CHCC did not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: CHCC’s current policy or procedure for suspension and debarment monitoring only applies to newly contracted persons or vendors under a covered transaction, thus not pursuant to the requirements or provisions of 2 CFR 180.300. Effect: CHCC is in noncompliance with applicable suspension and debarment regulations and questioned costs of $551,917 result. Recommendation: CHCC should revise or update their policies and procedures for monitoring suspension and debarment status of each vendor of covered transactions. These should be reflective of the requirements set by 2 CFR 180.300. Views of Responsible Officials: CHCC concurs with the findings but not the questioned costs. CHCC Division Grants and Financial Integrity (DGFI), updated our Suspension and Debarment procedure to comply with 2 CFR 180.300. To address the question cost of $551,917, CHCC imported from SAM.gov the Exclusion reports dated April 2020 and October 2020 and confirmed that none of the vendors cited in this finding are in the list of excluded vendors. Auditor Response: In accordance with 2 CFR 2900.3(a), a questioned cost is defined as a possible violation of statute, regulation, or the terms and conditions of a Federal award. The current process of CHCC monitoring suspension and debarment status of each vendor or supplier under a covered transaction is not designed to be in accordance with the provisions stated in 2 CFR 180.300 which is the statute to be followed as identified in the terms and conditions of the federal awards. As such, we retain the questioned costs.

Federal Agency: U.S. Department of Interior CFDA Program: 15.875 Economic, Social, and Political Development of the Territories Award Number: D18AP00137 and D19AP00132 Area: Reporting Questioned Costs: $-0- Criteria: In accordance with the applicable reporting requirements, an SF-425 report is required to be submitted on a semi-annual basis for non-expired or non-terminated grants. Condition: For two (or 40%) of five reports tested, CHCC did not submit the required semi-annual SF-425 reports during the year. Cause: CHCC failed to properly implement their current policies and procedures for SF-425 reporting submission monitoring. Effect: CHCC is in noncompliance with applicable reporting requirements but no questioned cost results as the finding is non-monetary in nature. Recommendation: CHCC should implement more stringent actions to properly enforce their current controls and procedures in monitoring the submission of all required SF-425 reports. Views of Responsible Officials: CHCC partially concurs with the findings as the Director of DGFI provided the SF-425 for Grant D19AP00132 to the auditor during fieldwork. CHCC will strictly enforce our established policies and procedures to ensure timely submissions of the SF-425 and other post award reports required for our Federal Grants. Auditor Response: Based on terms and conditions of grant D19AP00132, the SF-425 reports are required to be submitted on a semi-annual basis. Only one report, the first semi-annual report, was provided during fieldwork. Further, we received confirmation from CHCC that the reports provided, which did not include the SF-425 reports for grant D19AP00132, were the only submissions during FY 2020. Finding remains.

Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Administration Award Number: 1H79SM081982-01 and 5H79SM081982-02 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Lastly, 2 CFR 200.313 (d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For five (or 100%) of five capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does not include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance. 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance. Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance is not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results. Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. 3. CHCC should ensure that the results of the periodic maintenance procedures include all information, including unique identifiers for capital assets, necessary to properly and timely trace capital assets between the capital assets listing and the maintenance results listing. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.

Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM081982-01 Area: Procurement and Suspension and Debarment Questioned Costs: $107,645 Criteria: In accordance with 2 CFR 180.300, entities that enter into covered transactions must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Additionally, according to 2 CFR 180.220(b)(1), a procurement transaction is considered a covered transaction if the contract amount is expected or to equal or exceed $25,000. Condition: CHCC did not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: CHCC’s current policy or procedure for suspension and debarment monitoring only applies to newly contracted persons or vendors under a covered transaction, thus not pursuant to the requirements or provisions of 2 CFR 180.300. Effect: CHCC is in noncompliance with applicable suspension and debarment regulations and questioned costs of $107,645 result. Recommendation: CHCC should revise or update their policies and procedures for monitoring suspension and debarment status of each vendor of covered transactions. These should be reflective of the requirements set by 2 CFR 180.300. Views of Responsible Officials: CHCC concurs with the findings but not the questioned costs. CHCC Division Grants and Financial Integrity (DGFI), updated our Suspension and Debarment procedure to comply with 2 CFR 180.300. To address the question cost of $107,645, CHCC imported from SAM.gov the Exclusion reports dated April 2020 and October 2020 and confirmed that none of the vendors cited in this finding are in the list of excluded vendors. Auditor Response: In accordance with 2 CFR 2900.3(a), a questioned cost is defined as a possible violation of statute, regulation, or the terms and conditions of a Federal award. The current process of CHCC monitoring suspension and debarment status of each vendor or supplier under a covered transaction is not designed to be in accordance with the provisions stated in 2 CFR 180.300 which is the statute to be followed as identified in the terms and conditions of the federal awards. As such, we retain the questioned costs.

Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreement Award Number: 1NH23IP922587-01 Area: Period of Performance Questioned Costs: $4,343 Criteria: In accordance with 45 CFR 75.309, a non-federal entity may charge to the federal award only allowable costs incurred during the period of performance and any costs incurred before the U.S. Department of Health and Human Services (HHS) awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Funds available to pay allowable costs during the period of performance include both federal funds awarded and the carryover balances. Condition: For two (or 8%) of twenty-five expenditures tested, aggregating $13,462, of total population of $132,807, expenditures were obligated after the end of period of performance of the related grant awards. Cause: CHCC incurred these expenditures prior to an approved PO. CHCC failed to follow the correct sequence of their PO approval process, resulting in obligating transactions after the end of the period of performance of the grant as an approved PO is required to process the payments. Effect: CHCC is in noncompliance with applicable period of performance requirements and questioned costs of $4,343 result. Identification as a Repeat Finding: Finding No. 2019-014 Recommendation: 1. CHCC should strictly follow their established policies and procedures related to PO approval, which includes checking the grant status to ensure that obligations are incurred prior to the end of the POP of the related grant. 2. CHCC should establish more stringent monitoring procedures to ensure that no expenditures are incurred prior to receiving an approval of the PO. Views of Responsible Officials: CHCC does not concur with the findings and the cost questioned. The transactions cited were for emergency repairs of Vaccine Refrigerators. The repairs were done within the period of performance ending June 30, 2020 ($2,990 was for Service date of December 20, 2019; and $1,353 was for service date February 28, 2020) No purchase order was prepared for the emergency service. A ratification memo was approved for payment processing by the Chief Financial Officer and the Chief Executive Officer. CHCC believes that the repairs on the Refrigerators that are used to store vaccines are reasonable and necessary, especially during the period wherein we are responding to the COVID-19. Auditor Response: The purchase order date, which signifies when a transaction is obligated, was beyond the period of performance. Additionally, the ratification memo was approved by the CEO on September 25, 2020, which was also beyond the period of performance. Finding remains.

Federal Agency: Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreement Award Number: 1NH23IP922587-01-00, 6NH23IP922587-01-01, 6NH23IP922587-01-02, 5NH23IP922587-02-00, 6 NH23IP922587-02-01 and 6NH23IP000736 Area: Special Tests and Provision – Control, Accountability and Safeguarding of Vaccine Questioned Costs: $ -0- Criteria: In accordance with the Vaccine for Children Program (VFC) Policies and Procedures at the State/Local Immunization Program section 5.2.7, CHCC is required to conduct monthly reconciliation of the vaccination records which includes the vaccine inventory, patient screening forms, vaccine administered log sheet and the temperature log sheet. Additionally, in accordance with the VFC Policies and Procedures at the State/Local Immunization Program section 4.1, visits must be conducted on an annual or as per need basis which evaluates the program’s adherence to VFC program requirements, including appropriate vaccine handling, storage, and ordering procedures. CHCC is required to perform sampling of patient records to verify eligibility screening and the administration of VFC vaccine only to eligible children. Condition: 1. For 12 (or 100%) of 12 monthly provider inventory reconciliations selected for testing, no supporting documentation was provided to evidence that reviews and approvals were conducted by CHCC over the reconciliations. Condition, continued: 2. For five (or 83%) of six providers selected for testing, CHCC was unable to provide the annual Site Visit Reports. Cause: CHCC was unable to provide the supporting documents as it was lost during the transition to the new management and their current control and procedures are not suitably designed to properly maintain and retain all the documents. Effect: The CHCC is in noncompliance with the applicable Special Tests and Provisions – Control, Accountability and Safeguarding of Vaccine. Recommendation: CHCC should improve their record-keeping policies and controls, such as duplication of documents into a soft copy, to ensure that a seamless transition is achieved whenever changes to management take into effect. Views of Responsible Officials: CHCC concurs with the findings. To address this finding, the Immunization Program conducts the following reconciliation of vaccination records as follows: Vaccination records: daily entries of vaccination records are captured through the patient encounter form for all providers administering vaccinations. Data Entry Assistants and Program Assistants are responsible for entering the vaccinations based on the form. The Immunization Information Systems (IIS) team are responsible for ensuring data quality elements are complete on the form and reflected on the WebIZ system. Patient screening forms: also known as the patient encounter form is the paper-based document in which patient demographics and vaccination data elements are recorded upon visit for all providers. Data Entry Assistant and Program Assistant capture demographic and input vaccines an individual is to receive for the visit. The vaccinator then inputs vaccination data elements (lot number, manufacturer, site, route, etc.) to be inputted into the registry, WebIZ. Temperature log: utilized to document the vaccine storage unit temperature based on the thermometer reading and logged at the start and end of each workday, as well as after hours and weekends/holidays. The VFC Coordinator and Security team logs the temperatures on a daily, routine basis. Vaccine inventory: monitored weekly by the Logistics Technician via spreadsheet and tracked using the registry WebIZ for overall vaccine inventory management. Inventory is reported to CDC by the Program Manager every 14 days. Vaccine wastage from all providers is submitted to the program at the first week of each month for the previous month reporting period. Overall wastage reporting is done monthly to CDC. In addition, since 2020, CHCC has conducted the following steps to ensure that annual site visits for VFC providers are completed and documented appropriately to evaluate adherence to the VFC program requirements: - Provided training to the staff member assigned/responsible (VFC Coordinator) for conducting site visits - Worked with CDC Subject Matter Experts to ensure that data systems for site visit findings/reporting were accessible to the VFC Coordinator. Training on the system was also provided to the VFC Coordinator. This system is cloud based and accessible to anyone provided access. Therefore, should staff turnover occur, access to prior reports and the system for submitting new site visit reports will continue to be accessible to the organization and to team members who will take on the responsibility. - Ensure that Position Description for the VFC Coordinator clearly specify responsibilities for implementing the VFC Program in accordance with the Immunization Program Operating Manual (IPOM), which outlines the requirements for annual provider compliance site visits, including the sampling of patient records to verify eligibility screening and administration of VFC vaccine only to eligible children. - Entries of vaccine reconciliation documentation such as vaccine inventory (orders, transfers, and wastages) are accessible on the registry, CNMI WebIZ, as well as routine reporting to CDC VtrckS

Federal Agency: Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreement Award Number: 1NH23IP922587-01-00, 6NH23IP922587-01-01, 6NH23IP922587-01-02, 5NH23IP922587-02-00, 6 NH23IP922587-02-01 and 6NH23IP000736 Area: Special Tests and Provision – Record of Immunization Questioned Costs: $ -0- Criteria: In accordance with the Vaccine for Children Program (VFC) Policies and Procedures at the State/Local Immunization Program section 4.1, visits must be conducted on an annual or as per need basis which evaluates the program’s adherence to VFC program requirements including sampling patient records to verify eligibility screening and the administration of VFC vaccine only to eligible children. Condition For five (or 83%) of six providers selected for testing, CHCC was unable to provide the Site Visit Reports to verify that the required information of vaccination records was maintained by each service provider. Cause: CHCC was unable to provide the supporting documents as it was lost during the transition to the new management and their current control and procedures are not suitably designed to properly maintain and retain all the documents. Effect: The CHCC is in noncompliance with the applicable Special Tests and Provisions – Record of Immunization. Recommendation: CHCC should improve their record-keeping policies and controls, such as duplication of documents into a soft copy, to ensure that a seamless transition is achieved whenever changes to management take into effect. Views of Responsible Officials: CHCC partially concurs with the finding. Since 2020, the CHCC has conducted the following steps to ensure that annual site visits for VFC providers are completed and documented appropriately to evaluate adherence to the VFC program requirements: - Worked with CDC Subject Matter Experts to ensure that data systems for site visit findings/reporting were accessible to the VFC Coordinator. Training on the system was also provided to the VFC Coordinator. This system is cloud based and accessible to anyone provided access. Therefore, should staff turnover occur, access to prior reports and the system for submitting new site visit reports will continue to be accessible to the organization and to team members who will take on the responsibility. - Ensure that Position Descriptions for the VFC Coordinator clearly specify responsibilities for implementing the VFC Program in accordance with the Immunization Program Operating Manual (IPOM), which outlines the requirements for annual provider compliance site visits, including the sampling of patient records to verify eligibility screening and administration of VFC vaccine only to eligible children. - Provided training/refresher to the staff member assigned/responsible (VFC Coordinator) for conducting site visits - Timeliness and completeness of site visit entries have been incorporated as part of the program’s activity workplan.

Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Award Number: 1NU50CK0004990100 and 6NU50CK0004990104 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. The CHCC Operating Policy: Fixed Asset/Property Changes requires the CHCC Property Management Branch to perform an annual physical inventory of all fixed assets/property and to document and control all changes in fixed assets/property. Further, in accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Lastly, 2 CFR 200.313(d)(3) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: For eight (or 100%) of eight capital assets selected for testing, the following were noted: 1. CHCC did not provide any supporting documentation that a physical inventory count was performed in FY2020. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. CHCC’s capital assets listing does include all the required information for equipment and real property that is in accordance with 2 CFR 200.313(d)(1). No questioned costs are presented as we are not able to quantify the extent of noncompliance. 3. Capital asset items could not be traced to the results of the periodic maintenance procedures performed. No questioned costs are presented as we are not able to quantify the extent of noncompliance Cause: 1. CHCC’s current policy and procedure for capital asset listing management and maintenance are not in accordance with the federal requirements stated in 2 CFR 200.313(d)(1). 2. CHCC’s document maintenance and retention controls did not operate as designed to ensure that the recorded results of the physical inventory and maintenance procedures are stored properly and that documents are easily retrieved. 3. The results of CHCC’s periodic maintenance procedures lack unique identifiers necessary to trace the selected samples between the capital assets listing and the maintenance results. Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Recommendation: 1. CHCC should update the structure and contents of their current capital asset listing to include all the information required by 2 CFR 200.313(d)(1). Additionally, CHCC should improve their policies and procedures on management and maintenance of their capital asset listing. 2. CHCC should implement more stringent policies and procedures in relation to their document maintenance and retention to ensure that documents are easily retrieved and provided in a timely manner. Views of Responsible Officials: CHCC concurs with the findings. CHCC will update its Capital Assets policy to comply with the requirements of 2 CFR 200.313. Furthermore, CHCC will ensure that there is a clear crosswalk between the Preventive Maintenance Record with our Facilities Department and the Capital Assets listing that is revised pursuant to the requirements of 2 CFR 200.313. CHCC would like to clarify that although the documentation fell short of the Uniform Guidance documentation, all the physical existence and working conditions were verifiable during the audit.

Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Award Number: 6-NU50CK000499-01-04, 6-NU50CK000499-01-05 and 5-NU50CK000499-02-00 Area: Reporting Questioned Costs: $ -0- Criteria: In accordance with the applicable reporting requirements stated in the grant agreements, monthly fiscal reports are required to be submitted for non-expired or non-terminated grants. Condition: For eight (or 100%) of eight monthly fiscal reports selected for testing, CHCC did not provide copies of the fiscal reports for inspection by the audit team. Cause: CHCC lacks controls or procedures that allows them to properly maintain submitted reports and extract copies on a timely manner. Effect: CHCC is in noncompliance with applicable reporting requirements but no questioned cost result as the finding is non-monetary in nature. Recommendation: CHCC should establish a more stringent document retention policies and procedures, such as creating backup copies or maintaining a server that contains all the submitted reports to allow them to retrieve documents on a timely manner. Views of Responsible Officials: CHCC agrees with the findings and will establish a stringent records retention policy, even for reports that were electronically completed and submitted using Grantor portals. These fiscal reports were done on the RedCap before 2023 and were readily accessible, hence ELC Program Staff did not maintain separate offline copies of the reports. When ELC transitioned to ELC CAMP, CHCC lost access to the submitted and saved reports. Hence, CHCC cannot provide supporting documents to its assertion that all reports were submitted.

Federal Agency: U.S. Department of Health and Human Resources CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visting Grant Program Award Number: X10MC32212 Area: Procurement and Suspension and Debarment Questioned Costs: $37,473 Criteria: In accordance with 2 CFR 180.300, entities that enter into covered transactions must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Additionally, according to 2 CFR 180.220(b)(1), a procurement transaction is considered a covered transaction if the contract amount is expected or to equal or exceed $25,000. Condition: CHCC did not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: CHCC’s current policy or procedure for suspension and debarment monitoring only applies to newly contracted persons or vendors under a covered transaction, thus not pursuant to the requirements or provisions of 2 CFR 180.300. Effect: CHCC is in noncompliance with applicable Suspension and Debarment regulations and questioned cost of $37,473 result. Recommendation: CHCC should revise or update their policies and procedures for monitoring suspension and debarment status of each vendor of covered transactions. These should be reflective of the requirements set by 2 CFR 180.300. Views of Responsible Officials: CHCC concurs with the findings but not the questioned costs. CHCC Division Grants and Financial Integrity (DGFI), updated our Suspension and Debarment procedure to comply with 2 CFR 180.300. To address the question cost of $37,473, CHCC imported from SAM.gov the Exclusion reports dated April 2020 and October 2020 and confirmed that none of the vendors cited in this finding are in the list of excluded vendors. Auditor Response: In accordance with 2 CFR 2900.3(a), a questioned cost is defined as a possible violation of statute, regulation, or the terms and conditions of a Federal award. The current process of CHCC monitoring suspension and debarment status of each vendor or supplier under a covered transaction is not designed to be in accordance with the provisions stated in 2 CFR 180.300 which is the statute to be followed as identified in the terms and conditions of the federal awards. As such, we retain the questioned costs.

Finding No.: 2019-004 Federal Agency: U.S. Department of Agriculture CFDA Program: 10.557 Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Award Number: 7NM700NM5 Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. The CNMI Property Management Policies states that equipment, whether acquired in whole or in part with grant funds, until disposition takes place will, at a minimum, meet the following requirements: • Description of the property. • Manufacturer’s serial and model numbers, federal stock number, national stock number, or other identification. • Acquisition source of the property, including grant or agreement number and method of procurement. • Whether title is vested with the CNMI or U.S. Government. • Acquisition date and cost. • Percentage (at the end of the budget year) of U.S. participation in the project or program for which the property was acquired. • Location, use, condition, and the date the information was reported. • Unit Acquisition Cost. • Date of disposal and sale price method used to determine fair market value where the CNMI compensates the agency for its share. Further, the Materials Supply Office (MSO) will conduct an annual inventory of property held by each Accountable Person as reflected in the master inventory control record. Further, MSO shall perform random audits of property held by each Accountable Person to validate the integrity of the property control process. Finding No.: 2019-004, continued Federal Agency: U.S. Department of Agriculture CFDA Program: 10.557 Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Award Number: 7NM700NM5 Area: Equipment and Real Property Management Questioned Costs: $-0- Condition: Tests of program expenditures noted the following: 1. MSO did not perform a fixed asset physical inventory for fiscal year 2019. No physical inventory was performed in fiscal years 2018 and 2017. 2. Property records maintained by MSO were not provided. 3. Total fixed assets schedule per the Program did not agree to the general ledger details, resulting in a variance of $39,995. 4. A reconciliation was not performed between the Program and MSO. 5. The Program’s fixed assets schedule did not include required information such as whether title is vested with the CNMI or U.S. Government and the use of the assets. 6. Of five fixed assets tested for existence verification, aggregating $121,553 of a total population of $249,070, for one (or 20%), the vehicle with Property Tag Number FA-00375-US that was traded-in for another vehicle, for which was surveyed on 10/04/18, is still included in the Program’s fixed assets schedule as of 09/30/19. Cause: CHCC did not enforce compliance with applicable Equipment and Real Property Management requirements. Effect: CHCC is in noncompliance with applicable Equipment and Real Property Management requirements. No questioned cost is presented as we are unable to quantify the extent of the noncompliance. A summary of the program’s total capital outlays for FY 2019 was $39,995. Finding No.: 2019-004, continued Federal Agency: U.S. Department of Agriculture CFDA Program: 10.557 Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Award Number: 7NM700NM5 Area: Equipment and Real Property Management Questioned Costs: $-0- Identification as a Repeat Finding: Finding No. 2018-008. Recommendation: CHCC should consider identifying a fixed asset team and provide training on applicable Equipment and Real Property Management requirements, including documentation requirements. The responsible personnel should coordinate and conduct the required annual physical inventories and should reconcile results to the property records in accordance with applicable Equipment and Real Property Management requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale of what resulted to the finding described in Condition 3; however, management did not provide comments for Conditions 1, 2 and 4 to 6.

Finding No.: 2019-005 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 and 6U79SM062447-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $16,190 Criteria: In accordance with 2 CFR Part 200, Subpart E, cost must be necessary and reasonable for the performance of the federal award and be allocable thereto. Further costs must conform to any limitations or exclusions and be adequately documented. Condition: Of sixty nonpayroll expenditures tested, aggregating $39,974 of a total population of $330,391, the following deficiencies were noted: 1. For five (or 8%), check/wire transfer payment vouchers were not signed and were not stamped as paid; accordingly, CHCC was not able to substantiate that the expenditures were approved. 2. For twenty-seven (or 45%), the check/wire transfer payments were not provided. Finding No.: 2019-005, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 and 6U79SM062447-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $16,190 Condition, continued: Of twenty-five payroll expenditures tested, aggregating of $35,967 of a total population of $433,601, the following deficiencies were noted: 3. For one (or 4%), the Request for Personnel Action and Notification of Personnel Action forms for employee number 373605 (Business Unit H71040, amounting to $625), covering payperiod ended 10/13/18, were not provided, for which the amount is questioned. Finding No.: 2019-005, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 and 6U79SM062447-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $16,190 Condition, continued: 4. For one (or 4%), payperiod ended 04/13/19 payroll register substantiating the payroll cost of $529 for Employee No. 403867 (Business Unit H81040) was not provided, for which the amount is questioned. Cause: CHCC did not enforce recordkeeping and monitoring controls over compliance with applicable allowable costs/cost principles requirements. Effect: CHCC is in noncompliance with the applicable allowable costs/cost principles requirements and questioned costs of $16,190 result as the projected questioned costs exceed the $25,000 threshold. Identification as a Repeat Finding: Finding No. 2018-011. Recommendation: Responsible CHCC personnel should establish recordkeeping system whereby underlying support for each transaction is substantiated and filed. Further, the responsible CHCC personnel should ensure that payment vouchers are approved and stamped as paid. Finding No.: 2019-005, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 and 6U79SM062447-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $16,190 Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1, 2 and 4, and states agreement for Condition 3. Auditor Response: Condition 1 - Batch headers evidencing approvals were not provided. Condition 2 - Cancelled checks provided comprised of numerous invoice payments for which corresponding check vouchers were not provided; thus, CHCC was not able to substantiate whether cancelled checks provided pertain to transactions being tested. Condition 4 - The payroll register provided for PPE 04/13/19 did not reflect the employee’s payroll costs. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-006 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 6U79SM062447-04M001 and 6U79SM062447-04M004 Area: Matching, Level of Effort, Earmarking Questioned Costs: $-0- Criteria: In accordance with 2 CFR Subpart 200.306, for all Federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity's cost sharing or matching when such contributions meet all of the following criteria: 1. Are verifiable from the non-Federal entity's records; 2. Are not included as contributions for any other Federal award; 3. Are necessary and reasonable for accomplishment of project or program objectives; 4. Are allowable under subpart E of this part; 5. Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs; 6. Are provided for in the approved budget when required by the Federal awarding agency; and 7. Conform to other provisions of this part, as applicable. Condition: Support for the non-federal match for Business Units H71040 and H81040 were not provided. Cause: CHCC did not enforce internal controls over recordkeeping and monitoring controls to substantiate compliance with matching requirements. Effect: CHCC is in noncompliance with applicable matching requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Finding No.: 2019-006, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 6U79SM062447-04M001 and 6U79SM062447-04M004 Area: Matching, Level of Effort, Earmarking Questioned Costs: $-0- Identification as a Repeat Finding: Finding No. 2018-012. Recommendation: Responsible CHCC personnel should establish recordkeeping system whereby underlying support for matching requirements is substantiated and filed. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor Response: Underlying accounting records supporting the non-federal match were not provided. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-007 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: (a) in a newspaper of general circulation; (b) in a newspaper of local circulation in the area pertinent to the procurement; (c) in industry media; (d) through electronic mailing lists, (e) through the internet, agency web site, or other publicly accessible electronic media, (f) through electronic mailing lists, or (g) in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Criteria, continued: • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. Condition: Of thirty-nine procurement samples tested, aggregating $56,383 of a total population of $220,635, the following deficiencies were noted: 1. For four (or 10%), the Invitation to Bid (ITB) or the Request For Proposal (RFP) publication notices and evaluation forms were not provided. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Condition, continued: 2. For seven (or 18%), the purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 3. 3. For eight (or 21%), approval by the Expenditure Authority and the P&S Director were not evident. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Condition, continued: 4. For one (or 3%) small purchase, no evidence of effort to obtain three quotations. Cause: CHCC did not enforce compliance with established procurement policies and procedures over procurement. Effect: CHCC is in noncompliance with applicable procurement regulations and questioned costs of $23,500 result as the projected questioned costs exceed the $25,000 threshold. Identification as a Repeat Finding: Finding No. 2018-013. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for any deviation from applicable procurement requirements. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 4. Auditor Response: Condition 1 - ITB and RFP publication notices were not provided. Condition 2 - Purchase requisitions and/or contracts were not provided. Condition 3 - Documentations evidencing approval by the Expenditure Authority and the P&S Director were not provided. Condition 4 - CHCC Corrective Action Plan stated no solicitation was obtained. In addition, documentations substantiating that the vehicle rental agreement was competitively procured during the initial year of the rental were not provided. Further, in accordance with 45 CFR Part 75.361 Retention requirements for records, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award, must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the HHS awarding agency or pass-through entity in the case of a subrecipient. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-008 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5H79SM062879-02 and 6U79SP020710-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $452,311 Criteria: In accordance with 2 CFR Part 200, Subpart E, cost must be necessary and reasonable for the performance of the federal award and be allocable thereto. Further costs must conform to any limitations or exclusions and be adequately documented. Condition: Of sixty non-payroll expenditures tested, aggregating $88,128 of a total population of $1,284,340, the following deficiencies were noted: 1. For twenty (or 33%), payments comprised of various invoices for which payment details were not provided. Accordingly, CHCC was not able to substantiate payments made for the following expenditures agreed to the invoice amounts. Finding No.: 2019-008, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5H79SM062879-02 and 6U79SP020710-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $452,311 Condition, continued: 2. For ten (or 17%), either the trip reports, travel vouchers, boarding passes and/or documentations supporting travel cash advances and perdiem calculations were not provided. 3. For nineteen (or 32%), check payments were not provided. Finding No.: 2019-008, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5H79SM062879-02 and 6U79SP020710-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $452,311 Condition, continued: 4. For two (or 3%), invoices were not provided. No questioned costs are presented as amounts are questioned at Condition 3. Finding No.: 2019-008, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5H79SM062879-02 and 6U79SP020710-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $452,311 Condition, continued: Of twenty-five payroll expenditures tested, aggregating $33,121 of a total population of $686,242, the following deficiency was noted. 5. For one (or 4%), payperiod ended 04/13/19 payroll register substantiating the payroll cost of $349 for Employee No. 403867 (Business Unit H9243B) was not provided, for which the amount is questioned. Test of grant awards noted the following: 6. Cumulative expenditures of $1,144,077 exceeded the grant award’s funding limit of $718,339 for Business Unit H9243B, resulting in an excess amount of $425,738. Documentation of any increase in funding limit was not provided, for which the excess amount of $425,738 is questioned. Cause: CHCC did not enforce recordkeeping controls in accordance with applicable allowable costs/cost principles requirements. Effect: CHCC is in noncompliance with allowable costs/cost principles requirements and questioned costs of $$452,311 result. Identification as a Repeat Finding: Finding No. 2018-015. Finding No.: 2019-008, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5H79SM062879-02 and 6U79SP020710-04M001 Area: Allowable Costs/Cost Principles Questioned Costs: $452,311 Recommendation: The responsible personnel should establish a recordkeeping system whereby underlying support for each transaction is processed timely and filed accordingly for easy retrieval to substantiate costs. The responsible personnel should not approve program expenditures unless underlying support is provided for review. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 6. Auditor Response: Condition 1 - Payment vouchers were not provided. Condition 2 - Underlying travel documentations were not provided. Condition 3 - Cancelled checks were not provided. Condition 4 - Of the $25,000 for Document Number 1452571, $2,079 was not supported with an invoice. In addition, the invoice for Document 1479633 was not provided. Condition 5 - The payroll register provided for PPE 04/13/19 did not reflect the employee’s payroll costs. Condition 6 - Grant awards provided only equates to $718,339. Grant award documentation of the increase in funding limit was not provided. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-009 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Cash Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.305(b)(1), non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Condition: Of five subrecipient disbursements tested for cash management requirement, aggregating $175,000 of a total population of $468,864, for five (or 100%), documentation of procedures performed to ensure that the time elapsed between the transfer of federal funds to the subrecipients and the disbursement of such funds by the subrecipients were not provided. No questioned costs as amounts questioned at Finding No. 2019-012, Condition 1 are for the same subrecipients, for which the total FY2019 expenditures under the subrecipient agreements were questioned. Cause: CHCC did not enforce monitoring controls over compliance with applicable cash management requirements over subrecipients. Finding No.: 2019-009, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Cash Management Questioned Costs: $-0- Effect: CHCC is in incompliance with applicable cash management requirements over subrecipients. Recommendation: CHCC should establish and implement procedures to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and the disbursement of such funds for program purposes by the subrecipient is minimized. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor Response: Documentations of procedures performed to ensure that the time elapsed between the transfer of federal funds to the subrecipients and the disbursement of such funds by the subrecipients were not provided. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-010 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM062879-01, 5U79SP020710-04 and 6U79SP020710-04M001 Area: Period of Performance Questioned Costs: $97,710 Criteria: In accordance with 45 CFR §75.309, a non-Federal entity may charge to the federal award only allowable costs incurred during the period of performance and any costs incurred before the U.S. Department of Health and Human Services (HHS) awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Funds available to pay allowable costs during the period of performance include both federal funds awarded and carryover balances. In addition, a non-Federal entity must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period. This deadline may be extended with prior written approval from the HHS awarding agency. Condition: Of nineteen expenditures tested, aggregating of $138,858 of a total population of $1,970,581, the following deficiency was noted: 1. For one (or 5%), the cancelled check for Document Number 1479917 (Business Unit H9243B, dated 09/30/19) amounting to $10,000 was not provided; accordingly, CHCC was not able to substantiate that the payment was liquidated within the grant award’s 90 days liquidation period, for which the amount is questioned. 2. For seven (or 37%), expenditures were liquidated after the liquidation period end date of 12/29/18. Finding No.: 2019-010, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM062879-01, 5U79SP020710-04 and 6U79SP020710-04M001 Area: Period of Performance Questioned Costs: $97,710 Condition, continued: 3. For two (or 11%), expenditures were incurred/obligated after the obligation periods. No questioned costs are presented as amounts are questioned at Condition 1 for Document Number 1479917 and at Condition 2 for Document Number 1428464. 4. For one (or 5%), the transaction pertains to indirect costs charges for which the expenditure was charged to the Program after the 90 days liquidation period end date of 12/29/18. Finding No.: 2019-010, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM062879-01, 5U79SP020710-04 and 6U79SP020710-04M001 Area: Period of Performance Questioned Costs: $97,710 Condition, continued: Of five subsequent expenditures tested, aggregating $2,486 of a total population of $6,362, the following deficiencies were noted: 5. For one (or 20%), the supporting documents were not provided. Accordingly, CHCC was not able to substantiate that the expenditure was incurred/obligated within the period of performance end date of 09/29/19 and was liquidated within the liquidation period end date of 12/29/19. 6. For two (or 40%), expenditures were liquidated after the liquidation period end date of 12/29/19. Cause: CHCC did not enforce recordkeeping and monitoring controls over compliance with applicable period of performance requirements. Finding No.: 2019-010, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM062879-01, 5U79SP020710-04 and 6U79SP020710-04M001 Area: Period of Performance Questioned Costs: $97,710 Effect: CHCC is in noncompliance with applicable period of performance requirements and questioned costs of $97,710 result. Recommendation: Responsible CHCC personnel should establish recordkeeping system whereby underlying support for each transaction is substantiated and filed and enforce monitoring control over compliance with applicable period of performance requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 4 and 6 and states agreement with Condition 5; however, disagrees with the questioned costs. Auditor Response: Condition 1 - The cancelled check was not provided. Condition 2 - Check clearance dates were after the liquidation period end date of 12/29/18. Condition 3 - Obligation period end dates were obtained from documentations provided by CHCC. Finding No.: 2019-010, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 1H79SM062879-01, 5U79SP020710-04 and 6U79SP020710-04M001 Area: Period of Performance Questioned Costs: $97,710 Auditor Response, continued: Condition 4 - The indirect costs was charged to the Program on 12/31/18, which is after the period of performance end date of 12/29/18. Condition 5 - Questioned costs are warranted given the transaction tested was not supported with adequate documentations. Condition 6 - Expenditures were liquidated after the liquidation period end date of 12/29/19. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-011 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: (a) in a newspaper of general circulation; (b) in a newspaper of local circulation in the area pertinent to the procurement; (c) in industry media; (d) through electronic mailing lists, (e) through the internet, agency web site, or other publicly accessible electronic media, (f) through electronic mailing lists, or (g) in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Criteria, continued: • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. • Sole Source Procurement A written justification for sole source procurement shall be prepared by the CEO, the official with expenditure authority, and shall contain the specific unique capabilities required; the specific unique capabilities of the contractor; the efforts made to obtain competition; and the specific considerations given to alternative sources and specific reasons why alternative sources were not selected. Condition: Of thirty-seven procurement samples tested, aggregating $232,278 of a total population of $1,068,186, the following deficiencies were noted: 1. For five (or 14%), procurement files were not provided. No questioned costs is presented for Document Number 249681 as the amount is questioned at Condition 2. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Condition, continued: 2. For four (or 11%), approval by the Expenditure Authority and the P&S Director were not evident. 3. For four (or 11%), purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 2. 4. For four (or 11%), either the Invitation to Bid (ITB) or Request for Proposal (RFP) publication notices and evaluations forms were not provided. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Condition, continued: 5. For one (or 3%), there was no written justification by the Expenditure Authority for the sole source procurement method used for Document No. 1427946 (Business Unit H8243A), dated 11/30/18 amounting to $36,500. No questioned costs are presented as the amount is questioned at Finding No. 2019-010, Condition 2. 6. For three (or 8%) small purchase, no evidence of effort to obtain three quotations. No questioned costs are presented as the amount is questioned at Condition 2 for Document Number 1443186 and at Finding No. 2019-008, Condition 1 for Document Numbers 1456156 and 1456160. 7. For one (or 3%), the written justification by the Official Expenditure Authority of the sole source procurement method used was not provided. No questioned costs are presented as the amount is questioned at Finding No. 2019-010, Condition 2. Cause: CHCC did not enforce compliance with established procurement policies and procedures over procurement. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Effect: CHCC is in noncompliance with applicable procurement regulations, and questioned costs of $183,926 exist. Identification as a Repeat Finding: Finding No. 2018-017. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationales for any deviations from applicable procurement requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan states agreement with the findings described for Conditions 1 to 7; however, disagrees with the questioned costs. Auditor Response: Conditions 1 to 7 - Questioned costs are warranted given transactions tested were not supported by adequate documentations. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-012 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Subrecipient Monitoring Questioned Costs: $468,864 Criteria: In accordance with CFR part 200.332, a pass-through entity’s monitoring responsibilities include verification that every subrecipient is audited when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the $750,000 threshold set forth in §200.501 Audit requirements. In addition, to equally distribute subawards, CHCC should issue public publication notices for interested nonprofit organizations to apply. Condition: Of five subrecipients tested, aggregating $160,000 of a total population of $468,864, the following deficiencies were noted: 1. For five (or 100%), documentation of the monitoring procedures performed to determine whether any of the subrecipients expended $750,000 or more in federal funds and whether those that expended $750,000 or more were audited, were not provided. Total FY2019 expenditures under the subrecipient agreements were $353,864, which is a questioned costs. Finding No.: 2019-012, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Subrecipient Monitoring Questioned Costs: $468,864 Condition, continued: Test of fourteen nonpayroll expenditures pertaining to subrecipient transactions, aggregating $438,864 of a total population of $468,864, the following deficiencies were noted: 2. For fourteen (or 100%), public publication notices of subaward opportunities were not provided. Total FY2019 expenditures under the subrecipient agreements for Document Numbers 1436077, 1436266, 1456803 and 1446815 amounted to $115,000, which are for the same subrecipients, are questioned. No questioned costs are presented for the other Document Numbers as amounts are questioned at Condition 1, for which are for the same subrecipients. Finding No.: 2019-012, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Subrecipient Monitoring Questioned Costs: $468,864 Condition, continued: 3. For one (or 7%), supporting documents were not provided. No questioned costs is presented as the amount questioned at Condition 2 for Document Number 1436077 is for the same subrecipient. Cause: CHCC did not enforce recordkeeping and monitoring controls over applicable subrecipient monitoring requirements. Effect: CHCC is in noncompliance with applicable subrecipient monitoring requirements and questioned costs of $468,864 result. Identification as a Repeat Finding: Finding No. 2018-019. Recommendation: CHCC should establish and enforce required monitoring procedures and establish a recordkeeping system whereby underlying support for each transaction is processed timely and filed accordingly for easy retrieval to substantiate costs. Finding No.: 2019-012, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 Area: Subrecipient Monitoring Questioned Costs: $468,864 Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 3. Auditor Response: Condition 1 - Invoices, receipts and progress reports from prior disbursements were not provided. Condition 2 - Public publication notices of subaward opportunities were not provided. Condition 3 - We were not made aware that the transaction was voided and the corresponding reversal journal entry was also not provided. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-013 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6 NH23IP000736-05-01 and 5NH231P000736-05-00 Area: Allowable Costs/Cost Principles Questioned Costs: $22,500 Criteria: In accordance with 2 CFR Part 200, Subpart E, cost must be necessary and reasonable for the performance of the federal award and be allocable thereto. Further costs must conform to any limitations or exclusions and be adequately documented. Condition: Of thirty-three nonpayroll expenditures tested, aggregating $23,528 of a total population of $243,080, the following deficiencies were noted: 1. For twenty-seven (or 82%), check payments were not provided. In addition, for Document Numbers 1436562 and 1436565, funds availability certifications were not evident and payment request memorandums did not agree to the invoice amounts. Finding No.: 2019-013, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6 NH23IP000736-05-01 and 5NH231P000736-05-00 Area: Allowable Costs/Cost Principles Questioned Costs: $22,500 Condition, continued: 2. For three (or 9%), payment vouchers were not signed to evidence approval. 3. For one (or 3%), the P&S Director’s approval of the purchase order was not evident. No questioned costs is presented as the amount is questioned at Condition 1. Finding No.: 2019-013, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6 NH23IP000736-05-01 and 5NH231P000736-05-00 Area: Allowable Costs/Cost Principles Questioned Costs: $22,500 Condition, continued: Of thirty-two payroll expenditures tested, aggregating $26,611 of a total population of $535,817, the following deficiencies were noted: 4. For one (or 3%), approval of the Request for Personnel Action form by the Director of Public Health Services, Chief Financial Officer, Director of Human Resources and Chief Executive Officer were not evident. In addition, the payroll register was not provided to substantiate the employee’s payroll cost. 5. For one (or 3%), transaction pertains to personnel insurance costs, for which the corresponding supporting documents were not provided. 6. For five (or 15%), transactions pertain to payroll costs journal entries, for which the corresponding checks/ACH payments were not provided. Finding No.: 2019-013, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6 NH23IP000736-05-01 and 5NH231P000736-05-00 Area: Allowable Costs/Cost Principles Questioned Costs: $22,500 Cause: CHCC did not enforce recordkeeping controls in accordance with applicable allowable costs/cost principles requirements. Effect: CHCC is in noncompliance with allowable costs/cost principles requirements and questioned costs of $22,500 result as the projected questioned costs exceed the $25,000 threshold. Identification as a Repeat Finding: Finding No. 2018-020. Recommendation: The responsible personnel should establish a recordkeeping system whereby underlying support for each transaction is processed timely and filed accordingly for easy retrieval to substantiate costs. The responsible personnel should not approve program expenditures unless underlying support is provided for review. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 and 2, and states agreement with Conditions 3 to 6; however, disagrees with the questioned costs. Finding No.: 2019-013, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6 NH23IP000736-05-01 and 5NH231P000736-05-00 Area: Allowable Costs/Cost Principles Questioned Costs: $22,500 Auditor Response: Condition 1 - Cancelled checks provided comprised of numerous invoice payments for which corresponding check vouchers were not provided; thus, CHCC was not able to substantiate whether cancelled checks provided pertain to transactions being tested. Condition 2 - Batch headers evidencing approvals were not provided. Conditions 3 through 6 - Questioned costs are warranted given transactions tested were not supported by adequate documentations. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-014 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6NH231P000736-05-01 and 5NH231P000786-05-00 Area: Period of Performance Questioned Costs: $80,809 Criteria: In accordance with 45 CFR §75.309, a non-Federal entity may charge to the federal award only allowable costs incurred during the period of performance and any costs incurred before the U.S. Department of Health and Human Services (HHS) awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Funds available to pay allowable costs during the period of performance include both federal funds awarded and carryover balances. In addition, a non-Federal entity must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period. This deadline may be extended with prior written approval from the HHS awarding agency. Condition: Of nineteen expenditures tested, aggregating $88,887 of a total population of $778,897, the following deficiencies were noted: 1. For ten (or 53%), no supporting documents were provided to substantiate that the expenditures were incurred within the period of performance. Finding No.: 2019-014, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6NH231P000736-05-01 and 5NH231P000786-05-00 Area: Period of Performance Questioned Costs: $80,809 Condition, continued: 2. For eight (or 42%), cancelled checks or other form of payment were not provided; accordingly, CHCC was not able to substantiate that expenditures were liquidated within the grant award’s liquidation period. 3. For one (or 5%), liquidation occurred more than ninety days after the period of performance end date. Of eight subsequent expenditures tested, aggregating $19,730 of a total population of $19,744, the following deficiencies were noted: 4. For seven (or 88%), supporting documents were not provided. Accordingly, CHCC was not able to substantiate that the expenditures were incurred/obligated within the period of performance end date of 06/30/19 and were liquidated within the liquidation period end date of 09/30/19. Finding No.: 2019-014, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6NH231P000736-05-01 and 5NH231P000786-05-00 Area: Period of Performance Questioned Costs: $80,809 Condition, continued: 5. For one (or 13%), the expenditure was liquidated after the liquidation period end date of 09/30/19. Cause: CHCC did not enforce recordkeeping and monitoring controls over compliance with applicable period of performance requirements. Finding No.: 2019-014, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6NH231P000736-05-01 and 5NH231P000786-05-00 Area: Period of Performance Questioned Costs: $80,809 Effect: CHCC is in noncompliance with applicable period of performance requirements and questioned costs of $80,809 result. Recommendation: The responsible personnel should review funding period dates prior to charging expenditures to a federal award. They should also ensure that purchase order, contracts, checks or evidence that the check cleared are properly filed for support. Furthermore, the responsible personnel should monitor check payments to ensure that liquidations occur in a timely manner. If extensions are necessary, grantor approval should be sought. Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 3 to 5, and states agreement with Conditions 1 and 2; however, disagrees with the questioned costs. Auditor Response: Conditions 1 and 2 - Questioned costs are warranted given transactions tested were not supported by adequate documentations. Condition 3 - Condition pertains to liquidation requirement and not obligation requirement. Finding No.: 2019-014, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.268 Immunization Cooperative Agreements Award Numbers: 6NH231P000736-05-01 and 5NH231P000786-05-00 Area: Period of Performance Questioned Costs: $80,809 Auditor Response, continued: Conditions 4 and 5 - Documentations provided by the Director of Grants and Fiscal Integrity on 09/27/24 do not pertain to transactions tested. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-015 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: X10MC29495 and X10MC31162 Area: Cash Management Questioned Costs: $524,804 Criteria: In accordance with 31 CFR Part 205, a State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. State interest liability accrues from the day Federal funds are credited to a State account to the day the State pays out the Federal funds for Federal assistance program purposes. Interest earned on advances of Program funds at the State and local levels shall be treated in accordance with the provisions of 31 CFR part 205, which implement the requirements of the Cash Management Improvement Act (CMIA) of 1990. In addition, in accordance with the grant terms and conditions, all drawdown of federal funds from the Payment Management System (PMS) must have approval of the Grants Management Officer before funds are drawn. Condition: Of five drawdowns tested, aggregating $524,804 of a total population of $750,948, the following deficiencies were noted: 1. For one (or 20%), of the $97,117 drawdown amount, the payment for check number 9199 was liquidated almost a year from the check issued date. No questioned costs are presented as the potential interest liability is less than $500. 2. For one (or 20%), the payment has not been liquidated. No questioned costs are presented as the potential interest liability would have been less than $500 as of our field work date of 09/10/24. Finding No.: 2019-015, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: X10MC29495 and X10MC31162 Area: Cash Management Questioned Costs: $524,804 Condition, continued: 3. For five (or 100%), approved SF 270 evidencing prior approval by the Grants Management Officer of anticipated expenditures prior to drawdown of funds were not provided. Cause: CHCC did not enforce recordkeeping and monitoring controls over compliance with applicable cash management requirements and lacks monitoring controls over drawdown processing. Effect: CHCC is in incompliance with applicable cash management requirements and questioned costs of $524,804 for Condition 3. Recommendation: CHCC should implement monitoring control procedures to ensure that the time elapsing between the transfer of Federal funds from the United States Treasury and the payout of funds by CHCC is minimized. In addition, responsible CHCC personnel should establish recordkeeping system whereby underlying support for each transaction is substantiated and filed. Finding No.: 2019-015, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: X10MC29495 and X10MC31162 Area: Cash Management Questioned Costs: $524,804 Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 3. Auditor Response: Conditions 1 and 2 - While we understand that CHCC have no control over the timeliness of vendors cashing CHCC’s issued checks, CHCC is required to minimize the time elapsing between the transfer of funds from the United States Treasury and disbursements of federal funds and this can be achieved through the monitoring of outstanding checks during its bank reconciliation process. Condition 3 - Forms SF 270 evidencing prior grantor approval were not provided. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

Finding No.: 2019-016 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: a. in a newspaper of general circulation; b. in a newspaper of local circulation in the area pertinent to the procurement; c. in industry media; d. through electronic mailing lists, e. through the internet, agency web site, or other publicly accessible electronic media, f. through electronic mailing lists, or g. in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Criteria, Continued: • Sole Source Procurement A written justification for sole source procurement shall be prepared by the CEO, the official with expenditure authority, and shall contain the specific unique capabilities required; the specific unique capabilities of the contractor; the efforts made to obtain competition; and the specific considerations given to alternative sources and specific reasons why alternative sources were not selected. Condition: Of thirty-seven nonpayroll expenditures tested, aggregating $75,546 of a total population of $212,059, the following deficiencies were noted: 1. For five (or 14%), written justifications by the Official Expenditure Authority for the sole source procurement method used were not provided. 2. For twelve (or 32%), the Invitation to Bid or Request for Proposal publications notices were not provided. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Condition, continued: 3. For nine (or 24%), purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 4. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Condition, continued: 4. For nine (or 24%), approval by the Expenditure Authority and the P&S Director were not evident. 5. For three (or 8%), either the purchase order was not provided or was not signed by the P&S Director. No questioned costs are presented as amounts are questioned at Condition 4. 6. For one (or 3%) small purchase, no evidence of effort to obtain three quotations. No questioned costs are presented as the amount is questioned at Condition 4. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Cause: CHCC did not enforce compliance with established policies and procedures over procurement. Effect: CHCC is in noncompliance with applicable procurement regulations and questioned costs of $60,104 result. Identification as a Repeat Finding: Finding No. 2018-025. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for any deviation from applicable procurement requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan states agreement with the finding described in Conditions 1 to 6; however, disagrees with the questioned costs. Auditor Response: Conditions 1 to 6 - Questioned Costs are warranted given transactions tested were not supported by adequate documentations. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Auditor Response, continued: In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.

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