Outpatient Medical Center, Inc.Non-Profit

2025-002 Allowable Costs/Cost Principles (repeat of finding 2024-004) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E sets for the specific cost principles to be followed when expending federal funds. Condition The Organization claimed the same expenditure for reimbursement under multiple grants. The Organization did not maintain sufficient supporting records for all of the expenditures reimbursed with federal awards. This finding appears to be a systemic problem. Cause The Organization’s internal controls did not include proper review of transactions charged to federal programs to ensure that the goods or services received were supported by the appropriate documentation. In addition, expenditures were not properly tracked by grant, which allowed for the same costs to be charged to multiple awards. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $61,155 Context In a sample of forty transactions tested, three were found to be for expenditures that were not consistent with the allowable cost principles. We identified $36,855 of expenditures for which the Organization could not provide supporting documentation, and $24,300 of expenditures that had already been charged to another program or award. Recommendation We recommend the Organization implement a system to track and document all expenditures of federal awards in the financial management system and that supporting documentation for all federal expenditures, whether payroll or procurement transactions, be maintained. In addition, we recommend the Organization implement controls sufficient to monitor the system to ensure it is properly designed and effective. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2025-003 Period of Performance (repeat of finding 2024-005) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures include costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be claimed as current federal expenditures. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $194,142 (of which $61,155 was previously reported in finding 2025-002 above). Context In a sample of forty transactions, we noted five included expenditures for goods or services that were not provided in the current period. $117,887 of expenditures charged to the program were for goods or services related to future periods. $76,255 of expenditures charged to the program were for goods or services related to previous periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2025-004 Cash Management (repeat of finding 2024-008) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “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 The Organization did not maintain supporting documentation for cash draws made from the Payment Management System (PMS). This finding appears to be a systemic problem. Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs None noted. Context Out of seven draws tested, the Organization was not able to provide any supporting documentation or expenditure detail to support two draws. Due to this, we were unable to verify the time elapsing between the funds transfer from the PMS system and the disbursement of funds. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures to be paid or reimbursed. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2025-005 Suspension and Debarment Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [ ] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.214 and Title 2 CFR 180.300 require that organizations “verify that the person with whom you intend to do business is not excluded or disqualified” before entering into covered transaction (procurement contracts, purchase orders or agreements greater than or equal to $25,000) with persons or vendors. Condition The Organization entered into covered transactions without verification that vendors/contractors were not excluded from doing business with the federal government. This finding appears to be a systemic problem Cause The Organization did not follow its policy to verify that persons or entities contracted with were not listed on the exclusions list prior to entering into the contracts or purchase agreements. Effect The Organization may have entered into covered transactions with persons who have been suspended or debarred. Questioned Costs None noted. Context Out of four covered transactions selected, only one included evidence that an exclusion check was performed prior to signing the contract. Exclusions checks were performed after documentation was requested by the auditor and no excluded vendors were identified. Recommendation We recommend the Organization implement controls requiring that exclusion checks be performed prior to signing any contracts or purchase orders or agreements that are covered transactions. This exclusion check should be maintained as part of the supporting documentation for the expenditure. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-004 Allowable Costs/Cost Principles Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E sets for the specific cost principles to be followed when expending federal funds. Condition The Organization charged expenditures that were not necessary and reasonable for performance of the award to the federal grants. The Organization charged salaries in excess of the federal limits to grants. The Organization claimed the same expenditure for reimbursement under multiple grants. The Organization did not maintain sufficient supporting records for all of the expenditures reimbursed with federal awards. This finding appears to be a systemic problem Cause The Organization’s internal controls did not include proper review of transactions charged to federal programs to ensure that the goods or services received were necessary for the performance of the award, and that the transactions were supported by the appropriate documentation. In addition, expenditures were not properly tracked by grant, which allowed for the same costs to be charged to multiple awards. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $534,222 Context In a sample of sixty invoices tested, eight were found to be for expenditures that were not consistent with the allowable cost principles. We identified $283,128 of expenditures that were not necessary for the performance of the award due to the goods or services not yet being provided. In addition, we identified $56,685 of expenditures for which the Organization could not provide supporting documentation, $152,678 of salaries that were charged to multiple programs and $38,021 of expenditures that were either recorded multiple times or were already charged to another program. In addition, one employee had $3,710 of wages in excess of the federal thresholds charged to federal programs. Recommendation We recommend the Organization implement a system to track and document all expenditures of federal awards in the financial management system and that supporting documentation for all federal expenditures, whether payroll or procurement transactions, be maintained. In addition, we recommend the Organization implement controls sufficient to monitor the system to ensure it is properly designed and effective. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-005 Period of Performance Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.403(h) requires that costs be incurred in the approved budget period for the applicable awards and Title 2 CFR 200.403(e) requires that those costs be determined according to generally accepted accounting principles (GAAP). Condition The Organization’s federal expenditures includes costs for goods and/or services outside of the approved budget periods for the awards. Cause The Organization’s internal controls over compliance did not include consideration of when the goods were received or services were performed compared to the budget periods for the awards. Lack of understanding of GAAP and the requirements of accrual basis accounting allowed expenditures outside of the applicable budget periods to be approved and claimed as current federal expenditures based solely on management’s decision to pay for the expenditure in the current year. Effect The Organization may allocate unallowable costs to the federal awards. Questioned Costs $321,877 (of which $283,128 was previously reported in finding 2024-004 above) Context In a sample of sixty invoices, we noted eight included expenditures for goods or services that were not provided in the current budget period. $283,129 of expenditures charged to the program were for goods or services related to future budget periods. $38,748 of expenditures charged to the program were for goods or services related to previous budget periods. Recommendation We recommend management personnel authorized to approve expenditures of federal awards be limited to those who have a basic understanding of GAAP and the relationship between the accrual basis of accounting and the period of performance requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-007 Reporting (repeat of finding 2023-003) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Based on the standards of documentation of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D requires the Organization to retain adequate records and other supporting documentation for reports submitted to awarding agencies under the compliance requirements for reporting. Condition The Organization did not maintain sufficient supporting records for the information reported in its calendar year 2023 Uniform Data System (UDS) report. This finding appears to be a systemic problem. Cause The Organization’s internal controls over compliance did not include adequate controls over the retention of supporting documentation for UDS reports submitted to awarding agencies. Effect The Organization submitted UDS reports for federal awards that may lack supporting documentation. Amounts reported may not be correct. Questioned Costs None identified Context Amounts reported in Table 8A and Table 9E did not agree to the supporting documentation. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. If changes to the reported amounts are made, the supporting documentation should be updated and the reason for the change should be documented. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-008 Cash Management Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “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 Cash draws were made without support of approved documentation. Supporting documentation for other draws included invoices for expenditures that were dated several months after the draw was made. This finding appears to be a systemic problem Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs Indeterminable. Context Out of thirteen draws tested, the Organization was not able to provide supporting documentation for one draw and support for two additional draws included expenses that were not incurred within a reasonable time after the draw. Recommendation We recommend the Organization implement controls requiring all draws from the Payment Management System (PMS) to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2023-003 Reporting Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Based on the standards of documentation of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D requires the Organization to retain adequate records and other supporting documentation for reports submitted to awarding agencies under the compliance requirements for reporting. Condition The Organization did not maintain sufficient supporting records for the information reported in its calendar year 2022 Uniform Data System (UDS) report. Context This finding appears to be a systemic problem. Cause The Organization’s internal controls over compliance did not include adequate controls over the retention of supporting documentation for UDS reports submitted to awarding agencies. Effect The Organization submitted UDS reports for federal awards that may lack supporting documentation. Questioned Costs None identified Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

During the test of the sliding fee patients, we noted three (5) instances out of 25 patient files reviewed in which the sliding fee discount was calculated incorrectly.

Finding 2019-1 BANK RECONCILIATIONS Material Weakness Condition During our review of bank reconciliations, we noted that the operating account and 340B account reconciliations did not agree to the general ledger. Cause The operating account reconciliation included inaccurate reconciling items that had not been researched and the 340B account activity had not been recorded for the year. Effect Unreconciled accounts resulting in inaccurate accounting records Criteria Policy Number 1.8 of the Center's Financial Policies and Procedures manual states that "Bank accounts are reconciled on a monthly basis". Recommendation The Center should strengthen internal administrative controls to ensure that bank reconcilations for all accounts are completed timely and reconcile to the general ledger. Finding 2019-2 SPECIAL TESTS & PROVISIONS: SLIDING FEE SCALE U. S. Department of Health and Human Services Health Center Cluster Grant; CFDA #93.224 and #93.527 Condition During our test of sliding fee patients, we noted nine (9) instances out of 40 patient files reviewed in which the sliding fee was improperly calculated. Cause Failure to follow established Center procedures Effect Improper calculation of sliding fee discount Criteria Department of Health & Human Services guidelines, Section 330 of the PHS Act and 42 CFR Part 51c.303(f) which states Health Centers must provide a full discount to individuals with an annual income at or below 100% of the poverty guidelines and for those with incomes between 100% and 200% of poverty, fees must be charged in accordance with a sliding discount policy based on family size and income. Recommendation The Center should strengthen internal administrative controls to ensure that appropriate documentation is maintained on file to support a patient's family income. The Center should also ensure the fees charged and level of discount a patient receives is calculated correctly based on income and family size.

Finding 2019-2 SPECIAL TESTS & PROVISIONS: SLIDING FEE SCALE U. S. Department of Health and Human Services Health Center Cluster Grant; CFDA #93.224 and #93.527 Condition During our test of sliding fee patients, we noted nine (9) instances out of 40 patient files reviewed in which the sliding fee was improperly calculated. Cause Failure to follow established Center procedures Effect Improper calculation of sliding fee discount Criteria Department of Health & Human Services guidelines, Section 330 of the PHS Act and 42 CFR Part 51c.303(f) which states Health Centers must provide a full discount to individuals with an annual income at or below 100% of the poverty guidelines and for those with incomes between 100% and 200% of poverty, fees must be charged in accordance with a sliding discount policy based on family size and income. Recommendation The Center should strengthen internal administrative controls to ensure that appropriate documentation is maintained on file to support a patient's family income. The Center should also ensure the fees charged and level of discount a patient receives is calculated correctly based on income and family size.