Inner City Health Center

Criteria or specific requirement: Per §200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per the Organization's Additions to Property, Plant and Equipment Policy, Expenditures for tangible assets used actively in business operations with a cost exceeding $5,000 and with a useful life exceeding two years should be capitalized. Also per §200.313, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition and context: The Organization does not have a process in place to identify equipment and real property that is purchased with federal funds. Effect: The auditor noted instances of noncompliance. Noncompliance results in the federal interest in the assets acquired with federal grants not being properly tracked. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend that the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: An updated Purchasing Policy was approved by the Organization that covers this finding. In addition, a PO Process was established where pre-approvals are needed and a line item for grants is available to distinguish general operating expenditures from federally funded expenditures.

Recommendation: Our auditors recommended the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: An updated Purchasing Policy was approved by the Organization that covers this finding. In addition, a PO Process was established where pre-approvals are needed and a line item for grants is available to distinguish general operating expenditures from federally funded expenditures.

Criteria or specific requirement: According to § 2 CFR 200.303 Internal controls, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to 2 CFR 200.1 Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition and context: During our testing we noted three instances where the Organization allocated allowable expenses incurred outside of the period of performance dates. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being used outside of the grant period. Questioned costs: $53,077 Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on invoice date to ensure the incurred date is within the proper period of performance. Views of responsible officials: The Organization will review grant requirements and make sure that allowable costs are incurred and allocated to the grant within the grant period.

Recommendation: Our auditors recommended the Organization update their method of allocating expenditures to federal awards based on invoice date to ensure the incurred date is within the proper period of performance. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Organization will review grant requirements and make sure that allowable costs are incurred and allocated to the grant within the grant period.

2022 – 002 Special Tests: Application of Sliding Fee Discount Federal Agency: U.S. Department of Health and Human Services Federal Program: COVID-19: FY 2020 Health Center Program Look-Alikes: Expanding Capacity for Coronavirus Testing and COVID-19: American Rescue Plan Act Funding for Look-Alikes AL Number: 93.224 & 93.527 Award Period: 7/1/21 - 6/30/22 Type of Finding: Material Weakness in Internal Control over Compliance and Compliance Criteria or Specific Requirement Per Title 42 Chapter 1 Subchapter D Section 51c303(f), “Health centers must have a schedule of fees or payments for the provision of their health services consistent with locally prevailing rates or charges designed to cover their reasonable costs of operation. They are also required to have a corresponding schedule of discounts applied and adjusted on the basis of the patient’s ability to pay.” Condition and Context During our testing of forty sliding fee discounts for health center patients qualifying for reduced charge visits, we identified three visits that received the incorrect sliding fee discount or that the sliding fee application could not be located. Effect Potential that a patient would not receive the appropriate sliding fee discount. Questioned Costs None identified. Cause Clerical error in which the incorrect discount was applied due to lack of an oversight process in place. Recommendation We recommend the Organization to review internal controls in regards to the determination, recording, and monitoring of the sliding fee process to ensure that appropriate sliding fee rates/categories are utilized for each sliding fee encounter. Views of Responsible Officials The Organization will review our procedures for ensuring that sliding fee applications are completed accurately and are properly placed in patient files. We will also research and implement safeguards to ensure that the revised procedures are being followed throughout the year, potentially including audits and additional staff training. This will be performed by Andrea Cortez, Chief Operating Officer, Karina Villagrana, Practice Manager, and Andrew Shahidi, Chief Financial Officer in the next 45 days. If during this process we determine that an update, revision, or re-write of the current Sliding Fee Policy is required, we will do so and it will be submitted to the Board of Directors for approval at the March 27, 2024 meeting.

2022-002 Federal Program: COVID-19: FY 2020 Health Center Program Look-Alikes: Expanding Capacity for Coronavirus Testing and COVID-19: American Rescue Plan Act Funding for Look-Alikes – Assistance Listing No. 93.224 & 93.527 Recommendation: Our auditors recommended the Organization review its internal controls in regards to the determination, recording, and monitoring of the sliding fee process to ensure that appropriate sliding fee rates/categories are utilized for each sliding fee encounter. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The Organization will review our procedures for ensuring that sliding fee applications are completed accurately and are properly placed in patient files. We will also research and implement safeguards to ensure that the revised procedures are being followed throughout the year, potentially including audits and additional staff training. This will be performed by Andrea Cortez, Chief Operating Officer, Karina Villagrana, Practice Manager, and Andrew Shahidi, Chief Financial Officer in the next 45 days. If during this process we determine that an update, revision, or re-write of the current Sliding Fee Policy is required, we will do so and it will be submitted to the Board of Directors for approval at the March 27, 2024 meeting.