WHITMAN-WALKER HEALTH SYSTEM, INC.

2021-002 ? Reporting: Preparation of the Schedule of Expenditures of Federal Awards Identification of the Federal Program ? All Federal programs Criteria ? CFR Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ?200.502?. CFR Section ?200.502(a) also states that, ?The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs?. In accordance with ?200.302 Financial Management, a non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of the non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?200.328 Financial Reporting. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of ?200.305 Federal Payment. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. Condition ? WWHS?s policy on the Schedule preparation and review was not properly implemented for the year ended December 31, 2021. Such policy is designed to require timely and accuracy reconciliations of grant activity to the general ledger and approval by appropriate personnel. Cause ? Due to turnover of several key financial executives and grant personnel during the period, WWHS was unable to accurately, completely, and timely prepare the Schedule. Effect ? The Schedule was untimely and inaccurately prepared. While subsequently corrected for the audit, the Schedule was not reconciled to grant expenditures per the underlying accounting records, resulting in an inaccurate Schedule. Some awards were inaccurate, others were either inappropriately included in the Schedule, or inappropriately excluded in the Schedule. A sufficient and timely review was not performed to ensure an accurate and complete Schedule that reconciled to underlying accounting records. Questioned Costs ? None Context ? There were inadequate internal controls or processes in place to ensure an accurate and complete Schedule was prepared. Repeat Finding - No Recommendation - We recommend the Schedule to be prepared timely and to be reconciled to all grant activity per the related general ledger accounts. We recommend the appropriate level of review and approval be documented. Views of Responsible Officials ? Management agrees with the federal award finding identified in the audit. Management?s response to this finding is described in the accompanying management?s corrective action plan.

2021-003 ? Reporting: Submission of the Data Collection Form Identification of the Federal Program ? All Federal programs Criteria - In accordance with 2 CFR Section 200.512(a), the audit must be completed and data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor?s report(s), or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Condition - The audit, reporting package, and data collection form for the year ended December 31, 2021, were not filed by the deadline of September 30, 2022, to the Federal Audit Clearinghouse. Cause - Due to turnover of several key financial executives and grant personnel during the period, WWHS was unable to timely prepare the Schedule and related audit documentation. Effect - The audit, reporting package, and data collection form for the year ended December 31, 2021, were not submitted to the Federal Audit Clearinghouse in a timely manner. Questioned costs - None Context - The audit, reporting package, and data collection form for the year ended December 31, 2021, was filed late to the Federal Audit Clearinghouse. Repeat finding - No Recommendation - We recommend WWHS ensure necessary grant personnel resources are available to appropriately implement policies designed to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. View of Responsible Officials - Management agrees with the federal award finding identified in the audit. Management?s response to this finding is described in the accompanying management?s corrective action plan.

2021-004 ? Procurement and Suspension and Debarment Documentation Identification of the Federal Programs ? U.S. Department of Health and Human Services Health, National Institutes of Health Research and Development Cluster 93.242 Mental Health Research Grants 93.279 Drug Abuse and Addiction Research Programs 93.307 Minority Health and Health Disparities Research 93.855 Allergy and Infectious Diseases Research Criteria ? CFR Section 200.318(20)(c) states that there are specific circumstances in which noncompetitive procurement can be used, if certain circumstances apply. When competitive procurement is required, CFR Section 200.318(i) applies and requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, CFR Section 200.319(a) states that all procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition. Condition ? We noted for two out of the three procurements sampled, WWHS was not able to provide records sufficient to detail the history of the procurement and how the procurements either were conducted in a manner that provided full and open competition, or why noncompetitive procurement was appropriate. Cause ? Policies did not operate as designed to sufficiently document procurement rationale and to ensure procurements provided full and open competition, or otherwise justify non-competitive procurement. Effect ? Records may not be retained to sufficiently detail the history of procurement decisions. Full and open competition may not have occurred, or appropriate determination of when noncompetitive procurement was applicable may not have been made. Questioned Costs ? None Context ? We tested a sample of three procurements and found two exceptions whereby WWHS did not maintain adequate or complete documentation of full and open competition, or the circumstances for which noncompetitive procurement would be permissible. The related expenses charged to the major program under these procurement contracts for 2021 was $32,095. Repeat Finding ? No Recommendation - We recommend WWHS fully implement the existing policies and procedures to ensure compliance with procurement requirements. We recommend complete, detailed review of required forms by appropriate personnel to ensure completeness and validity of the information, documentation, and related conclusions, prior to entering into the contract or modifications. Views of Responsible Officials ? Management agrees with the federal award finding identified in the audit. Management?s response to this finding is described in the accompanying management?s corrective action plan.

2021-005 ? Allowable Cost: Cost Not Determined in Accordance with Generally Accepted Accounting Principles Identification of the Federal Program ? U.S. Department of Health and Human Services Health, National Institutes of Health Research and Development Cluster 93.855 Allergy and Infectious Diseases Research Criteria - CFR Section 200.403(e) states that costs must be determined in accordance with generally accepted accounting principles. CFR Section ?200.502(a) also states that the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Condition ? During our testing of non-payroll expenditures, we noted one out of 41 non-payroll expenditures selected was not recorded in the accounting period in which the expense was incurred. However, the expenditure was applied to the appropriate period of performance of the Federal award. Cause ? Policies did not operate as designed to record expenditures on the Schedule in accordance with the accrual basis of accounting under generally accepted accounting principles. Effect ? Although the expenditure identified was applied to the appropriate period of performance of the Federal award, the Schedule for the year ended December 31, 2021 was understated by $185.73. Questioned Costs ? None Context ? We selected 41 non-payroll expenditures for testing and identified $185.73 of one transaction was not recorded in the accounting period in which the expense was incurred. However, the expenditure was applied to the appropriate period of performance of the Federal award. The underlying expenses for which this receipt was based on were allowable. Repeat Finding ? No Recommendation - We recommend the Schedule to be prepared in accordance with generally accepted accounting principles. Views of Responsible Officials ? Management agrees with the federal award finding identified in the audit. Management?s response to this finding is described in the accompanying management?s corrective action plan.