West Central Mental Health Center, Inc., dna Solvista HealthNon-Profit

Criteria or Specific Requirement: Title 2 of the Code of Federal Regulations (CFR) 200.302(b)(4) requires non-federal entities to maintain effective internal control over federal programs. Specifically, the organization must reconcile its federal awards with expenditures incurred and revenue received. Additionally, 2 CFR Part 200.510(b)(1-6) specifies that a Schedule of Expenditures of Federal Awards (SEFA) be prepared for each fiscal year in accordance with the applicable federal regulations. The SEFA must include, at a minimum, total federal awards expended for each individual federal program and must accurately report all federal expenditures received and expended during the fiscal year. Condition and Context: During the audit, it was noted that Solvista Health does not reconcile federal awards with the expenditures used and revenue earned. Additionally, Solvista Health did not prepare an accurate SEFA. Questioned Costs: N/A Cause: Solvista Health’s accounting and internal control systems were not designed and implemented to ensure reconciliation of federal awards with expenditures and revenue, and the preparation of an accurate SEFA. Effect: Failure to reconcile federal awards with expenditures and related revenue, along with the absence of an accurate SEFA, could lead to incorrect reporting of federal funds, misstatement of financial information, and non-compliance with federal requirements. This represents a potential risk for improper use of federal funds and an inability to meet compliance and reporting obligations. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health design and implement internal control procedures to reconcile federal awards with the expenditures and revenue received to ensure completeness and accuracy in financial reporting. Additionally, management should prepare and maintain an accurate SEFA in accordance with 2 CFR 200.510 to ensure proper documentation and compliance with federal reporting requirements. Additionally, we recommend that Solvista Health train appropriate personnel on the requirements related to federal award reconciliations and SEFA preparation to mitigate the risk of noncompliance in the future.

Criteria or Specific Requirement: In accordance with 2 CFR 200.430, compensation for personal services must be based on records that accurately reflect the work performed and must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During the testing of federal expenditures, specifically over the accounting for payroll expenditures submitted for reimbursement, we noted that payroll expenditures for one employee included an additional month’s payroll costs attributable to a different employee covered under the same grant. Context: Payroll expenditures were duplicated due to an accounting error, which overstated the payroll expenditures applied to the grant. Questioned Costs: $6,358 consisting of payroll expenditures duplicated during the July 2023 through January 2024 reporting period. Cause: The variance appears to have resulted from a lack of sufficient internal controls over the accurate accounting and review of payroll costs charged to the federal program. In particular, Solvista Health did not implement a process for the review and approval for the final payroll costs submitted for reimbursement, which resulted in errors. Effect: Failure to submit accurately accounted for payroll expenditures to the federal program, may result in noncompliance with federal regulations over allowable costs, as well as questioned costs related to the incorrect submitted payroll expenditures. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement a system of internal controls that are designed and operating to provide an accurate accounting of payroll costs incurred under the federal programs, including review and monitoring of processes and procedures. In addition, documentation ensuring accurate payroll costs allocated to federal programs, along with support of review and approval of such charges, should be retained in accordance with federal regulations.

Criteria or Specific Requirement: In accordance with 2 CFR 200.430, fringe benefits should be allocated based on an approved indirect cost rate agreement (if applicable) or on actual costs when no approved rate exists. If a predetermined or negotiated rate has been established, it must be applied consistently and accurately across all programs. Condition: Solvista Health utilized a fringe benefit allocation rate of 31.15% when allocating fringe benefit expenditures to the Certified Community Behavioral Health Clinic Expansion Grant. However, the maximum agreed-upon fringe benefit rate submitted to the grantor was 30.15%. Additionally, it was noted that the actual fringe benefit expenditures incurred by the organization during the period were estimated at 25%. Context: Fringe benefits should have been charged at a rate consistent with Solvista Health’s actual fringe benefit expenditures incurred and should not have exceeded the maximum allowed rate. These errors resulted in an overstatement of fringe benefits and related indirect costs applied to the grant. Questioned Costs: $18,307 consisting of an accounting error in applying a fringe benefit rate higher than the maximum rate, in addition to applying the maximum fringe benefit rate rather than actual fringe benefit expenditures incurred. Cause: These errors were due to clerical errors in applying a fringe benefit rate higher than the agreed upon maximum fringe benefit rate, in addition to applying a maximum fringe benefit rate to the program rather than actual fringe benefit expenditures incurred by Solvista Health. Solvista Health lacks a properly designed and implemented system of internal control with regards to review and approval of costs submitted for reimbursement, Effect: Solvista Health improperly overstated fringe benefit expenditures allocated to the federal program during the performance period. This resulted in an excess reimbursement of program expenditures and questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health design and implement a system of internal controls which includes a review process to ensure accurate use of approved fringe benefit rates in all federal reporting. Additionally, management should reconcile budgeted and actual fringe benefit costs regularly to ensure continued compliance.

Criteria or Specific Requirement: 2 CFR 200.302(b)(4) requires non-federal entities to maintain effective internal control over federal programs. Specifically, the organization must reconcile its federal awards with expenditures incurred and revenue received. Additionally, 2 CFR Part 200.510(b)(1-6) mandates that a Schedule of Expenditures of Federal Awards (SEFA) be prepared for each fiscal year in accordance with the applicable federal regulations. The SEFA must include, at a minimum, total federal awards expended for each individual federal program and must accurately report all federal expenditures received and expended during the fiscal year. Condition and Context: During our audit procedures performed over the current year SEFA, it was noted that Solvista Health improperly excluded expenditures for two federal awards from its June 30, 2023 SEFA. Questioned Costs: N/A Cause: Solvista Health’s accounting and internal control systems were not designed and implemented to ensure reconciliation of federal awards with expenditures and revenue, and the preparation of an accurate SEFA. Effect: Failure to reconcile federal awards with expenditures, along with an incomplete and inaccurate SEFA, could lead to incorrect reporting of federal funds, misstatement of financial information, and noncompliance with federal requirements. This represents a potential risk for improper use of federal funds and an inability to meet compliance and reporting obligations. Additionally, the omission of federal awards from the June 30, 2023 SEFA resulted in noncompliance with federal reporting requirements and inaccurate representation of Solvista Health’s federal award activity. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health design and implement internal control procedures to reconcile federal awards with the expenditures and revenue received to ensure completeness and accuracy in financial reporting. Additionally, management should prepare and maintain an accurate SEFA in accordance with 2 CFR 200.510 to ensure proper documentation and compliance with federal reporting requirements. Additionally, we recommend that Solvista Health train appropriate personnel on the requirements related to federal award reconciliations and SEFA preparation to mitigate the risk of noncompliance in the future.

Criteria or Specific Requirement: In accordance with 2 CFR 200.302(b)(1) and (b)(3), non-federal entities must maintain effective control over, and accountability for, all funds, property, and other assets. Financial management systems must allow for the identification, in their accounts, of all federal awards received and expended, and must ensure that funds are used in accordance with federal award agreements. In addition, state grant agreements typically require the separate tracking of expenditures by funding source. Condition and Context: During procedures performed over the Schedule of Expenditures of Federal Awards, it was noted that Solvista Health did not separately track expenditures, and related revenues from state and federal programs/sources for the Mental Health Block Grant. All transactions were recorded within a single classification of accounts without designation of funding or expenditure source, resulting in the commingling of revenues and expenditures. Questioned Costs: N/A Cause: Solvista Health did not implement internal control procedures to separately identify and record state and federal expenditures related to the Mental Health Block Grant. Effect: Because state and federal funds were commingled, Solvista Health could not identify federal awards received and expended under this federal program as compared to state awards received and expended. In addition, this could cause Solvista Health compliance issues with the specific allowable cost principles and reporting requirements of each funding source. This increases the risk of unallowable expenditures and may result in questioned costs or repayment obligations. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health implement internal control procedures to establish separate accounts, classification, use of cost centers or project codes to clearly distinguish expenditures by funding source, as well as revenues received.

Criteria or Specific Requirement: In accordance with 2 CFR 200, non-federal entities are required to verify that vendors and contractors are not suspended or debarred from receiving federal funds prior to entering into a covered transaction. This check is typically conducted by reviewing the System for Award Management (SAM.gov) or obtaining a certification from the vendor. Condition and Context: During procedures performed over suspension and debarment, we noted multiple instances in which Solvista Health was unable to locate documentation that a suspension and debarment check was performed prior to entering into a transaction with a vendor. Questioned Costs: N/A Cause: Lack of properly designed and implemented internal controls to ensure a documented procedure or process requiring staff to perform and retain documentation of suspension and debarment verification as part of the procurement process. Effect: Failure to perform and retain documentation of suspension and debarment checks may result in noncompliance with federal procurement regulations and could expose Solvista Health to the risk of utilizing vendors who are ineligible to receive federal funds. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health revise their procurement policy to include a formal procedure requiring suspension and debarment verification for all covered transactions prior to vendor engagement. This process should include retaining documentation (e.g., dated SAM.gov search results or signed vendor certifications) in the procurement file for regulatory compliance.

Criteria or Specific Requirement: In accordance with the grant agreements and applicable federal record retention standards (2 CFR 200.334), recipients of federal funds must maintain all records pertinent to the grant—including required progress and financial reports—for a minimum of three years from the date of submission of the final expenditure report. Condition and Context: Solvista Health did not retain certain key documents required to be retained under federal regulation and specific grant agreements. Specifically, Solvista Health was unable to provide quarterly reports, expenditure reimbursement packets submitted to the grantors, project expenditure reports, or other grant-related records necessary to demonstrate compliance with federal reporting and record retention standards under the federal programs. Questioned Costs: N/A Cause: Solvista Health did not implement adequate internal controls to ensure that submitted reports and expenditure reimbursement packets were archived and retained in accordance with grant and federal requirements. Effect: The absence of these records could impede the ability to verify proper grant administration and verify submitted expenditures were allowable costs incurred in accordance with the federal award agreement, which could impact future funding eligibility. It also represents a potential noncompliance with federal grant requirements. Identification as a Repeat Finding: Not a repeat finding. Recommendation: Solvista Health should strengthen its document retention policies and processes and implement internal controls to ensure that all required grant reports are consistently reviewed, approved, submitted, retained and retrievable for the required retention period.

Criteria or Specific Requirement: In accordance with 2 CFR 200.302, non-federal entities must maintain financial systems that provide for the identification, of all federal awards received and expended, including revenues and expenditures tracked separately by federal program. Additionally, 2 CFR 200.430(i) requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed and must be supported by a system of internal control. Condition and Context: During the audit, it was noted that Solvista Health did not ensure that an eligible employee’s time was properly coded to the federal grant. Furthermore, the organization did not separately track grant revenues and expenditures from its general operating funds, making it difficult to clearly identify program-specific activity related to the federal award. Questioned Costs: N/A Cause: Solvista Health did not implement sufficient internal control procedures to ensure that employee timecards were accurately coded to the appropriate grant, nor to ensure that grant revenues and expenditures were tracked separately from general operating funds in accordance with grant and federal requirements. Effect: Failure to properly code eligible employee time to the appropriate grant and to separately track grant revenues and expenditures increases the risk of unallowable activities and possible questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement internal controls over tracking of expenditures related to federal award grants and the related reimbursed cost to ensure compliance with federal requirements.

Criteria or Specific Requirement: In accordance with 2 CFR 200.302(b)(4) and 2 CFR 200.329(a), nonfederal entities must establish internal controls to ensure accountability over federal funds and must monitor grant activities to ensure compliance with applicable requirements and achievement of performance goals. These responsibilities include assigning oversight roles and implementing processes to track both financial and programmatic aspects of federal awards. Condition and Context: During the audit, it was noted that Solvista Health did not have clearly defined roles and responsibilities for monitoring grant activities. It was difficult to determine who within the organization was responsible for overseeing compliance with grant requirements, tracking grant performance, and ensuring proper financial management of the grant funds. When asked, management was unable to identify designated individuals or a department currently accountable for these duties. Questioned Costs: N/A Cause: Solvista Health does not have an established formal grant management structure or assigned responsibility for grant oversight. Effect: Lack of properly designed and implemented internal controls, including policies and procedures relating to accountability and oversight of federal programs, may result in noncompliance with federal grant requirements under 2 CFR § 200.329 (monitoring and reporting program performance) and § 200.302 (financial management). Identification as a Repeat Finding: Not a repeat finding. Recommendation: Solvista Health should design and implement internal controls related to federal program grant management, including assignment of responsibility for grant oversight to specific individuals or departments. This will help ensure that Solvista Health is in compliance with federal regulations related to the monitoring and oversight of grant activities.

Criteria or Specific Requirement: In accordance with 2 CFR 200.305(b), when entities are on a cost reimbursement basis, payments must be requested only for allowable costs already incurred, and such requests should be made in a timely manner to avoid cash flow issues and ensure proper stewardship of federal funds. Condition and Context: During our testing, we determined that Solvista Health incurred allowable expenditures under the federal awards but did not submit claims for reimbursement in a timely manner. Specifically, expenditures were recorded and reported internally, but Solvista Health did not initiate the cost reimbursement requests in accordance with the timing of those expenditures. Questioned Costs: N/A Cause: Solvista Health lacks sufficient oversight or adequate internal controls to ensure timely submission of reimbursement requests corresponding with incurred expenditures. Effect: Failure to request reimbursement in a timely manner can impair cash flow, result in underutilization of available federal funds within the grant period, and indicate noncompliance with requirements under Uniform Guidance. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement formal procedures as well as assign an individual responsible for submitting reimbursement requests on a regular and timely basis after expenditures are incurred. This will promote compliance with federal requirements and ensure Solvista Health benefits fully from available federal grant funding.

Criteria or Specific Requirement: In accordance with 2 CFR 200.430, compensation for personal services must be based on records that accurately reflect the work performed and must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During the testing of allowable costs, we determined that Solvista Health submitted payroll expenditures for reimbursement that exceeded recalculated amounts based on underlying payroll records, timesheets, and approved pay rates. Context: Payroll expenditures submitted for reimbursement were in excess of actual payroll amounts per the employees’ time sheets and approved pay rates. Questioned Costs: $3,268 consisting of payroll expenditures submitted for reimbursement in excess of actual payroll expenditures per supporting documents. Cause: The variance appears to have resulted from a lack of sufficient internal controls over the accurate calculation and review of payroll costs charged to the federal program. In particular, Solvista Health did not implement a process for the review and approval for the final payroll costs submitted for reimbursement, which resulted in errors. Effect: Failure to submit accurately calculated payroll expenditures to the federal program, may result in noncompliance with federal regulations over allowable costs, as well as questioned costs related to the incorrectly submitted payroll expenditures. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement a system of internal controls that are designed and operating to provide an accurate calculation of payroll costs incurred under the federal programs, including review and monitoring of process and procedures. In addition, documentation ensuring accurate payroll costs allocated to federal programs, along with support of review and approval of such expenditures, should be retained in accordance with federal regulations.

Criteria or Specific Requirement: In accordance with 2 CFR 200.403(h), costs must be incurred during the approved budget period or period of performance, unless specifically authorized otherwise by the federal awarding agency. Charging costs incurred outside the period of performance is unallowable and does not comply with federal cost principles. Condition: During our testing of payroll expenditures charged to the federal award, it was determined that Solvista Health claimed reimbursement for payroll costs incurred outside the approved period of performance. Specifically, for one grant, payroll expenditures were claimed for time worked between June 26, 2023 and June 30, 2023, although the awards period of performance began on July 1, 2023. Additionally, for another grant tested, payroll expenditures were claimed for time worked between October 30, 2023 and October 31, 2023, despite the award’s period of performance not beginning until November 1, 2023. Context: Actual payroll expenditures submitted included payroll expenditures that were outside the period of performance, which overstated the payroll expenditures applied to the grant. Questioned Costs: $7,522 consisting of payroll expenditures submitted for reimbursement for expenditures incurred outside of the approved period of performance. Cause: Solvista Health did not have adequate controls to ensure that expenditures charged to the federal program were incurred within the period of performance. Effect: Solvista Health claimed reimbursement for payroll costs incurred outside of the approved period of performance, resulting in unallowable costs being charged to this award. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend Solvista Health design and implement controls to ensure that expenditures submitted for reimbursement under federal awards are properly reviewed for compliance with regard to the period of performance requirements.

Criteria or Specific Requirement: In accordance with 2 CFR 200.403(a), costs charged to a federal award must be allowable under the provisions of the cost principles, the terms and conditions of the award, and the approved budget. Additionally, earmarking requirements in the grant agreement and associated budget restrict specific categories of expenditures, including a cap on allowable software costs. Condition: During our testing of expenditures claimed for reimbursement, we noted that Solvista Health incurred and claimed software-related costs in excess of the grant agreement, which explicitly limits allowable software expenditures. Context: The software expenditures submitted exceeded the software costs allowed per the grant agreement. Questioned Costs: $2,814 consisting of exceeded software expenditures submitted for reimbursement. Cause: Solvista Health did not have adequately designed and implemented internal controls related to monitoring of compliance with earmarking requirements specific to software expenditures under the terms of the grant. Effect: Solvista Health exceeded the allowable software cost limit established by the grant. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health design and implement grant monitoring internal controls to ensure expenditures comply with all earmarking limitations specified in grant agreements and approved budgets. In particular, Solvista Health should implement procedures to track expenditures by budget category and verify compliance prior to submitting reimbursement requests.

Criteria or Specific Requirement: In accordance with 2 CFR 200.403 and 200.405, costs charged to federal awards must be necessary, reasonable, allocable to the program, and adequately documented. Only allowable costs as defined by the terms and conditions of the award and the Uniform Guidance may be charged to the grant. Condition: During our testing of expenditures submitted by Solvista Health for reimbursement, we identified instances where costs were charged to the grant that were not allowable under the Uniform Guidance or the terms of the grant agreement. Specifically, unallowable employee meals were included in travel reimbursement costs. Context: Employees’ meal expenditures were submitted as allowable costs and as travel costs; however employee meals are not an allowable expenditure per the grant agreement. Questioned Costs: $842 consisting of unallowable meal expenditures. Cause: Solvista Health did not have sufficient internal controls implemented to identify unallowed expenditures, which were submitted for reimbursement. Effect: Failure to submit unallowable expenditures for reimbursement may result in noncompliance with the federal awarding agency and may result in the repayment of any unallowable expenditures to the grantor. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health implement internal controls to ensure review and approval of grant-related expenditures. Additionally, we recommend regular training of staff on allowable cost principles under Uniform Guidance.

are responsible for maintaining effective control and accountability over grant compliance requirements, including documentation and retention of required report submissions. Condition and Context: Solvista Health is required to submit quarterly Substance Abuse and Mental Health Services Administration’s (SAMHSA’s) Performance Accountability and Reporting System (SPARS) reports in accordance with federal grant requirements. While the task of submitting these reports has been delegated to a third party program evaluation (Clover), Solvista Health has not retained documentation or maintained evidence of the reports’ submissions. As a result, we were unable to verify that the reports were submitted timely in accordance with grant requirements. Questioned Costs: N/A Cause: Solvista Health relies on Clover to submit the required reports and has not designed and implemented an internal control process and procedures to retain documentation of report compliance and submission. Effect: Without proper internal controls relating to monitoring and timely submission of required reports per the grant agreement, including adequate retention of documentation of report submission, Solvista Health could be out of compliance with grant agreements. Identification as a Repeat Finding: Not a repeat finding. Recommendation: Solvista Health should design and implement internal controls to ensure documentation of all required reports in accordance with grant terms and conditions, including evidential support of timing of submission of required reports such as submission confirmations or logs. The internal controls should be designed with regards to oversight of reporting requirements that are outsourced to vendors.

Criteria or Specific Requirement: In accordance with 2 CFR 200, Subpart E – Cost Principles, costs charged to federal awards must be allowable, reasonable, and treated consistently across all programs. Fringe benefit costs should be allocated based on the relative benefits expended by each program and in a manner that reflects a consistent and equitable methodology. When a cost allocation plan is in place, allocations must align with that plan to ensure compliance with federal requirements. Condition and Context: During our audit of Solvista Health’s federal awards, it was determined that fringe benefits are accounted for and applied inconsistently across federal programs. In one program, fringe benefits were charged as direct expenditures based on actual costs; in another program, they were applied using an allocation percentage; and in two programs, no fringe benefits were applied at all. Questioned Costs: N/A Cause: The inconsistent accounting and application of fringe benefit rates across federal programs resulted from the absence of a standardized, written fringe benefit cost allocation policy and a lack of internal controls to ensure compliance with 2 CFR Part 200 cost principles. Effect: This inconsistency increases the risk of noncompliance with federal cost principles and may result in misstated program costs, inequitable allocation of expenditures, and potential questioned costs by federal awarding agencies. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that Solvista Health revise their current written cost allocation policy to clearly define how fringe benefits are to be accounted for, allocated and applied across all federal programs. The policy should ensure consistency, compliance with 2 CFR 200, and equitable allocation based on actual benefit expended.