Southwest CARE CenterLocal Government

2025 – 001 Allowable Costs Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Opportunities for Persons with AIDS (HOPWA) AL Number: 14.241 Award Period: 7/1/24 - 6/30/25 Type of Finding: Significant deficiency in Internal Control over Compliance and Compliance Criteria or Specific Requirement According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During our testing, we noted four samples where the Organization was not maintaining accurate records to support the payroll costs allocated to the grant. Based on the actual payroll costs of the employees charged to the grant the Organization could have charged additional costs to the grant. Effect Noncompliance results in potential for incorrect payroll costs allocated to federal grants. Questioned Costs None identified. Cause The issuance was caused by management oversight resulting in wage allocations not being updated and reviewed. Recommendation We recommend the Organization update their grant allocation process to ensure accurate wage rates are used to calculate the allocations. Views of Responsible Officials Beginning with July 2025, the Organization will ensure that current month costs are a direct reflection of that month's costs of the allocated employees using a labor rate equal to ((total allowable salaries and wages + total allowable employee benefits and taxes) / total allowable hours worked) * applicable HOPWA-related hours worked.

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: During our testing of forty sliding fee discounts for health center patients qualifying for reduced charge visits, we identified five visits in which the incorrect sliding fee discount was applied or no sliding fee application was present at the date of service. Questioned costs: N/A Context: During our testing of forty sliding fee discounts for health center patients qualifying for reduced charge visits, we identified five visits in which the incorrect sliding fee discount was applied or no sliding fee application was present at the date of service. Cause: Clerical error in which the discount fee applied was calculated incorrectly or an application was not received due to lack of an oversight process in place. Effect: Individuals may receive an incorrect sliding fee discount. Repeat finding: N/A 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. Management Response: The case management team conducted a comprehensive training in April 2022 including instructions for completing a sliding fee scale and appropriately filing the documentation in the EMR. In May 2022, an internal monthly audit process was implemented that includes a review of slides completed in the prior month to further reduce the error rate. In response to this audit finding, the case management team will conduct a training session highlighting issues identified during the recent audit including the appropriate utilization of sliding fees. The revenue cycle and pharmacy teams have also implemented processes to ensure that sliding fee scales are active on the service date for medical visits and/or prescriptions from the pharmacy.

Criteria or specific requirement: Per procurement standards, nonfederal entities other than States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. Per 2 CFR Section 200.319, procurement expenditures require documentation over the bidding process. Condition: During our testing, we identified transactions which the Organization contracted with a vendor for services that exceeded the $3,000 threshold (the Organizations? requirement per their procurement policy) and did not retain documentation for the bidding process for these services. Questioned costs: N/A Context: During our testing, we identified transactions which the Organization contracted with a vendor for services that exceeded the $3,000 threshold (the Organizations? requirement per their procurement policy) and did not retain documentation for the bidding process for these services. Cause: Client did not have a consistent process for ensuring the procurement processes were followed. Effect: Noncompliance could result in the Organization not obtaining the best pricing and spending the federal funds appropriately. Recommendation: We recommend that the Organization implement processes and procedures to ensure that all disbursements charged to the federal follow the proper procurement standards and to maintain support for the procurement methods used. Management Response: The Organization is reviewing and modifying the Purchase Requisition and Purchase Order Policy to reflect current practices more accurately, update federal regulations and associated purchase thresholds. In addition, the Organization is improving internal procedures to manage requisition submittals which reach thresholds that would dictate multiple bid submittals as well as ensure an annual training of the Organization?s management and purchasers on policy parameters.

Criteria: Per procurement standards, nonfederal entities other than States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. Per 2 CFR Section 200.319, procurement expenditures require documentation over the bidding process. Condition: During our testing of contracts above $25,000 to ensure that vendors are properly vetted to not be on the SAM.gov debarred vendors listing we noted no support showing that vendors were reviewed against the debarred vendors listing prior to entering into a contract. Questioned costs: N/A Context: During our testing of contracts above $25,000 to ensure that vendors are properly vetted to not be on the SAM.gov debarred vendors listing we noted no support showing that vendors were reviewed against the debarred vendors listing prior to entering into a contract. Cause: General error in lack of vendor verification due to lack of an oversight process in place. Effect: Debarred vendors could be used without proper verification. Recommendation: We recommend that the Organization implement processes and procedures to ensure that all vendors are reviewed against the debarred vendors listing prior to entering into the contract. Management Response: The Organization currently utilizes a third-party vendor, Compliatric, to screen vendors in accordance with SAM.gov requirements on a routine basis. However, a procedure does not currently exist to ensure 100% of new vendors are entered into this separate system. A procedure is being developed to ensure that all new vendors are entered into Compliatric and screening is completed prior to entering into a contract.

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