Valle Del Sol, Inc.Non-Profit

During our compliance testing of sliding fee discounts for the Organization, there was one instance in which the sliding fee encounter did not have a corresponding sliding fee scale application on file. We note that the compliance finding was immaterial to the program overall.

During our compliance testing of sliding fee discounts for the Organization, there was one instance in which the sliding fee was calcuated incorrectly. We note that the compliance finding was immaterial to the program overall.

Audit adjustments were necessary to correct errors in the current year consolidated financial statements totaling $3,662,932. The current period adjustments were related to an increase in accrued liabilities of approximately $3,662,932 resulting in a decrease in net income of $3,662,932.

Recommendation: Management’s close supervision and review is the best means to ensure all requirements are met. We recommend implementation of a second level independent review over the demographic data and income verification information entered into the patient billing system in order to ensure the financial classification is correct.

Recommendation: Eligibility determination should be reviewed thoroughly by Management since Management will ultimately send invoices to Mercy Care for reimbursement.

Recommendation: Management is and will encourage communication with the granting agency to confirm that all rates used for reimbursement are accurate.

Criteria: Complete controls over financial reporting include the ability to prepare consolidated financial statements and accompanying notes to the consolidated financial statements and the consolidated schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As auditors, we were requested to draft the consolidated financial statements from data provided by Valle del Sol, Inc. and Subsidiary. The data included material misstatements which, if not corrected through audit adjustments, would have resulted in consolidated financial statements that were materially misstated. Additionally, as part of audit procedures, we identified misstatements, including approximately $53,000 of expenditures related to the year ended June 30, 2021 for Assistance Listing No. 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services, which, if not corrected, would have resulted in the consolidated schedule of expenditures of federal awards to be materially misstated. Cause: Valle del Sol, Inc. and Subsidiary has limited staff to prepare full disclosure consolidated financial statements. In addition, there has been turnover in management and accounting. Valle del Sol, Inc. and Subsidiary prepared the consolidated SEFA, however there were errors identified as a result of audit procedures. Effect: There was material misstatement to the consolidated financial statements and consolidated SEFA that may not have been identified without assistance of auditors. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that Valle del Sol, Inc. and Subsidiary is aware of this condition on financial reporting purposes. Management should continually be aware of the financial accounting and reporting of Valle del Sol, Inc. and Subsidiary and changes in the accounting and reporting requirements. Steps should be developed to ensure that all new funding sources are evaluated by management for inclusion or exclusion from the consolidated SEFA. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal controls requires all expenditures to be properly approved in a timely manner. Condition: The following internal control issues were identified: ? 32 out of 60 expenditures tested lacked timely approval of employees? actual time spent on the program. ? 12 out of 60 expenditures tested lacked employee signatures for certification of actual time spent on the program. Cause: Due to the implementation of policy change occurring during the fiscal year, the new policy was implemented retrospectively. This resulted in an untimely approval process compared to when the expenditures were incurred. Effect: Improper expenses may be paid and allocated to the federal programs or allocated at the wrong amount. Questioned Costs: $0 Context/Sampling: 60 transactions out of 525 total transactions were selected for testing which accounted for $355,918 of $1,537,938 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend Valle del Sol, Inc. and Subsidiary?s management implement a process that ensure review of actual hours for time spent to be billed to the program is completed timely and all time and effort certifications are signed by the respective employees. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal controls requires all expenditures to be properly approved in a timely manner. In addition, all expenditures charged to federal programs are required to be allowable costs under the program and allocated in accordance with Valle del Sol, Inc. and Subsidiary?s cost allocation plan. Condition: The following conditions were identified: ? 36 out of 60 expenditures tested lacked timely approval of employees? actual time spent on the program. ? 5 out of 60 expenditures tested lacked employee signatures for certification of actual time spent on the program. ? 6 out of 60 expenditures tested were based on estimated fringe benefits. When compared to actual fringe benefits incurred, the amounts allocated to the program exceeded actual costs incurred. Cause: Due to the implementation of policy change occurring during the fiscal year, the new policy was implemented retrospectively. This resulted in an untimely approval process compared to when the expenditures were incurred. Additionally, due to an oversight by management, fringe benefits allocated to the program were based on predetermined budgets rather than actual fringe benefits incurred. Effect: Improper expenses may be paid and allocated to the federal programs or allocated at the wrong amount. Questioned Costs: Projected at approximately $34,000 Context/Sampling: A nonstatistical sample of 60 transactions out of 3,362 total transactions were selected for testing which accounted for $132,188 of $2,417,262 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend Valle del Sol, Inc. and Subsidiary?s management implement a process that ensure review of actual hours for time spent to be billed to the program is completed timely and all time and effort certifications are signed by the respective employees and management implement a process that allows for actual fringe benefits to be billed to the program. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to charge patients under this program using a sliding fee scale that is based on the patient?s income levels and household size and retain supporting documentation of the patient?s income levels and household size. Condition: The following conditions were identified: ? Six out of 60 patients were being charged an incorrect sliding fee rate. ? One out of 60 patients lacked supporting documentation of income levels and household size. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, sliding fee rates were incorrectly calculated and documentation over patient levels and household size were not retained. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. The amount reimbursed is not impacted by the sliding fee collected. Context/Sampling: A nonstatistical sample of 60 patients out of 836 patients on the sliding fee scale were selected for testing. Repeat Finding from Prior Year: Yes. Recommendation: Implement internal controls over verifying income and applying correct sliding fee rate, in addition to retaining supporting documentation. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal control depends on review with respect to the execution and recording of transactions, as well as the custody of Valle del Sol, Inc. and Subsidiary?s assets. Condition: During the year ended June 30, 2022 the following conditions were identified: ? CFDA 93.224: Valle del Sol, Inc. and Subsidiary submitted and received reimbursement for an expenditure for one program within another. The error was subsequently corrected within the same fiscal year. ? CFDA 93.829: One of four cash drawdowns tested lacked supporting documentation of management?s review prior to submission. Cause: Oversight by Valle del Sol, Inc. and Subsidiary. Effect: Lack of adequate and timely review could result in cash drawdowns being materially misstated and noncompliant with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. Context/Sampling: CFDA 93.224 - A nonstatistical sample of four cash drawdowns out of 14 were selected for testing. CFDA 93.829 - A nonstatistical sample of four cash drawdowns out of 12 were selected for testing. Repeat Finding from Prior Year: No. Recommendation: Implement internal controls to ensure expenditures included in cash drawdown requests are for the program. Views of Responsible Officials: Management agrees with the finding.

Criteria: The Organization is required to create a written procurement, suspension, and debarment policy that complies with applicable federal requirements and to follow this policy when procuring goods and services. Condition: During testing performed, it was determined estimates, quotes, closed bids, etc. were not obtained prior to entering into contracts as follows: Health Center Program Cluster o Two covered transactions. o During testing performed, two contracts entered into excluded provisions required by Appendix II of 2 CFR Part 200. Section 223 o Two covered transactions. Cause: Due to oversight by Valle del Sol, Inc. and Subsidiary. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the procurement guidelines under the Uniform Guidance. Questioned Costs: None reported. Context/Sampling: The following nonstatistical samples were tested: Health Center Program o Two of five covered transactions. Section 223 o Two of six covered transactions. Repeat Finding from Prior Year: No. Recommendation: We recommend the Organization adhere to their formal policy when acquiring goods and services. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to submit federal financial reports in accordance with established requirements and should be reviewed by management prior to submission to ensure accuracy. Condition: Although the reports were reviewed in accordance with the internal controls, one of two reports tested did not agree to supporting documentation by approximately $6,600. Cause: Oversight by Valle del Sol, Inc. and Subsidiary. Effect: Inaccurate reporting could result in noncompliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None Context/Sampling: A nonstatistical sample of two reports of five were selected for testing. Repeat Finding from Prior Year: No. Recommendation: Have management routinely review and consider modifications that would strengthen the internal controls surrounding the reporting process. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to report information that are complete, accurate, and is supported by underlying documentation. Condition: One out of 4 reports tested lacked supporting documentation for information reported in the Uniform Data System (UDS) report. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, documentation over information included in the UDS report was not retained. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 reports out of 19 reports were selected for testing. Repeat Finding from Prior Year: No. Recommendation: Implement internal controls over retaining supporting documentation. Views of Responsible Officials: Management agrees with the finding.

Criteria: Complete controls over financial reporting include the ability to prepare the consolidated schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As part of audit procedures, we identified a material misstatement of the consolidated schedule of expenditures of federal awards. Cause: Valle del Sol, Inc. and Subsidiary prepared the consolidated SEFA, however there was an error identified for a federal program that was incorrectly excluded. Effect: There was a material misstatement to the consolidated schedule of expenditures of federal awards that may not have been identified without assistance of auditors. Recommendation: Management should be continually be aware of the financial accounting and reporting of Valle del Sol, Inc. and Subsidiary and changes in the accounting and reporting requirements. Steps should be developed to ensure all that all new funding sources are evaluated by management for inclusion or exclusion from the consolidated schedule of expenditures of federal awards. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with Valle del Sol, Inc. and Subsidiary?s cost allocation plan. Condition: 37 out of 60 expenditures tested lacked the required documentation to support that the hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgets. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, detailed timecards were not retained supporting actual time spent rather than predetermined budgets. Effect: Improper expenses may be paid and allocated to the federal program or allocated at the wrong amount. Questioned Costs: Employees? time allocated to the program could be over or understated compared to actual time worked on the program by an amount that has not been determined. Total payroll expenditures were $943,129. Context/Sampling: A nonstatistical sample of 60 transactions out of 562 total transactions were selected for testing which accounted for $377,474 of $1,533,320 total federal program expenditures. Repeat Finding from Prior Year: Yes. Recommendation: We recommend Valle del Sol, Inc. and Subsidiary?s management implement a process that allows for actual hours for time spent to be billed to the program and ensure that supporting documents are retained. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to charge patients under this program using a sliding fee scale that is based on the patient?s income levels and household size. Condition: Three out of 60 patients were being charged an incorrect sliding fee rate. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, sliding fee rates were incorrectly calculated. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. The amount reimbursed is not impacted by the sliding fee collected. Context/Sampling: A nonstatistical sample of 60 patients out of 740 patients on the sliding fee scale were selected for testing. Repeat Finding from Prior Year: Yes. Recommendation: Implement internal controls over verifying income and applying correct sliding fee rate. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal control depends on an adequate segregation of duties with respect to the execution and recording of transactions, as well as the custody of Valle del Sol, Inc. and Subsidiary?s assets. Accordingly, a complete system of internal control should be designed such that these functions are performed by different individuals, so that no one individual handles a transaction from its inception to its completion. Condition: During the year ended June 30, 2021, Valle del Sol, Inc. and Subsidiary had one employee compiling, reviewing, and submitting cash drawdown requests. Cause: Valle del Sol, Inc. and Subsidiary has limited staff to prepare, review, and submit cash drawdown requests. Effect: Cash drawdowns could be misstated and result in noncompliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of two cash drawdowns out of six were selected for testing. Repeat Finding from Prior Year: No. Recommendation: Implement internal controls to establish segregation of duties regarding cash management processes. Views of Responsible Officials: Management agrees with the finding.

Criteria: The Organization is required to create a written procurement, suspension, and debarment policy that complies with applicable federal requirements and to follow this policy when procuring goods and services. Additionally, the procurement process shall include a verification check of vendor suspension or debarment for transactions exceeding $25,000 as required by 2 CFR Part 200.214. Condition: During testing performed, it was determined that there was no documentation retained regarding verification of vendor suspension or debarment for three covered transactions in the sample selection. Cause: Due to employee turnover, the Organization was unable to recover documentation regarding verification of vendor suspension or debarment. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the procurement guidelines under the Uniform Guidance. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of four expenditures out of 11 were selected for testing. Repeat Finding from Prior Year: No. Recommendation: We recommend the Organization adhere to their formal policy when acquiring goods and services. Views of Responsible Officials: Management agrees with the finding.

Criteria: Complete controls over financial reporting include the ability to prepare consolidated financial statements and accompanying notes to the consolidated financial statements and the consolidated schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As auditors, we were requested to draft the consolidated financial statements from data provided by Valle del Sol, Inc. and Subsidiary. The data included material misstatements which, if not corrected through audit adjustments, would have resulted in consolidated financial statements that were materially misstated. Additionally, the consolidated schedule of expenditures of federal awards were completed by the auditors with data provided by Valle del Sol, Inc. and Subsidiary. Cause: Valle del Sol, Inc. and Subsidiary has limited staff to prepare full disclosure consolidated financial statements and there has been turnover in management and accounting. Effect: There is a reasonable possibility that Valle del Sol, Inc. and Subsidiary would not be able to draft the consolidated financial statements and consolidated schedule of expenditures of federal awards that are correct without assistance of auditors. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that Valle del Sol, Inc. and Subsidiary is aware of this condition on financial reporting purposes. Management and the board of directors should continually be aware of the financial accounting and reporting of Valle del Sol, Inc. and Subsidiary and changes in the accounting and reporting requirements. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with Valle del Sol, Inc. and Subsidiary?s cost allocation plan. Condition: Nine out of 60 expenditures tested lacked the required support to show that the hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgets. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, detailed timecards were not retained supporting actual time spent rather than predetermined budgets. Effect: Improper expenses may be paid and charged to the federal program or charged at the wrong amount. Questioned Costs: Employees? time charged to the program could be over or understated compared to actual time worked on the program by an amount that has not been determined. Total payroll expenditures were $1,099,050. Context/Sampling: A nonstatistical sample of 60 transactions out of 354 total transactions were selected for testing which accounted for $201,930 of $1,281,798 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend Valle del Sol, Inc. and Subsidiary?s management implement a process that allows for actual hours for time spent to be billed to the program and ensure that supporting documents are retained. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to charge patients under this program using a sliding fee scale that is based on the patient?s income levels and household size. Condition: Two out of 60 patients were being charged an incorrect sliding fee rate. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, sliding fee rates were incorrectly calculated. Effect: Valle del Sol, Inc. and Subsidiary is not in compliance with the guidelines under the terms and conditions of the grant. Questioned Costs: None reported. The amount reimbursed is not impacted by the sliding fee collected. Context/Sampling: A nonstatistical sample of 60 patients out of 520 patients on the sliding fee scale were selected for testing. Repeat Finding from Prior Year: No. Recommendation: Implement internal controls over verifying income and applying correct sliding fee rate. Views of Responsible Officials: Management agrees with the finding.

Criteria: Valle del Sol, Inc. and Subsidiary is required to maintain written documentation of procurement, suspension, and debarment for vendors when procuring goods or services. Also, the internal controls require that a competitive bid/negotiation process be completed to establish a preferred vendor. In addition, award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: We identified the following internal control issues: ? 2 out of 2 expenditures tested lacked approval that the vendor was checked for suspension and debarment. Based on testing performed, vendor was not suspended or debarred. ? 2 out of 2 expenditures did not have documentation of how the bidding process was completed. Cause: Due to an oversight by Valle del Sol, Inc. and Subsidiary, management did not maintain documentation of procurement, and did not check for suspension and debarment. Effect: Valle del Sol, Inc. and Subsidiary is not compliant with federal regulations for procurement which could result with Valle procuring goods or services with vendors that are not allowed. Questioned Costs: Unknown, but contracts exceeding $10,000 totaled $49,248. Context/Sampling: Two of two contracts over $10,000. Repeat Finding from Prior Year: Yes. Recommendation: As an enhancement to controls over compliance, we recommend that Valle del Sol, Inc. and Subsidiary consider modification or implementation of policies and procedures that would strengthen internal controls surrounding the procurement requirements and the management of these requirements. Views of Responsible Officials: Management agrees with the finding.

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