EIN: 942301551
UEI: GSA_MIGRATION
Audited by: ST GROUP P.C.
Oversight agency: 93 [Department of Health and Human Services]
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Data as of September 2, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on November 14, 2021. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by May 14, 2022 (1574 days ago).
What is a management decision? →Condition ? The Organization has implemented a companywide budget, and the accounting staff meets regularly during the last fiscal year. However, there is still a lack of adequate budget monitoring as current liabilities exceed current assets by approximately $760k at the end of June 30, 2020, and an increase from last year's variance of approximately $684k. Criteria ? Monitoring procedures should allow management to effectively compare operating results to budget and identify areas where revenue collection efforts improved and/or costs controlled. Effect? Monitoring procedures are not followed to allow management to compare operating results to budget effectively. This has resulted in actual costs and actual revenues variances to the budget, which resulted in a deficit balance in the net assets. Cause? Monitoring of budget procedures is performed in an incomplete or irregular method. This has hindered management's ability to respond timely and effectively to revenue collection and/or to monitor costs incurred. Questioned Costs? n/a Repeat finding?Yes Recommendation? To ensure proper budget monitoring, financial information should be provided that allows management to effectively monitor actual results to budget in a timely and efficient manner. An annual budget for the Organization should be evaluated regularly, and any differences in expectations explained. This process should be documented to ensure the procedures will be performed regularly.
Show full finding ▾Hide full finding ▴Condition ? The Organization has implemented a companywide budget, and the accounting staff meets regularly during the last fiscal year. However, there is still a lack of adequate budget monitoring as current liabilities exceed current assets by approximately $760k at the end of June 30, 2020, and an increase from last year's variance of approximately $684k. Criteria ? Monitoring procedures should allow management to effectively compare operating results to budget and identify areas where revenue collection efforts improved and/or costs controlled. Effect? Monitoring procedures are not followed to allow management to compare operating results to budget effectively. This has resulted in actual costs and actual revenues variances to the budget, which resulted in a deficit balance in the net assets. Cause? Monitoring of budget procedures is performed in an incomplete or irregular method. This has hindered management's ability to respond timely and effectively to revenue collection and/or to monitor costs incurred. Questioned Costs? n/a Repeat finding?Yes Recommendation? To ensure proper budget monitoring, financial information should be provided that allows management to effectively monitor actual results to budget in a timely and efficient manner. An annual budget for the Organization should be evaluated regularly, and any differences in expectations explained. This process should be documented to ensure the procedures will be performed regularly.
Y2020-2 (Going Concern) Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: County of Los Angeles Department of Health Services Category of Finding: Allowable Cost/Cost Principles CFDA No: 93.959 Recommendation- To ensure proper monitoring of the budget, financial information should be provided that allows management to effectively monitor actual results to budget in a timely and efficient manner. An annual budget for the Organization should be evaluated regularly, and any differences in expectations explained. This process should be documented to ensure the procedures will be performed on a regular basis. Views of Responsible Officials and Corrective Action: CHCADA understands the importance of budget monitoring to ensure cost effectiveness. Under new Executive Management, CHCADA will be implementing a variety of internal processes in accordance to GAAP to ensure proper monitoring as well as identify/implement early actions to prevent unnecessary losses. Responsible Individual: Cristina Torres Implementation Date: 01/2022
2019-001
Condition? Our review of documentation for payroll taxes revealed late submission of payroll taxes to the IRS and EDD, which resulted in penalties assessed for the year ended June 30, 2020. The Organization is a semimonthly depositor; however, payroll taxes were not remitted timely. The payroll taxes for the quarter ended September 30, 2018, and December 31, 2018, amounted to approximately $420,000, and are not fully remitted as of September 5, 2021. The Organization?s delinquent payroll tax liability stands at $65,873 as of June 30, 2020 and has not been paid as of September 5, 2021. Criteria? The federal income, social security, and Medicare taxes must be withheld and deposited to United States Treasure (that is, trust fund taxes). The trust fund recovery penalty may apply if taxes are withheld and not deposited or paid to the United States Treasury. If these unpaid taxes can't be immediately collected from the Organization, the trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. For more information, see section 11 of Pub. 15. Cause? The Organization?s deteriorated cash flow situation contributed to delinquent payroll tax remittance. Effect? There is an increased risk that the Organization is in violation of the IRS Code and sanctions for violating the code. Questioned Costs? estimated $295,000 Repeat finding? Yes Recommendation? The Organization should carefully review all of its payment options, including working out a payment plan as soon as possible to avoid sanctions and further violation of the code.
Show full finding ▾Hide full finding ▴Condition? Our review of documentation for payroll taxes revealed late submission of payroll taxes to the IRS and EDD, which resulted in penalties assessed for the year ended June 30, 2020. The Organization is a semimonthly depositor; however, payroll taxes were not remitted timely. The payroll taxes for the quarter ended September 30, 2018, and December 31, 2018, amounted to approximately $420,000, and are not fully remitted as of September 5, 2021. The Organization?s delinquent payroll tax liability stands at $65,873 as of June 30, 2020 and has not been paid as of September 5, 2021. Criteria? The federal income, social security, and Medicare taxes must be withheld and deposited to United States Treasure (that is, trust fund taxes). The trust fund recovery penalty may apply if taxes are withheld and not deposited or paid to the United States Treasury. If these unpaid taxes can't be immediately collected from the Organization, the trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. For more information, see section 11 of Pub. 15. Cause? The Organization?s deteriorated cash flow situation contributed to delinquent payroll tax remittance. Effect? There is an increased risk that the Organization is in violation of the IRS Code and sanctions for violating the code. Questioned Costs? estimated $295,000 Repeat finding? Yes Recommendation? The Organization should carefully review all of its payment options, including working out a payment plan as soon as possible to avoid sanctions and further violation of the code.
Y2020-3 (Delinquent Payroll Taxes) Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: County of Los Angeles Department of Health Services Category of Finding: Allowable Cost/Cost Principles CFDA No: 93.959 Recommendation- The Organization should carefully review all of its payment options, including working out a payment plan as soon as possible to avoid sanctions and further violation of the code. Views of Responsible Officials and Corrective Action: Payroll taxes for the quarter ending September 30, 2018, and December 31, 2018, were a consequence of decisions from the Department of Mental Health. The department canceled cash advances to CHCADA, contrary to contract requirements by federal law. The graveness decision by the Department of Mental Health is the practice of holding year end cost reports for a period of 7-10 years. The department is recently provided CHCADA Interim Settlements one dated May 31 2021 in the amount of$ 133,740 covering Fiscal Years 2008-2017 and the other dated July 7, 2021 in the amount of $133,818 covering Fiscal Year 2017-2018. Both Interim Settlement amounts have not been received by CHCADA, currently sitting in Long Term Receivables. An Interim settlement from the same department is pending for Fiscal Year 2018-2019 in the amount of $191,893.69 for a total outstanding amount from DMH of $459,51.69. CHCADA canceled the DMH contract on November 2018 because of its decisions not to follow federal law and insensitivity towards this non profit. CHCADA is working with an assigned IRS agent to agree on a payment plan on the remainder balance. All secured payroll taxes for Q3 and Q4 of 2018 have been paid in full. All payroll taxes after those periods are current. Responsible Individual: Cristina Torres Implementation Date: 10/2021
2019-002
FAC accepted this audit on November 8, 2020 — management decision was due May 8, 2021.
Condition ?The Organization has implemented a companywide budget, and the accounting staff meets regularly during the last fiscal year. However, the is a lack of adequate monitoring of budget as current liabilities exceeding current assets by approximately $600k at the end of June 30, 2019. Furthermore, it was noted the total variance between the budget and the Organization?s actual results for the year ended June 30, 2019, is approximately 2 million dollars. For example, the Organization budgeted for the retirement expenses of $255,391, the pension plan has not been funded for a prolonged time. The Rent expense budget of $328,151 compared to actual rent of approximately $480,000, shows a variance of about 32%. Criteria ? Monitoring procedures should allow management to effectively compare operating results to budget and identify areas where revenue collection efforts improved and/or costs controlled. Effect? Monitoring procedures are not followed to allow management to effectively compare operating results to budget. This has resulted in actual costs and actual revenues variances to the budget, which resulted in a deficit balance in the net assets. Cause? Monitoring of budget procedures are performed in an incomplete or irregular method. This has hindered management's ability to respond in a timely and effective manner to revenue collection and/or to monitor costs incurred. Questioned Costs? n/a Repeat finding? No Recommendation? To ensure proper monitoring of budget, financial information should be provided that allows management to effectively monitor actual results to budget in a timely and efficient manner. An annual budget for the Organization should be evaluated regularly and any differences in expectations explained. This process should be documented to ensure the procedures will be performed on a regular basis.
Show full finding ▾Hide full finding ▴Condition ?The Organization has implemented a companywide budget, and the accounting staff meets regularly during the last fiscal year. However, the is a lack of adequate monitoring of budget as current liabilities exceeding current assets by approximately $600k at the end of June 30, 2019. Furthermore, it was noted the total variance between the budget and the Organization?s actual results for the year ended June 30, 2019, is approximately 2 million dollars. For example, the Organization budgeted for the retirement expenses of $255,391, the pension plan has not been funded for a prolonged time. The Rent expense budget of $328,151 compared to actual rent of approximately $480,000, shows a variance of about 32%. Criteria ? Monitoring procedures should allow management to effectively compare operating results to budget and identify areas where revenue collection efforts improved and/or costs controlled. Effect? Monitoring procedures are not followed to allow management to effectively compare operating results to budget. This has resulted in actual costs and actual revenues variances to the budget, which resulted in a deficit balance in the net assets. Cause? Monitoring of budget procedures are performed in an incomplete or irregular method. This has hindered management's ability to respond in a timely and effective manner to revenue collection and/or to monitor costs incurred. Questioned Costs? n/a Repeat finding? No Recommendation? To ensure proper monitoring of budget, financial information should be provided that allows management to effectively monitor actual results to budget in a timely and efficient manner. An annual budget for the Organization should be evaluated regularly and any differences in expectations explained. This process should be documented to ensure the procedures will be performed on a regular basis.
We are in agreement, CHCADA understands the importance of budget monitoring to ensure cost effectiveness. Therefore the budgets will be reviewed at least twice a year; November and March. CHCADAs plan is to evaluate the budget in appropriate times in accordance to the expenditures and make the adjustments as needed. This process will only be effective on contracts that are based on actual cost, in regards to the fee-for-service contracts, CHCADA has to ensure accessibility and availability of services, therefore financials for those contracts will be reviewed against productivity. Regarding fee-for-service contracts, there is no way to anticipate the volume of clients that will be referred in any coming years, this is based on outreach, advertisement, social media and others. This insecurity puts in jeopardy every fee-for-services contract. Implementation Date 01/2021, Responsible Official James Z. Hernandez.
Condition? Our review of documentation for payroll taxes revealed late submission of payroll taxes to IRS and EDD, which resulted in approximately $70,000 of penalties assessed for the year ended June 30, 2019. The Organizations is a semi-monthly depositor, however payroll taxes for the quarters March 31, 2018 and June 30, 2018 were paid in September 2018 and October 2018, respectively. The payroll taxes for the quarter ended September 30, 2018 and December 31, 2018 amounted approximately to $420,000, and are not fully remitted as of October 31, 2020. The Organization?s total payroll tax liabilities stands at $653,007 as of end June 30, 2019 and represent an increase of $366,941 from the last year, June 30, 2018, balance of $286,065. Criteria? The federal income, social security, and Medicare taxes must be withheld and deposited to United States Treasure (that is, trust fund taxes). If taxes are withheld and not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. If these unpaid taxes can't be immediately collected from the Organization, the trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. For more information, see section 11 of Pub. 15. Cause? The Organization?s deteriorated cash flow situation contributed to delinquent payroll tax remittance. Effect? There is an increased risk that the Organization is in violation of IRS Code and sanctions for violation of the code. Questioned Costs? estimated $350,000 Repeat finding? Yes Recommendation? The Organization should carefully review all of its payment options including working out a payment plan as soon as possible to avoid sanctions and further violation of the code.
Show full finding ▾Hide full finding ▴Condition? Our review of documentation for payroll taxes revealed late submission of payroll taxes to IRS and EDD, which resulted in approximately $70,000 of penalties assessed for the year ended June 30, 2019. The Organizations is a semi-monthly depositor, however payroll taxes for the quarters March 31, 2018 and June 30, 2018 were paid in September 2018 and October 2018, respectively. The payroll taxes for the quarter ended September 30, 2018 and December 31, 2018 amounted approximately to $420,000, and are not fully remitted as of October 31, 2020. The Organization?s total payroll tax liabilities stands at $653,007 as of end June 30, 2019 and represent an increase of $366,941 from the last year, June 30, 2018, balance of $286,065. Criteria? The federal income, social security, and Medicare taxes must be withheld and deposited to United States Treasure (that is, trust fund taxes). If taxes are withheld and not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. If these unpaid taxes can't be immediately collected from the Organization, the trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. For more information, see section 11 of Pub. 15. Cause? The Organization?s deteriorated cash flow situation contributed to delinquent payroll tax remittance. Effect? There is an increased risk that the Organization is in violation of IRS Code and sanctions for violation of the code. Questioned Costs? estimated $350,000 Repeat finding? Yes Recommendation? The Organization should carefully review all of its payment options including working out a payment plan as soon as possible to avoid sanctions and further violation of the code.
CHCADA agrees with the recommendation. CHCADA has begun negotiations with the IRS on a payment plan and an "Offer of Compromise" Implementation Date 06/2021, Responsible Official James Z. Hernandez.
2018-003
Condition? Our review of written documentation underlying several loan advances by key employees, to cover the Organization?s expenditures during the cash liquidity crisis, found them undocumented. Criteria?The Organization should establish and maintain effective internal control policies and procedures to ensure written documents are specifying the terms of the note payable agreements between the Organization and related-party upper management. The written contracts should document the agreed-upon terms and the business purpose of borrowed funds. Cause? The Organization?s review procedures to identify and document all loan advances were ineffective. Effect? There is an increased risk that the Organization did not recognize all the loan advances appropriately. Such advances may not have been appropriately approved by an appropriate officer or by the board of directors. Also, the balances may be unduly large or old. Questioned Costs? n/a Repeat finding? Yes Recommendation? To help ensure both parties understand their obligations and that the Organization complies with laws and regulations, we recommend documenting the terms of the borrowing arrangements in the written format. Related-party transactions are often scrutinized quite firmly by the IRS and may be disallowed if the amounts and the business purpose are not identifiable.
Show full finding ▾Hide full finding ▴Condition? Our review of written documentation underlying several loan advances by key employees, to cover the Organization?s expenditures during the cash liquidity crisis, found them undocumented. Criteria?The Organization should establish and maintain effective internal control policies and procedures to ensure written documents are specifying the terms of the note payable agreements between the Organization and related-party upper management. The written contracts should document the agreed-upon terms and the business purpose of borrowed funds. Cause? The Organization?s review procedures to identify and document all loan advances were ineffective. Effect? There is an increased risk that the Organization did not recognize all the loan advances appropriately. Such advances may not have been appropriately approved by an appropriate officer or by the board of directors. Also, the balances may be unduly large or old. Questioned Costs? n/a Repeat finding? Yes Recommendation? To help ensure both parties understand their obligations and that the Organization complies with laws and regulations, we recommend documenting the terms of the borrowing arrangements in the written format. Related-party transactions are often scrutinized quite firmly by the IRS and may be disallowed if the amounts and the business purpose are not identifiable.
Interim Loan agreements are in place, the final loan agreements are being prepared by Mr. Hernandez's trust attorney, the process has been delayed due to the current health pandemic, COVID-19. Implementation Date 06/2021, Responsible Official James Z. Hernandez.
2018-004
FAC accepted this audit on September 19, 2019 — management decision was due March 19, 2020.
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2017-102
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2017-106
FAC accepted this audit on October 25, 2018 — management decision was due April 25, 2019.
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2016-002
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FAC accepted this audit on October 25, 2017 — management decision was due April 25, 2018.
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