Anderson Valley Health Center IncNon-Profit

Finding 2022-001 Delay in Financial Reporting Audit Finding: Management is responsible for providing timely and accurate financial information. The Center is required to submit the Data Collection Form and the reporting package to the Federal Audit Clearinghouse and the State Controller?s Office, which include the Basic Financial Statements of the Center within the earlier of 30 days after receipt of the auditor?s report, or nine months after the end of the audit period. The Center has experienced delays in the preparation and issuance of the year ended June 30, 2022 basic financial statements and its Single Audit required under Union Guidance. Corrective Action Plan: Due to AVHC's remote location, small size and FQHC status, we have found it extremely challenging to hire accounting staff with the required skills and knowledge to manage our unique organization, so we have successfully outsourced our accounting department for many years. However, when our former outsourced company sold to a large corporation, we began to experience a decline in services. Deadlines were not being met, yet costs were increasing 50% to 100%. In December 2022, a local FQHC began providing accounting services for us under a shared service agreement. Unfortunately, the FY22 audit was not complete at the time of the transition, and though we were under contract with the former consultant to complete the audit work, they were ultimately unable to complete the audit. Staff under the new agreement did not have access to critical historical data required to complete the last few outstanding items, increasing the amount of time to address them. Since FY22 audit work was not part of the new agreement, adequate staffing was not in place to manage the additional work. Management understands how important it is to meet the annual audit deadline. The plan for attaining and maintaining compliance consists of the following actions, many of which are in place: ? Review monthly processes to ensure workpapers are audit ready and that minimal adjustments are required after June financials have been issued. ? Manage staffing levels to ensure experienced staff are available to work with auditors during the annual audit period. ? Identify staff responsible for assisting with audit preparation and conduct regular training to ensure they can efficiently prepare requested documents and address auditor requests. ? Adhere to a pre-planned schedule with built-in time for unexpected delays. ? Begin planning for each audit six months prior to the end of the fiscal year: o Reach out to the selected auditor in January for an Engagement Letter, a PBC list, and to schedule fieldwork. o o Actively work with vendors to ensure all FY invoices are entered no later than the end of July so that a Trial Balance and other initially requested documents are provided to auditors no later than August 15. o o Staff assigned to assist with audit preparation are directed to prioritize audit work from July 1 until completion of audited financials. They will prioritize all requests from auditors, including document and sample requests and responding to questions. o o Any deviation from interim deadlines is to be communicated between accounting staff and auditors for resource planning on both sides. o o Weekly meetings will be scheduled between Management, accounting staff and audit staff at any point that the audit seems to be falling behind the planned schedule, to work through any issues as efficiently as possible. We are confident that full implementation of, and continuing attention to, these measures will ensure we complete future audits on time, beginning with FY23. Responsible Person: Christie MacVitie, CFO Expected Implementation Date: September 5, 2023

Finding 2020-001 Special Test and Provisions ? Internal Control over Sliding Fee Discounts Program Information of the Federal Program: Catalog of Federal Domestic Assistance(?CFDA?) Number:93.224 CFDA Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Federal Award Number and Award Year: H80CS22682; 2020 Audit Finding: During our testing of the Center?s sliding fee discount program, 14 out of 40 sliding fees tested were not SFS applications but incorrectly using SFS code. Corrective Action Plan: The 14 instances in which the SFC code was incorrectly used followed the implementation of a new policy granting discounts to patients who pay their fees on the day service is provided. Contracted billing consultants incorrectly chose the Sliding Fee Discount adjustment code when recording the credit to the patient accounts, rather than the correct adjustment code. This issue has been addressed via billing huddles and training for our contractors as well as billing staff. The correct code is now being used, though the improperly coded transactions were not retroactively corrected in the system. In addition to the review process in place, Management will now require a quarterly audit of 10% of all Sliding Fee Discount adjustments and will verify the coding posted to eCW during the quarter under audit. The audit will include review of each application to ensure proper approval was obtained and confirmation that the correct discount was applied so that the patient was charged the correct fee. In the event the audit uncovers improper Sliding Fee adjustments were made, an additional 10% of the transactions will be audited, up to 100% of all transactions, and the incorrect adjustments will be corrected. Additionally, all employees authorized to post Sliding Fee Discount adjustments to the system each year will be required to read the Sliding Fee Discount Program Policy and Procedure around April 1, each year, when the new Federal Poverty Guidelines are implemented. Staff will also be required to verify that the system is charging the correct fee to the patient, by verifying the fee calculated by the system against the printed schedule, at the time adjustments are posted. Responsible Person: Chief Operations Officer Expected Implementation Date: November 2021

2019-001

2019-001 Special Tests and Provisions ? Internal Control over Sliding Fee Discounts Program Information of the Federal Program: Catalog of Federal Domestic Assistance (?CFDA?) Number: 93.224 CFDA Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Federal Award Number and Award Year: H80CS22682; 2019 Audit Finding: During the performance of the year-end audit, we noted there are two separate instances where the sliding fee discounts were not correctly applied: ? In one instance, a patient was given less sliding fee discount that he/she should have received. Based on the patient?s family size and household income level, the patient was qualified to receive more sliding fee discount and should have been put on a lower sliding scale. However, the patient was incorrectly put on a higher sliding scale. ? In another instance, a patient received more sliding fee discount that he/she should have received. The patient received dental services from the Center. However, the patient was incorrectly charged with the nominal fee associated with medical services. The nominal fee for medical services was lower than the nominal fee for dental services. Corrective Action Plan: AVHC includes language in its Financial Policies & Procedures requiring all applications be reviewed by supervisory staff to ensure the accurate Sliding Fee category has been selected; however, this was not practiced consistently throughout FY18-19. AVHC will comply with that provision 100% of the time by routing every Sliding Fee Discount Program application to the COO for review. Further, the COO will also verify that the correct Sliding Fee category is selected in the Practice Management system for each approved applicant. Responsible Person: Fabiola Cornejo, Chief Operations Officer Expected Implementation Date: This was implemented January 1, 2020

2019-002 Cash Management ? Internal Control over Reimbursement Information of the Federal Program: Catalog of Federal Domestic Assistance (?CFDA?) Number: 93.224 CFDA Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Federal Award Number and Award Year: H80CS22682; 2019 Audit Finding: During year end single audit testing, we noted a instance where a contractors? medical supplies expense was submitted twice, one on the contractor?s invoice to the Center, and another one as a separate reimbursement request, both has the same invoice attached. The Center did not go through proper review procedure and reimbursed the contractor twice, resulting the Center over-drawing from federal awards. Corrective Action Plan: The same expense was reimbursed twice because they were reimbursed via two separate methods and in two separate amounts. The expense was first claimed on a vendor invoice, with no invoice support attached, and then submitted again on an Expense Report. The amount claimed on the invoice consisted of the base product amount, before sales tax and a discount, while the amount claimed on the Expense Report was for the total amount of the invoice. In order to make it easier to detect these types of situations in the future, AVHC will amend the Financial Policies & Procedures to include the requirements that invoice copies for reimbursement on vendor invoices must be included with the invoice in order to be paid, and that all expense reimbursements, regardless of the means by which they are submitted, will require an original invoice in order to be reimbursed. Responsible Person: Judith Waterman, Chief Financial Officer and Erica Cooperrider, Accounts Payable Expected Implementation Date: This procedure was implemented January 1, 2020, and the updated Financial Policy will be approved during the March Board meeting (March 5, 2020).