Redwood Coast Medical ServicesNon-Profit

Criteria or Specific Requirement: Pursuant to the Accounts Payable and Purchasing Process narrative from RCMS, three key controls are noted as obtaining an authoritative signature on non-service purchase orders, authoritative initials on invoices and an authoritative signature on checks; two authoritative signatures for check amounts greater than $500. Condition: Forty samples were selected for our internal control and compliance testing over non-payroll expenses. We noted four conditions in which internal controls were not correctly in effect as follows: ? Nine of the sample selections were missing purchase orders. ? Three of the sample selections with purchase orders were missing an authoritative signature. ? All forty invoices were missing authoritative initials. ? A purchase order was allocated twice as an expense to a grant. Cause: The Accounts Payable and Purchasing Process changed due to RCMS? response to the Covid-19 pandemic. Responsible officials were now allowed to approve purchase orders and invoices via email or phone which resulted in there being no authoritative signatures on the purchase orders or authoritative initials on invoices. RCMS did not update their Accounts Payable and Purchasing Process narrative to reflect these changes. Effect or Potential Effect: The deficiency in internal control to review and approve purchase orders and invoices put RCMS at increased risk in not allowing management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. The purchase order allocated twice as an expense to a grant has no effect on financial reporting or compliance. This instance indicates an inefficiency in the manual calculation and lack of secondary review of the expense allocation, which puts RCMS at increased risk in not allowing management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. Questioned Costs: No questioned cost noted. Context: Statistical sampling was performed to draw sample selections. See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that RCMS strengthen its policies and procedures surrounding the Accounts Payable and Purchasing Process in order to prevent, or detect and correct, misstatements on a timely basis. RCMS should have a secondary review on the manual calculation and allocation of expenses to grants.

Information of the Federal Program: See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): Pursuant to OMB August 2020 Compliance Requirement for CFDA 93.224 Health Center Program Cluster, - Special Tests and Provisions ? 1. Sliding Fee Discounts, health centers must prepare and apply a sliding fee discount schedule (?SFDS?) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient?s ability to pay, family size and income for individuals and families. Condition: Forty samples were selected for our internal control and compliance testing over the sliding fee discounts program. We noted there are three separate instances where the sliding fee discounts were not correctly applied: ? In one instance, a patient was given a lower 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 a higher sliding fee discount and should have been put on a lower sliding scale. However, the patient was incorrectly put on a higher sliding scale due to wrong family size input. Redwood Coast Medical Services, Inc. Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2020 34 Section III ? Federal Awards Findings (Continued) A. Current Year Findings and Questioned Costs ? Major Federal Award Program Audit (Continued) Finding 2020-002 Special Test and Provisions ? Internal Control over Sliding Fee Discounts Program Information of the Federal Program: (Continued) Condition: (Continued) ? In the second instance, a patient was given a higher 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 a lower sliding fee discount and should have been put on a higher sliding scale. However, the patient was incorrectly put on a lower sliding scale due to wrong family size input. ? In the third instance, a patient was given a higher 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 a lower sliding fee discount and should have been put on a higher sliding scale. However, the patient was incorrectly put on a lower sliding scale due to wrong annual income level input. Cause: The Center does not have an adequate review process in place to ensure the sliding fee discount applied are accurately determined and applied. Effect or Potential Effect: The deficiency in internal control to review its sliding scale determination put RCMS at increased risk in providing patients with sliding fee discounts that are not based on the patients? ability to pay, family size and income for individuals and families. The absence of an appropriate review process may result in RCMS not being in compliance with grant requirements. Questioned Costs: No questioned cost noted. Context: Statistical sampling was performed to draw sample selections. See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that RCMS strengthen its policies and procedures surrounding the sliding fee program in order to properly determine and document the patients? eligibility in the program. RCMS should have a secondary review on the sliding fee application forms and sliding fee discount applied.