Waimanalo Health CenterNon-Profit

Item 2025-001 - Special Tests and Provisions - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00646-23-07, 2 H80CS00646-24-01, 1 H8LCS51923-01-00 for 2024 and 2025, 1 H8NCS54043-01-00 for 2025 - (Significant Deficiency) Criteria: US Code Title 42, The Public Health and Welfare Act, Section 254b requires health centers to prepare and apply a sliding fee discount schedule so that the amounts owed for health center services by eligible patients are adjusted or discounted based on the patient's ability to pay. Waimanalo Health Center's policy requires that sliding fee discount be modified on an annual basis based on the federal poverty level after the board's approval. Statement of condition: During our audit, we noted that the Center did not properly determine the sliding fee discount for one eligible patient, based on information provided during the patient registration process. Cause: Improper determination and application of sliding fee discount based on the Center's eligibility criteria. Effect or Potential Effect: Failure to properly apply the sliding fee discount resulted in a patient being charged incorrectly. Questioned costs: None. Context: One out of sixty samples tested was incorrectly slid. Identification as a repeat finding: This is a repeat of prior year's finding (Finding 2024-004). Recommendation: We recommend that the Center provide training to all personnel involved in determining patients’ sliding fee discounts. In addition, we recommend that an internal audit of a sample of patient charts be conducted periodically to verify that sliding fee scale discounts or categories are properly and accurately determined based on the information provided by patients. Finally, we recommend that the results of such internal audits be formally documented. Management response: Management agrees with the finding and will be establishing policies and procedures and conducting training for all personnel involved in determining patients' sliding fee discounts to help ensure the accuracy of the process. Management will also implement an internal audit of a sample of patient charts and will ensure that such audits are properly documented.

Item 2025-002 - Procurement, Suspension and Debarment - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00646-23-07, 2 H80CS00646-24-01, 1 H8LCS51923-01-00 for 2024 and 2025, 1 H8NCS54043-01-00 for 2025 - (Significant Deficiency) Criteria: Recipients and subrecipients are subject to the procurement, suspension and debarment regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. The Center's policy is to conduct a monthly exclusion search for all its employees and contractors and requires that all searches are documented within the personnel file in the Human Resource system. Statement of condition: During our audit, we noted that certain employees have no record of an exclusion search conducted during 2025. There were also certain employees for whom an exclusion search was not consistently conducted on a monthly basis. Cause: Inconsistent application of the internal control. Effect or Potential Effect: Failure in implementing the exclusion search raises the risk that salaries of employees who are suspended or debarred may be charged to the program. Questioned costs: None Context: Two out of sixty samples tested did not have any exclusion searches on file during 2025. Three out of sixty samples did not have exclusion searches done on a monthly basis in 2025. However, none of the sixty samples tested were found to be suspended or debarred. Identification as a repeat finding: This is a repeat of prior year's finding (Finding 2024-005). Recommendation: We recommend that the Center train its personnel in relation to the exclusion screening and proper documentation thereof and that the Center conduct regular reviews to ensure the completeness of exclusion search documentation. Management response: Management agrees with the finding and will be conducting training for its personnel to help ensure the accuracy, completeness and timeliness of exclusion searches.

Item 2024-004 - Special Tests and Provisions - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00646-22-03, 2 H80CS005646-23-00, 4 H8GCS48213-01-01, 1 H8LCS51923-01-00 for 2023 and 2024 - (Material Weakness) Criteria: US Code Title 42, The Public Health and Welfare Act, Section 254b requires health centers to prepare and apply a sliding fee discount schedule so that the amounts owed for health center services by eligible patients are adjusted or discounted based on the patient's ability to pay. Waimanalo Health Center's policy requires that sliding fee discount be modified on an annual basis based on the federal poverty level after the board's approval.   Statement of condition: During our audit, we noted that the Center did not properly determine the sliding fee discount of certain eligible patients based on information provided during the patient registration process. Cause: Improper determination and application of sliding fee discount based on the Center's eligibility criteria. Effect: Failure to properly apply the sliding fee discount resulted in certain patients being charged incorrect amounts. Questioned costs: None Context: 1 sample patient with 4 sample visits was incorrectly slid. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Center conduct training of all of its personnel who are involved in determining the sliding fee scale of patients. We also recommend that an internal audit of a sample of patient charts be conducted periodically to ensure that patients' sliding fee scale discounts or category is properly and accurately determined based on information provided by patients. Finally, we recommend that such internal audit be documented. Management response: Management agrees with the finding and will be establishing policies and procedures and conducting training for all personnel involved in determining patients' sliding fee scale to help ensure the accuracy of the process. Management will also implement an internal audit of a sample of patient charts and will ensure that such audits are properly documented.

Item 2024-005 - Procurement, Suspension and Debarment - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00646-22-03, 2 H80CS005646-23-00, 4 H8GCS48213-01-01, 1 H8LCS51923-01-00 for 2023 and 2024 - (Significant Deficiency) Criteria: Recipients and subrecipients are subject to the procurement, suspension and debarment regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. The Center's policy is to conduct a monthly exclusion search for all its employees and contractors and requires that all searches are documented within the personnel file in the Human Resource system.   Statement of condition: During our audit, we noted that certain employees have no record of an exclusion search conducted during 2024. There were also certain employees for whom an exclusion search was not consistently conducted on a monthly basis. Cause: Inconsistent application of the internal control. Effect: Failure in implementing the exclusion search raises the risk that salaries of employees who are suspended or debarred may be charged to the program. Questioned costs: None Context: Five out of forty samples tested did not have any exclusion searches on file during 2024. Three out of forty samples did not have exclusion searches done on a monthly basis in 2024. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Center train its personnel in relation to the exclusion screening and proper documentation thereof and that the Center conduct regular reviews to ensure the completeness of exclusion search documentation. Management response: Management agrees with the finding and will be conducting training for its personnel to help ensure the accuracy, completeness and timeliness of exclusion searches.

Finding No. 2023-004 – Late Submission of the Center’s Single Audit to the Federal Audit Clearinghouse

Finding No. 2023-004 – Late Submission of the Center’s Single Audit to the Federal Audit Clearinghouse

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria – Management is responsible for the preparation and fair presentation of financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. Condition – Subsequent to the issuance of the audited financial statements of the Center as of and for the year ended June 30, 2021, management determined that cash, accounts receivable, patient service revenue, and grant and contract revenue were overstated as the financial statements were not properly adjusted for the reconciling items. Net assets released from donor restrictions was also understated as amounts were not properly released in the prior year. Cause – A lack of investigation of reconciling items and overall review of reconciliations caused errors to be undetected. Effect or Potential Effect – For the year ended June 30, 2021 cash and patient service revenue was overstated by $226,520, grants and contracts receivable was overstated by $166,541, refundable advance was overstated by $53,210, grants and contract revenue was overstated by $97,302, and contributions with donor restrictions was overstated by $16,029. Net assets released from donor restrictions was understated by $107,435 and the total change in total net assets was overstated by $339,851. Questioned Costs – None. Repeat Finding – Similar to Findings 2021-001 and 2020-001. Recommendation – The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Reconciling and long outstanding balances should be investigated prior to the completion of monthly reconciliations, with supporting documentation of such investigation maintained for future reference. A secondary review of all reconciliations and journal entries with corresponding supporting documents should be performed to verify accuracy and completeness. Views of Responsible Officials and Planned Corrective Actions – Refer to the corrective action plan.

Criteria ? 2 CFR 200.515, Audit reporting, states the auditor must determine and provide an opinion (or disclaimer of opinion) on whether the financial statements of the auditee are presented fairly in all material respects in accordance with generally accepted accounting principles (or a special purpose framework such as cash, modified cash, or regulatory as required by state law). Condition ? The audit as of and for the year ended June 30, 2021 resulted in more than a dozen adjusting journal entries of significance to the financial statements. The adjustments were for such matters as: ? Accruing revenue for services provided prior to year-end but billed subsequent to yearend. ? Reconciling balances, such as the accounts receivable, prepaid insurance, inventory, and accrued payroll accounts, per the general ledger to the detail. ? Adjusting the contractual allowance. ? Adjusting depreciation to reconcile to the fixed assets subledger. ? Adjusting beginning net asset balances to roll prior year account balances forward. ? Recognizing interest expense on the capital lease obligation. ? Adding additional grants to the Schedule of Expenditures of Federal Awards. The net impact of the adjusting entries identified during the audit is material to the financial statements. Due to the size and volume of the adjustments, this deficiency is considered a material weakness as, without these adjustments, the financial statements of the Center would have been materially misstated. Effect or Potential Effect ? Financial statements provided to the funding agencies and other third-parties would be materially misstated and not present the proper financial condition or operating results of the Center. Cause ? The Center continued to deal with the turnover in several key positions, including the Chief Financial Officer and Controller in 2020. Also, a lack of review or preparation of adjustments and reconciliations being performed during the year caused errors to go undetected. Questioned Costs ? None. Repeat Finding ? Similar to Finding 2020-001. Recommendation ? The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. A secondary review of all reconciliations and journal entries should be performed to verify accuracy and completeness. The expenditures in the Schedule of Expenditures of Federal Awards should also be reconciled to the expenditures in the general ledger and such reconciliation reviewed and approved. Views of Responsible Officials and Planned Corrective Actions ? Refer to the corrective action plan.

Criteria ? 2 CFR 200.515, Audit reporting, states the auditor must determine and provide an opinion (or disclaimer of opinion) on whether the financial statements of the auditee are presented fairly in all material respects in accordance with generally accepted accounting principles (or a special purpose framework such as cash, modified cash, or regulatory as required by state law). Condition ? The audit as of and for the year ended June 30, 2020 resulted in more than a dozen adjusting journal entries of significance to the financial statements. The adjustments were for such matters as: ? Accruing revenue for services provided prior to year-end but billed subsequent to yearend ? Reconciling balances, such as the accounts receivable, prepaid insurance, inventory, and accrued payroll accounts, per the general ledger to the detail ? Adjusting the contractual allowance ? Recording depreciation for items purchased during the year ? Recording the loss on impairment of an investment ? Adjusting deferred revenue for amounts that were incorrectly recognized as revenue ? Recognizing interest expense on the capital lease obligation ? Correcting entries posted in error during the year The net impact of the adjusting entries identified during the audit is material to the financial statements. Due to the size and volume of the adjustments, this deficiency is considered a material weakness as, without these adjustments, the financial statements of the Center would have been materially misstated. Effect or Potential Effect ? Financial statements provided to the funding agencies and other third-parties would be materially misstated and not present the proper financial condition or operating results of the Center. Cause ? The Center had turnover in several key positions, including the Chief Financial Officer and Controller during the year with no transition from the prior individuals to the incoming individuals. Due to the turnover, monthly account reconciliations were not performed and required journal entries were not posted to the general ledger. Recommendation ? The material account balances should be reconciled on a monthly basis and any adjusting entries documented and recorded. Reconciling the balance per the general ledger to the supporting detail on a monthly basis is a key internal control to ensure that the account balances are properly stated and the resulting financial statements are not materially misstated. Views of Responsible Officials and Planned Corrective Actions ? Refer to the corrective action plan.