Inner City Health Center

Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition and context: During our testing we noted two instances where the Organization was unable to provide documentation that the request for payment was approved prior to the drawdown date. In both instances we also noted that a portion of the funds drawn down had yet to have costs incurred to support drawing down those funds. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being drawn down prior to the costs being incurred by the Organization. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend that the Organization create effective internal controls and procedures over the cash management process and drawdowns of federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: The Organization will review grant requirements and make sure that drawdown terms are followed and that a review will take place over any drawdowns prior to requesting the funds.

Criteria or specific requirement: Per §200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per the Organization's Additions to Property, Plant and Equipment Policy, Expenditures for tangible assets used actively in business operations with a cost exceeding $5,000 and with a useful life exceeding two years should be capitalized. Also per §200.313, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Condition and context: The Organization does not have a process in place to identify equipment and real property that is purchased with federal funds. Effect: The auditor noted instances of noncompliance. Noncompliance results in the federal interest in the assets acquired with federal grants not being properly tracked. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend that the Organization create effective internal controls and procedures over the purchase of Federally Funded Equipment and Real Property and a tracking methodology to properly identify equipment purchased with federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants. Views of responsible officials: An updated Purchasing Policy was approved by the Organization that covers this finding. In addition, a PO Process was established where pre-approvals are needed and a line item for grants is available to distinguish general operating expenditures from federally funded expenditures.

Criteria or specific requirement: According to § 2 CFR 200.303 Internal controls, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to 2 CFR 200.1 Period of Performance is defined as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Condition and context: During our testing we noted three instances where the Organization allocated allowable expenses incurred outside of the period of performance dates. Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being used outside of the grant period. Questioned costs: $53,077 Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend the Organization update their method of allocating expenditures to federal awards based on invoice date to ensure the incurred date is within the proper period of performance. Views of responsible officials: The Organization will review grant requirements and make sure that allowable costs are incurred and allocated to the grant within the grant period.

Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Organization should have internal controls designed to ensure compliance with these provisions. Condition and context: During our testing over Procurement and Suspension and Debarment noted the following findings:  The Organization’s procurement policy is not in compliance with requirements defined by 2 CFR 200.  There were three instances in which the Organization was unable to locate documentation to support that bids were obtained for a procurement transaction.  There were three instances where the Organization did not perform the suspension and debarment check prior to entering into a transaction with a vendor.Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds possibly being paid to an ineligible vendor. Questioned costs: None identified. Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award. Recommendation: We recommend the Organization review and update its procurement policy to ensure the policy meets the federal requirements and implement a process to ensure that procurement and suspension and debarment documentation is retained. Views of responsible officials: The Organization will update its procurement policy to be in line with federal requirements. The Organization will also review its controls to make sure that procurement and suspension and debarment documentation is retained.