Audit 320795

Finding 2023-001 – Internal Control over Financial Reporting – Allowable Costs U.S. Department of Health and Human Services, Passed through the Pennsylvania Department of Health Immunization Cooperative Agreements, ALN 93.268 Allowable Costs Condition: The Foundation did not have adequate procedures in place to ensure that all costs submitted to the Pennsylvania Department of Health (DOH) were allowable. Close monitoring of invoices was performed by DOH, resulting in repeated requests to adjust invoicing of grant costs to remove unallowable costs. This cycle of submission and rejection went on for many months, elongating the reimbursement process. During our compliance testing, we noted three of twenty-five expenditures charged to the federal grant and selected for detailed testing that were determined to be unallowable costs. These unallowable costs were also identified by the DOH during their invoice review. Total federal expenditures between 2021 and 2023 were $2,549,344. Of this amount, expenditures totaling $1,049,850 have been reviewed in totality and ultimately approved by the DOH as allowable costs, after corrections were made by the Foundation. Remaining federal expenditures incurred in 2023 of $1,499,494 are pending DOH approval. Based on previously identified unallowable costs, we acknowledge there could be additional unallowable costs as the DOH reviews and approves invoices relating to the remaining 2023 federal expenditures. The amount of potential unallowable costs cannot be quantified. As was understood by the Foundation to be the case from grant inception, the DOH intends to review each monthly invoice to ensure 100% of costs are allowable, and will not move forward to the next month until the month under review is corrected by the Foundation and approved by DOH for reimbursement. Criteria: The Foundation administered the federal 93.268 grant passed through from the Pennsylvania Department of Health and therefore committed to following the internal control and compliance regulations set forth in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: The Foundation does not have internal controls in place to ensure adequate review of allowable costs for the DOH grant. Effect: The Foundation was not in compliance with allowable costs. As described above, significant effort was required on the part of the Foundation to invoice and make corrections and re-submit and significant effort was required on the part of DOH to monitor the grant submissions. This resulted in significant delays in the receipt of additional grant reimbursements by the Foundation and negatively impacted the Foundation’s cash flows. Questioned costs: Unknown. Context: 100% testing by DOH to date has indicated systemic issues. Our sampling resulted in similar findings. DOH intends to do a 100% test of all transactions. Repeat Finding from Prior Year: No. Recommendation: We recommend that management establish procedures to ensure that all costs charged to the grant are appropriately reviewed and determined allowable per the grant agreement, ideally before even being incurred but certainly before being invoiced to the DOH. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2023-001 – Internal Control over Financial Reporting – Allowable Costs U.S. Department of Health and Human Services, Passed through the Pennsylvania Department of Health Immunization Cooperative Agreements, ALN 93.268 Allowable Costs Condition: The Foundation did not have adequate procedures in place to ensure that all costs submitted to the Pennsylvania Department of Health (DOH) were allowable. Close monitoring of invoices was performed by DOH, resulting in repeated requests to adjust invoicing of grant costs to remove unallowable costs. This cycle of submission and rejection went on for many months, elongating the reimbursement process. During our compliance testing, we noted three of twenty-five expenditures charged to the federal grant and selected for detailed testing that were determined to be unallowable costs. These unallowable costs were also identified by the DOH during their invoice review. Total federal expenditures between 2021 and 2023 were $2,549,344. Of this amount, expenditures totaling $1,049,850 have been reviewed in totality and ultimately approved by the DOH as allowable costs, after corrections were made by the Foundation. Remaining federal expenditures incurred in 2023 of $1,499,494 are pending DOH approval. Based on previously identified unallowable costs, we acknowledge there could be additional unallowable costs as the DOH reviews and approves invoices relating to the remaining 2023 federal expenditures. The amount of potential unallowable costs cannot be quantified. As was understood by the Foundation to be the case from grant inception, the DOH intends to review each monthly invoice to ensure 100% of costs are allowable, and will not move forward to the next month until the month under review is corrected by the Foundation and approved by DOH for reimbursement. Criteria: The Foundation administered the federal 93.268 grant passed through from the Pennsylvania Department of Health and therefore committed to following the internal control and compliance regulations set forth in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: The Foundation does not have internal controls in place to ensure adequate review of allowable costs for the DOH grant. Effect: The Foundation was not in compliance with allowable costs. As described above, significant effort was required on the part of the Foundation to invoice and make corrections and re-submit and significant effort was required on the part of DOH to monitor the grant submissions. This resulted in significant delays in the receipt of additional grant reimbursements by the Foundation and negatively impacted the Foundation’s cash flows. Questioned costs: Unknown. Context: 100% testing by DOH to date has indicated systemic issues. Our sampling resulted in similar findings. DOH intends to do a 100% test of all transactions. Repeat Finding from Prior Year: No. Recommendation: We recommend that management establish procedures to ensure that all costs charged to the grant are appropriately reviewed and determined allowable per the grant agreement, ideally before even being incurred but certainly before being invoiced to the DOH. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding. See separate Corrective Action Plan.