Audit 329124

2023-002 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period ending September 30, 2022. Compliance Requirement: Cash Management Criteria and Condition: Under the terms of the grant agreement with the Oregon Health Authority (OHA), HIV Alliance was required to expend advance funding within the grant period ending September 30, 2022. Any unspent funds were required to be returned to OHA within 15 days following the end of the grant period. HIV Alliance has not complied with this requirement. Context: $278,644 in advance funds provided to HIV Alliance by Oregon Health Authority (OHA) were not spent during the grant period ending September 30, 2022. HIV Alliance contacted OHA to begin the process to return the funds in February 2023. HIV Alliance and OHA communicated intermittently until a final amount to be returned was settled on and an invoice from OHA was provided on August 22, 2023. The invoice for the unspent funds was paid on September 19, 2023. Cause: The stipulated 15-day period for the return of unspent funds for finalizing grant accounts and determining the exact amount of unspent funds is an administrative challenge. This short timeframe, coupled with insufficient procedural guidelines within the organization for grant closure and reconciliation processes prior to the deadline, contributed to the delay in initiating the return of unspent funds. Effect: Funds were not returned to OHA within the required timeframe. Recommendation: Engage in dialogue with OHA to discuss the practicality of the current 15-day period for returning unspent funds and advocate for a more realistic timeframe that allows for accurate finalization of grant accounts. Maintain regular communication with awarding agencies to promptly address any potential underspending of advanced grant funds. Management's Response: 15 days is not a practical requirement and will be a significant administrative burden to comply with if it is maintained in future grant agreements. Steps will be taken to mitigate the administrative burden as much as possible and close out grants more quickly in order to comply with the requirement.

2023-003 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirement: Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.446 Interest states that costs incurred for interest on borrowed capital are unallowable. HIV Alliance included interest expense in reported allowable costs. Context: Unallowable interest expense transactions, totaling approximately $6,000, were not properly excluded from costs to be paid with federal funds. Cause: In the June reconciliation of total program expenses to allowable expenses, interest expense was not removed, resulting in interest expense being funded with federal awards. This reconciliation process had been effectively identifying and excluding unallowable costs up to that point. Internal controls in place were not sufficient to prevent or detect and correct this error. Effect: Small amounts of unallowable costs were funded with federal awards and may result in the requirement to reimburse these funds. Additionally, this could increase the risk of future non-compliance if corrective actions are not taken. Recommendation: Processes and procedures should be implemented to strengthen the grant expense reconciliation process and also implement review processes to ensure all unallowable costs are consistently identified and excluded. Management's Response: Processes will be designed to incorporate management reviews of grant invoices and reported expenses.

2023-004 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirements: Allowable Activities and Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.303 Internal Controls requires grantees to establish and maintain internal controls sufficient to provide reasonable assurance of compliance with applicable statutes, regulations, and terms and conditions of Federal awards. Internal controls related to the review and approval of non-payroll costs were not operating effectively throughout the grant period. Context: Twenty-five non-payroll expenses were selected for testing. The invoice for one of the selected items could not be located; as such, no evidence was available to demonstrate the operation of review and approval controls. The provided invoice and support for two additional items selected for testing did not show evidence of being reviewed. The three items were not determined to be instances of noncompliance as the information avaliabe was sufficient to demonstrate compliance with allowable activity and allowable cost requirements. Cause: Processes and procedures were not sufficient to ensure that evidence of the performance of internal controls was readily available for all grant expenditures. Effect: If not reviewed and approved according to HIV Alliance's policies, unallowable activities and costs could be funded with federal awards and result in instances of noncompliance. Recommendation: Processes and procedures should be reviewed and strengthened to ensure all controls are appropriately documented and available for review by internal and external parties at a later date. Management's Response: Processes will be implemented and monitored to ensure all expenses include evidence of the review and approval procedures performed.

2023-002 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period ending September 30, 2022. Compliance Requirement: Cash Management Criteria and Condition: Under the terms of the grant agreement with the Oregon Health Authority (OHA), HIV Alliance was required to expend advance funding within the grant period ending September 30, 2022. Any unspent funds were required to be returned to OHA within 15 days following the end of the grant period. HIV Alliance has not complied with this requirement. Context: $278,644 in advance funds provided to HIV Alliance by Oregon Health Authority (OHA) were not spent during the grant period ending September 30, 2022. HIV Alliance contacted OHA to begin the process to return the funds in February 2023. HIV Alliance and OHA communicated intermittently until a final amount to be returned was settled on and an invoice from OHA was provided on August 22, 2023. The invoice for the unspent funds was paid on September 19, 2023. Cause: The stipulated 15-day period for the return of unspent funds for finalizing grant accounts and determining the exact amount of unspent funds is an administrative challenge. This short timeframe, coupled with insufficient procedural guidelines within the organization for grant closure and reconciliation processes prior to the deadline, contributed to the delay in initiating the return of unspent funds. Effect: Funds were not returned to OHA within the required timeframe. Recommendation: Engage in dialogue with OHA to discuss the practicality of the current 15-day period for returning unspent funds and advocate for a more realistic timeframe that allows for accurate finalization of grant accounts. Maintain regular communication with awarding agencies to promptly address any potential underspending of advanced grant funds. Management's Response: 15 days is not a practical requirement and will be a significant administrative burden to comply with if it is maintained in future grant agreements. Steps will be taken to mitigate the administrative burden as much as possible and close out grants more quickly in order to comply with the requirement.

2023-003 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirement: Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.446 Interest states that costs incurred for interest on borrowed capital are unallowable. HIV Alliance included interest expense in reported allowable costs. Context: Unallowable interest expense transactions, totaling approximately $6,000, were not properly excluded from costs to be paid with federal funds. Cause: In the June reconciliation of total program expenses to allowable expenses, interest expense was not removed, resulting in interest expense being funded with federal awards. This reconciliation process had been effectively identifying and excluding unallowable costs up to that point. Internal controls in place were not sufficient to prevent or detect and correct this error. Effect: Small amounts of unallowable costs were funded with federal awards and may result in the requirement to reimburse these funds. Additionally, this could increase the risk of future non-compliance if corrective actions are not taken. Recommendation: Processes and procedures should be implemented to strengthen the grant expense reconciliation process and also implement review processes to ensure all unallowable costs are consistently identified and excluded. Management's Response: Processes will be designed to incorporate management reviews of grant invoices and reported expenses.

2023-004 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirements: Allowable Activities and Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.303 Internal Controls requires grantees to establish and maintain internal controls sufficient to provide reasonable assurance of compliance with applicable statutes, regulations, and terms and conditions of Federal awards. Internal controls related to the review and approval of non-payroll costs were not operating effectively throughout the grant period. Context: Twenty-five non-payroll expenses were selected for testing. The invoice for one of the selected items could not be located; as such, no evidence was available to demonstrate the operation of review and approval controls. The provided invoice and support for two additional items selected for testing did not show evidence of being reviewed. The three items were not determined to be instances of noncompliance as the information avaliabe was sufficient to demonstrate compliance with allowable activity and allowable cost requirements. Cause: Processes and procedures were not sufficient to ensure that evidence of the performance of internal controls was readily available for all grant expenditures. Effect: If not reviewed and approved according to HIV Alliance's policies, unallowable activities and costs could be funded with federal awards and result in instances of noncompliance. Recommendation: Processes and procedures should be reviewed and strengthened to ensure all controls are appropriately documented and available for review by internal and external parties at a later date. Management's Response: Processes will be implemented and monitored to ensure all expenses include evidence of the review and approval procedures performed.