Audit 334379

MW2020-005 SUBRECIPIENT MONITORING (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-002) Condition The auditee failed to comply with federal regulations requiring the monitoring of subrecipients for federal awards. Recipients of federal awards are responsible for monitoring the activities of subrecipients to ensure that they comply with applicable laws, regulations, and the terms and conditions of the federal award. The auditee did not maintain any documentation to demonstrate that they fulfilled this responsibility. This noncompliance with the monitoring requirement could result in the mismanagement of federal funds, including the inappropriate expenditure of funds or the failure to achieve program objectives. Criteria The regulations are documented in 31 USC 7502(f)(2), 2 CFR sections 200.330, .331, and .501(h); (Requirements for Pass-Through Entities). The criteria for monitoring subrecipients of federal awards should be following federal regulations, the terms of the federal contract, and any additional requirements specified by the auditee's policies and procedures. Specifically, the monitoring criteria should include, but not be limited to, the following: • Subrecipient Risk Assessment • Financial Monitoring • Compliance Monitoring • Reporting and Documentation Cause CUAHSI had a policy and procedure manual in place which outlined the steps for monitoring. The was no audit evidence of anyone following it and monitoring that the subrecipient was using the funding as prescribed. There was a lack of management oversight.Effect CUAHSI is not in compliance with the requirements for monitoring and thus creating the possible misuse or improper use of funds. Recommendation The auditor recommends that management review the requirements documented in 31 USC 7502(f)(2), 2 CFR sections 200.330, .331, and .501(h);(Requirements for Pass-Through Entities) and develops and implements procedures to adhere to such requirements. Current Year Status This condition still exists for the year ended December 31, 2020. The monitoring of subrecipients was not completed in a reasonable timeframe in accordance with the policies set forth in the UG. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-006 CASH MANAGEMENT (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019- 003) Condition The cash management process requires that cash draws be reviewed and approved to ensure the propriety of draw reimbursement requests. Management was unable to provide the auditor evidence documenting approval of the drawdowns for the year ended December 31, 2019. Criteria 2 CFR Part 200 states that entities expending federal grants 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 statues, regulations, and the terms and conditions of the Federal award. To comply with 2 CFR Part 200, it is required to submit monthly invoices for the funds received under the federal contract. These invoices will serve as a record of the services or goods provided during the specified period and will facilitate accurate tracking and reporting of the funds. In addition to the invoice, any supporting documentation, such as timesheets, should be maintained with the invoices. The cash management process should also be adjusted for the receipt of program income. These documents validate the services provided and ensure transparency and auditability of the invoiced amount. These amounts should be able to be traced to the general ledger in conjunction with the time in which they are billed. Effect Grant awards and reimbursements may not be recorded correctly and there is a higher risk of error or misappropriation of assets.Cause CUAHSI had no fiscal management team during the year ended December 31, 2019, and that all the books and records for that year had to be recreated from bank statements by and outside bookkeeping company years after the fact. Recommendation The auditor recommends CUAHSI develop and implement controls to ensure an adequate review process is in place for review of reimbursement requests submitted to granting agencies to ensure consistent reporting. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit procedures, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to reconcile the federal award reimbursements and document their review and approval process for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-007 PROCUREMENT, SUSPENSION AND DEBARMENT (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-004) Condition CUAHSI had a policy in place regarding procurement of which they were unable to provide any documentation that they complied with the policy. There was no documentation for one payment made to the Board Member for $15,000. While there were invoices for the remaining amounts, there was no documentation maintained that showed CUAHSI verified expenses were incurred from vendors that were not suspended or debarred. Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. Cause CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect CUAHSI is not in compliance with UG requirements, there could be future legal action, the repayment of funds, loss of reputation and possible suspension or debarment.Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-008 FEDERAL DRAWDOWNS IN ADVANCE OF EXPENDITURES (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-009) Condition Subsequent to the year ended December 31, 2019, CUAHSI drew down approximately $1,300,000 from National Science Foundation (“NSF”) based on information that there was going to be a government shutdown. Federal funds are required to be to be drawn down on a reimbursement basis and not in advance of the expenditures. The funds were not returned to NSF after it became clear that there would not be a government shutdown. Criteria CFR § 200.305 Cash management: This section of the CFR outlines the requirements for the management of cash drawdowns and disbursements of federal funds. Federal funds should be disbursed in a timely manner for allowable costs that have been incurred. Cause CUAHSI had insufficient funds available to “float” operating expenses. Effect Drawing down funds in advance of incurring eligible expenses could lead to non-compliance with federal regulations, such as those outlined in 2 CFR § 200.305. This may result in the need to repay the funds, potential financial penalties, or disqualification from future federal funding.Recommendation The auditor recommends that CUAHSI develops and implements controls over policies consistent with 2 CFR 200.35. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that during 2020, CUAHSI had advance drawdowns totaling $3,610,240 from the NSF. Of this amount, CUAHSI incurred $2,521,926 in eligible expenses for the year ended December 31, 2020. This resulted in $1,088,314 in federal advances as of year-end. The draw downs in excess of revenue recognized during the year ended December 31, 2020 is reported as part of deferred revenue in the accompanying Statement of Financial Position. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-009 PROGRAM INCOME (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019- 011) Condition The use of program income generated through a federally funded program will be governed by the terms and conditions of the federal grant award, or sub-award, are subject to the same allowability requirements in 2 CFR 200 for same award objectives and the regulations at 2 CFR 200.307. Program income is defined as “Gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the federal award during the period of performance” by 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. Program income consists of registration fees collected for training, meetings or workshops and the proceeds from the sale of publications as a result of the federal award during the period of performance. Program income is treated as an additive to the federal funds received by CUAHSI. During a drawdown, program income reduces the amount that is requested to cover reimbursable costs through the Flexible Billing module. This allows program income to be applied to the award before a reimbursement is requested from NSF adding the value of program income received to the awarded amount. Program income reporting is due annually on November 15th. NSF requires that all cumulative program income is reported for all open grants and agreements in the current year. CUAHSI recorded $293,591 of program income for the year ended December 31, 2019. This amount should have been deducted from the grant drawdowns for the year ended December 31, 2019 in accordance with the criteria listed above. There was no audit evidence to support whether the grant revenue was adjusted on the drawdowns. These matters warrant resolution as they may have subsequent adverse impacts. They may ultimately need to be addressed by the oversight agencies. Criteria Pursuant to 2 CFR 200 for award objectives and the regulations at 2 CFR 200.307, program income is defined as “Gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the federal award during the period of performance” by 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.Criteria (continued) CUAHSI lacked comprehensive documentation demonstrating the proper authorization, allocation, and approval processes for the utilization of program income. 2 CFR 200.307 mandates that clear documentation be maintained to support the proper allocation of program income and its alignment with the program's goals. The non-compliance with program income regulations, as outlined in this finding, highlights the need for corrective action to align CUAHSI’s practices with the stipulated regulations. Management's commitment to addressing these issues will play a pivotal role in rectifying the deficiencies identified during the audit. Effect This is a violation of the terms and conditions of the federal contract with the NSF. Noncompliance can lead to penalties, fines, or even termination of the contract. It may also damage CUAHSI’s reputation and future eligibility for federal funding and jeopardize CUAHSI’s ability to secure future grants or contracts from other funding agencies. Granting organizations typically prioritize funding recipients with a track record of compliance and accountability. Cause Lack of resources and detailed attention to the risks, along with circumvention of controls has resulted in weak internal controls, and conflicting or incomplete policies and procedures. Recommendation The auditor recommends that CUAHSI develops and implements controls over policies consistent with 2 CFR 200.307.Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that CUAHSI failed to submit the required Program Income Reporting Worksheet by the required deadline of forty five (45) days after the end of the year to ensure with the program income policies in accordance with the UG for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-005 SUBRECIPIENT MONITORING (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-002) Condition The auditee failed to comply with federal regulations requiring the monitoring of subrecipients for federal awards. Recipients of federal awards are responsible for monitoring the activities of subrecipients to ensure that they comply with applicable laws, regulations, and the terms and conditions of the federal award. The auditee did not maintain any documentation to demonstrate that they fulfilled this responsibility. This noncompliance with the monitoring requirement could result in the mismanagement of federal funds, including the inappropriate expenditure of funds or the failure to achieve program objectives. Criteria The regulations are documented in 31 USC 7502(f)(2), 2 CFR sections 200.330, .331, and .501(h); (Requirements for Pass-Through Entities). The criteria for monitoring subrecipients of federal awards should be following federal regulations, the terms of the federal contract, and any additional requirements specified by the auditee's policies and procedures. Specifically, the monitoring criteria should include, but not be limited to, the following: • Subrecipient Risk Assessment • Financial Monitoring • Compliance Monitoring • Reporting and Documentation Cause CUAHSI had a policy and procedure manual in place which outlined the steps for monitoring. The was no audit evidence of anyone following it and monitoring that the subrecipient was using the funding as prescribed. There was a lack of management oversight.Effect CUAHSI is not in compliance with the requirements for monitoring and thus creating the possible misuse or improper use of funds. Recommendation The auditor recommends that management review the requirements documented in 31 USC 7502(f)(2), 2 CFR sections 200.330, .331, and .501(h);(Requirements for Pass-Through Entities) and develops and implements procedures to adhere to such requirements. Current Year Status This condition still exists for the year ended December 31, 2020. The monitoring of subrecipients was not completed in a reasonable timeframe in accordance with the policies set forth in the UG. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-006 CASH MANAGEMENT (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019- 003) Condition The cash management process requires that cash draws be reviewed and approved to ensure the propriety of draw reimbursement requests. Management was unable to provide the auditor evidence documenting approval of the drawdowns for the year ended December 31, 2019. Criteria 2 CFR Part 200 states that entities expending federal grants 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 statues, regulations, and the terms and conditions of the Federal award. To comply with 2 CFR Part 200, it is required to submit monthly invoices for the funds received under the federal contract. These invoices will serve as a record of the services or goods provided during the specified period and will facilitate accurate tracking and reporting of the funds. In addition to the invoice, any supporting documentation, such as timesheets, should be maintained with the invoices. The cash management process should also be adjusted for the receipt of program income. These documents validate the services provided and ensure transparency and auditability of the invoiced amount. These amounts should be able to be traced to the general ledger in conjunction with the time in which they are billed. Effect Grant awards and reimbursements may not be recorded correctly and there is a higher risk of error or misappropriation of assets.Cause CUAHSI had no fiscal management team during the year ended December 31, 2019, and that all the books and records for that year had to be recreated from bank statements by and outside bookkeeping company years after the fact. Recommendation The auditor recommends CUAHSI develop and implement controls to ensure an adequate review process is in place for review of reimbursement requests submitted to granting agencies to ensure consistent reporting. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit procedures, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to reconcile the federal award reimbursements and document their review and approval process for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-007 PROCUREMENT, SUSPENSION AND DEBARMENT (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-004) Condition CUAHSI had a policy in place regarding procurement of which they were unable to provide any documentation that they complied with the policy. There was no documentation for one payment made to the Board Member for $15,000. While there were invoices for the remaining amounts, there was no documentation maintained that showed CUAHSI verified expenses were incurred from vendors that were not suspended or debarred. Criteria The requirements for this compliance requirement are contained in 2 CFR sections 200.317- 200.326; 48 CFR parts 03, 15, 44, and the clauses at 48 CRF sections 52.244-2, 52.244-5, 52.203-13, 52.203-16 and 52.215-12; agency FAR supplements; 2 CFR part 180; OMB M-18- 18; and the terms and conditions of the federal award. There is a requirement to verify that contractors in covered transactions or any of its vendors are not federally debarred, suspended, or excluded. Cause CUAHSI has a policy in place to meet the procurement requirements but there was no evidence of compliance with that policy. Effect CUAHSI is not in compliance with UG requirements, there could be future legal action, the repayment of funds, loss of reputation and possible suspension or debarment.Recommendation It is recommended that CUAHSI strive to prioritize compliance. CUAHSI should ensure that, to the extent practicable, the use of a competitive procurement process in compliance with 2 CFR section 200/317. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that CUAHSI failed to maintain and provide the proper records and support to document their review of vendor files. Such failure led to non-compliance with the procurement, suspension and debarment policies in accordance with the UG for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-008 FEDERAL DRAWDOWNS IN ADVANCE OF EXPENDITURES (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-009) Condition Subsequent to the year ended December 31, 2019, CUAHSI drew down approximately $1,300,000 from National Science Foundation (“NSF”) based on information that there was going to be a government shutdown. Federal funds are required to be to be drawn down on a reimbursement basis and not in advance of the expenditures. The funds were not returned to NSF after it became clear that there would not be a government shutdown. Criteria CFR § 200.305 Cash management: This section of the CFR outlines the requirements for the management of cash drawdowns and disbursements of federal funds. Federal funds should be disbursed in a timely manner for allowable costs that have been incurred. Cause CUAHSI had insufficient funds available to “float” operating expenses. Effect Drawing down funds in advance of incurring eligible expenses could lead to non-compliance with federal regulations, such as those outlined in 2 CFR § 200.305. This may result in the need to repay the funds, potential financial penalties, or disqualification from future federal funding.Recommendation The auditor recommends that CUAHSI develops and implements controls over policies consistent with 2 CFR 200.35. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that during 2020, CUAHSI had advance drawdowns totaling $3,610,240 from the NSF. Of this amount, CUAHSI incurred $2,521,926 in eligible expenses for the year ended December 31, 2020. This resulted in $1,088,314 in federal advances as of year-end. The draw downs in excess of revenue recognized during the year ended December 31, 2020 is reported as part of deferred revenue in the accompanying Statement of Financial Position. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

MW2020-009 PROGRAM INCOME (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019- 011) Condition The use of program income generated through a federally funded program will be governed by the terms and conditions of the federal grant award, or sub-award, are subject to the same allowability requirements in 2 CFR 200 for same award objectives and the regulations at 2 CFR 200.307. Program income is defined as “Gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the federal award during the period of performance” by 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. Program income consists of registration fees collected for training, meetings or workshops and the proceeds from the sale of publications as a result of the federal award during the period of performance. Program income is treated as an additive to the federal funds received by CUAHSI. During a drawdown, program income reduces the amount that is requested to cover reimbursable costs through the Flexible Billing module. This allows program income to be applied to the award before a reimbursement is requested from NSF adding the value of program income received to the awarded amount. Program income reporting is due annually on November 15th. NSF requires that all cumulative program income is reported for all open grants and agreements in the current year. CUAHSI recorded $293,591 of program income for the year ended December 31, 2019. This amount should have been deducted from the grant drawdowns for the year ended December 31, 2019 in accordance with the criteria listed above. There was no audit evidence to support whether the grant revenue was adjusted on the drawdowns. These matters warrant resolution as they may have subsequent adverse impacts. They may ultimately need to be addressed by the oversight agencies. Criteria Pursuant to 2 CFR 200 for award objectives and the regulations at 2 CFR 200.307, program income is defined as “Gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the federal award during the period of performance” by 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards.Criteria (continued) CUAHSI lacked comprehensive documentation demonstrating the proper authorization, allocation, and approval processes for the utilization of program income. 2 CFR 200.307 mandates that clear documentation be maintained to support the proper allocation of program income and its alignment with the program's goals. The non-compliance with program income regulations, as outlined in this finding, highlights the need for corrective action to align CUAHSI’s practices with the stipulated regulations. Management's commitment to addressing these issues will play a pivotal role in rectifying the deficiencies identified during the audit. Effect This is a violation of the terms and conditions of the federal contract with the NSF. Noncompliance can lead to penalties, fines, or even termination of the contract. It may also damage CUAHSI’s reputation and future eligibility for federal funding and jeopardize CUAHSI’s ability to secure future grants or contracts from other funding agencies. Granting organizations typically prioritize funding recipients with a track record of compliance and accountability. Cause Lack of resources and detailed attention to the risks, along with circumvention of controls has resulted in weak internal controls, and conflicting or incomplete policies and procedures. Recommendation The auditor recommends that CUAHSI develops and implements controls over policies consistent with 2 CFR 200.307.Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that CUAHSI failed to submit the required Program Income Reporting Worksheet by the required deadline of forty five (45) days after the end of the year to ensure with the program income policies in accordance with the UG for the year ended December 31, 2020. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.