Audit 362192

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Program: Ryan White HIV/AIDS Program – Part B (ALN 93.917) Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our testing of the Ryan White Service Delivery program (grant period ending March 31, 2023), we noted that STDC initially submitted a final financial report to the Texas Department of State Health Services (DSHS) – Ryan White Division, reporting $491,993 in contractual expenditures and $69,458 in administrative expenditures. Subsequently, STDC submitted an additional reimbursement request via Form B-13, which included $162,433 in additional contractual costs and $12,153 in administrative costs. Upon review of the supporting documentation for this supplemental submission, we were unable to obtain sufficient appropriate evidence that the additional $12,153 in administrative expenditures were actually incurred. Despite the lack of adequate supporting documentation, the full amount was reimbursed by DSHS. Criteria: In accordance with 2 CFR §200.403(g), to be allowable under a federal award, costs must be adequately documented. Furthermore, §200.302(b)(3) requires recipients of federal funds to maintain records that identify adequately the source and application of funds, and §200.338(a) authorizes federal agencies to disallow costs that are not properly supported or allocable. Cause: STDC did not maintain contemporaneous or sufficient documentation to support administrative costs included in the post-period reimbursement request. Additionally, internal controls over the review and approval of financial reports and supplemental claims (e.g., Form B-13 submissions) were not operating effectively to prevent or detect the inclusion of unsupported expenditures. Effect: As a result, STDC received federal reimbursement for $12,153 in administrative costs without appropriate documentation, constituting noncompliance with federal cost principles. This condition may result in the disallowance of costs and repayment obligations to the funding agency. Recommendation: We recommend that STDC strengthen internal controls related to post-award financial reporting and reimbursement procedures by: • Ensuring that all costs claimed are supported by contemporaneous documentation clearly demonstrating that costs were incurred and allocable; • Establishing a formal review protocol for post-period adjustments, including documentation validation and supervisory sign-off; • Performing reconciliations of claimed expenditures before submission of final or supplemental reports to granting agencies; and • Consulting with DSHS to determine whether corrective action or repayment is necessary regarding the unsupported amount. Questioned Costs: $12,153

Federal Program: Community Services Block Grant (CSBG) – ALN 93.569 Compliance Requirement: Eligibility and Allowable Activities/Costs Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of client case files under the CSBG program, we identified an instance in which services and benefits were provided to a single individual rather than to the household unit, contrary to CSBG program requirements. The intake documentation did not reflect an evaluation or approval at the household level, and the assistance was recorded and delivered as though the individual were the sole service recipient. Under CSBG guidance, eligibility and service determinations are required to be made at the household level, as the program is designed to address the needs of low-income families, not isolated individuals within those families. Criteria: Per 45 CFR §96.30(a) and the U.S. Department of Health and Human Services CSBG Terms and Conditions, recipients must establish eligibility based on household income and provide services that are consistent with the needs of the family unit. In addition, the OMB Compliance Supplement for ALN 93.569 emphasizes that services must be targeted to eligible households to meet statutory intent and federal program objectives. Cause: The condition appears to have resulted from an oversight in case management procedures and a lack of clarity in intake protocols regarding the requirement to document and apply eligibility and benefits at the household level. Effect: Failure to assess and deliver services at the household level may result in noncompliance with CSBG program requirements and introduces the risk of inconsistent or inequitable benefit distribution among clients. If not addressed, this weakness may lead to systemic misapplication of eligibility standards. Recommendation: We recommend that STDC take the following steps to ensure compliance with CSBG eligibility and service delivery requirements: • Reinforce federal guidance through staff training for intake personnel and case managers, emphasizing that services must be assessed and provided based on household eligibility; • Update intake procedures and forms to ensure complete documentation of household composition, income, and eligibility status; • Implement periodic internal file reviews to verify that household-level eligibility determinations are consistently applied and properly documented in client records. Questioned Costs: None (isolated instance)

Federal Program: Community Services Block Grant (CSBG) – ALN 93.569 Compliance Requirement: Eligibility and Allowable Activities/Costs Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of client case files under the CSBG program, we identified an instance in which services and benefits were provided to a single individual rather than to the household unit, contrary to CSBG program requirements. The intake documentation did not reflect an evaluation or approval at the household level, and the assistance was recorded and delivered as though the individual were the sole service recipient. Under CSBG guidance, eligibility and service determinations are required to be made at the household level, as the program is designed to address the needs of low-income families, not isolated individuals within those families. Criteria: Per 45 CFR §96.30(a) and the U.S. Department of Health and Human Services CSBG Terms and Conditions, recipients must establish eligibility based on household income and provide services that are consistent with the needs of the family unit. In addition, the OMB Compliance Supplement for ALN 93.569 emphasizes that services must be targeted to eligible households to meet statutory intent and federal program objectives. Cause: The condition appears to have resulted from an oversight in case management procedures and a lack of clarity in intake protocols regarding the requirement to document and apply eligibility and benefits at the household level. Effect: Failure to assess and deliver services at the household level may result in noncompliance with CSBG program requirements and introduces the risk of inconsistent or inequitable benefit distribution among clients. If not addressed, this weakness may lead to systemic misapplication of eligibility standards. Recommendation: We recommend that STDC take the following steps to ensure compliance with CSBG eligibility and service delivery requirements: • Reinforce federal guidance through staff training for intake personnel and case managers, emphasizing that services must be assessed and provided based on household eligibility; • Update intake procedures and forms to ensure complete documentation of household composition, income, and eligibility status; • Implement periodic internal file reviews to verify that household-level eligibility determinations are consistently applied and properly documented in client records. Questioned Costs: None (isolated instance)

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Program: Ryan White HIV/AIDS Program – Part B (ALN 93.917) Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our testing of the Ryan White Service Delivery program (grant period ending March 31, 2023), we noted that STDC initially submitted a final financial report to the Texas Department of State Health Services (DSHS) – Ryan White Division, reporting $491,993 in contractual expenditures and $69,458 in administrative expenditures. Subsequently, STDC submitted an additional reimbursement request via Form B-13, which included $162,433 in additional contractual costs and $12,153 in administrative costs. Upon review of the supporting documentation for this supplemental submission, we were unable to obtain sufficient appropriate evidence that the additional $12,153 in administrative expenditures were actually incurred. Despite the lack of adequate supporting documentation, the full amount was reimbursed by DSHS. Criteria: In accordance with 2 CFR §200.403(g), to be allowable under a federal award, costs must be adequately documented. Furthermore, §200.302(b)(3) requires recipients of federal funds to maintain records that identify adequately the source and application of funds, and §200.338(a) authorizes federal agencies to disallow costs that are not properly supported or allocable. Cause: STDC did not maintain contemporaneous or sufficient documentation to support administrative costs included in the post-period reimbursement request. Additionally, internal controls over the review and approval of financial reports and supplemental claims (e.g., Form B-13 submissions) were not operating effectively to prevent or detect the inclusion of unsupported expenditures. Effect: As a result, STDC received federal reimbursement for $12,153 in administrative costs without appropriate documentation, constituting noncompliance with federal cost principles. This condition may result in the disallowance of costs and repayment obligations to the funding agency. Recommendation: We recommend that STDC strengthen internal controls related to post-award financial reporting and reimbursement procedures by: • Ensuring that all costs claimed are supported by contemporaneous documentation clearly demonstrating that costs were incurred and allocable; • Establishing a formal review protocol for post-period adjustments, including documentation validation and supervisory sign-off; • Performing reconciliations of claimed expenditures before submission of final or supplemental reports to granting agencies; and • Consulting with DSHS to determine whether corrective action or repayment is necessary regarding the unsupported amount. Questioned Costs: $12,153

Federal Program: Community Services Block Grant (CSBG) – ALN 93.569 Compliance Requirement: Eligibility and Allowable Activities/Costs Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of client case files under the CSBG program, we identified an instance in which services and benefits were provided to a single individual rather than to the household unit, contrary to CSBG program requirements. The intake documentation did not reflect an evaluation or approval at the household level, and the assistance was recorded and delivered as though the individual were the sole service recipient. Under CSBG guidance, eligibility and service determinations are required to be made at the household level, as the program is designed to address the needs of low-income families, not isolated individuals within those families. Criteria: Per 45 CFR §96.30(a) and the U.S. Department of Health and Human Services CSBG Terms and Conditions, recipients must establish eligibility based on household income and provide services that are consistent with the needs of the family unit. In addition, the OMB Compliance Supplement for ALN 93.569 emphasizes that services must be targeted to eligible households to meet statutory intent and federal program objectives. Cause: The condition appears to have resulted from an oversight in case management procedures and a lack of clarity in intake protocols regarding the requirement to document and apply eligibility and benefits at the household level. Effect: Failure to assess and deliver services at the household level may result in noncompliance with CSBG program requirements and introduces the risk of inconsistent or inequitable benefit distribution among clients. If not addressed, this weakness may lead to systemic misapplication of eligibility standards. Recommendation: We recommend that STDC take the following steps to ensure compliance with CSBG eligibility and service delivery requirements: • Reinforce federal guidance through staff training for intake personnel and case managers, emphasizing that services must be assessed and provided based on household eligibility; • Update intake procedures and forms to ensure complete documentation of household composition, income, and eligibility status; • Implement periodic internal file reviews to verify that household-level eligibility determinations are consistently applied and properly documented in client records. Questioned Costs: None (isolated instance)

Federal Program: Community Services Block Grant (CSBG) – ALN 93.569 Compliance Requirement: Eligibility and Allowable Activities/Costs Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of client case files under the CSBG program, we identified an instance in which services and benefits were provided to a single individual rather than to the household unit, contrary to CSBG program requirements. The intake documentation did not reflect an evaluation or approval at the household level, and the assistance was recorded and delivered as though the individual were the sole service recipient. Under CSBG guidance, eligibility and service determinations are required to be made at the household level, as the program is designed to address the needs of low-income families, not isolated individuals within those families. Criteria: Per 45 CFR §96.30(a) and the U.S. Department of Health and Human Services CSBG Terms and Conditions, recipients must establish eligibility based on household income and provide services that are consistent with the needs of the family unit. In addition, the OMB Compliance Supplement for ALN 93.569 emphasizes that services must be targeted to eligible households to meet statutory intent and federal program objectives. Cause: The condition appears to have resulted from an oversight in case management procedures and a lack of clarity in intake protocols regarding the requirement to document and apply eligibility and benefits at the household level. Effect: Failure to assess and deliver services at the household level may result in noncompliance with CSBG program requirements and introduces the risk of inconsistent or inequitable benefit distribution among clients. If not addressed, this weakness may lead to systemic misapplication of eligibility standards. Recommendation: We recommend that STDC take the following steps to ensure compliance with CSBG eligibility and service delivery requirements: • Reinforce federal guidance through staff training for intake personnel and case managers, emphasizing that services must be assessed and provided based on household eligibility; • Update intake procedures and forms to ensure complete documentation of household composition, income, and eligibility status; • Implement periodic internal file reviews to verify that household-level eligibility determinations are consistently applied and properly documented in client records. Questioned Costs: None (isolated instance)

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Program: Area Agency on Aging (AAA) – Various ALNs under the Older Americans Act (e.g., 93.044, 93.045, 93.052) Compliance Requirement: Eligibility and Documentation Requirements Type of Finding: Internal Control Deficiency Condition: During our review of client intake documentation for services provided under the AAA programs, we identified multiple instances in which intake forms were not signed by the assigned case worker. While client demographic information and signatures were present, the absence of case worker signatures indicates that formal review and approval of client eligibility and service initiation was incomplete in accordance with established procedures. Criteria: Per Older Americans Act program guidance, eligibility determinations and service documentation must be reviewed and authorized by qualified staff. Standard internal control practices further require that intake forms be signed and dated by both the client and the case worker to provide audit evidence of eligibility assessment and case manager oversight. The case worker’s signature serves as confirmation that intake information was reviewed for accuracy, eligibility criteria were met, and services were appropriately initiated. Cause: The condition appears to result from inconsistent application of intake protocols and a lack of secondary review to ensure completion of required documentation fields, including the case worker’s signature. Effect: Incomplete intake documentation compromises the integrity of the client eligibility process and increases the risk of noncompliance with federal program standards. It may also impair the agency’s ability to demonstrate proper eligibility determination and oversight in the event of federal or state monitoring. Recommendation: We recommend that STDC strengthen controls over the intake and eligibility documentation process by: • Reinforcing existing policies that require case worker signatures on all intake forms; • Implementing a secondary review or quality assurance step prior to initiating services to verify that all required documentation, including signatures, is present; • Providing targeted training to intake and case management staff on documentation standards and accountability requirements under Older Americans Act programs. Questioned Costs: None

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.

Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.