Audit 363060

Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, §200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with §200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for awards AID-654-A-17-00003 and 72061220CA00003, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. For award AID-654-A-17-00003, PSI requested an advance payment in June 2024 of $1,291,991; however $351,749 remained available from this advance in July 2024 exceeding the cash needs. For award 72061220CA00003, PSI requested an advance payment in January 2024 of $463,615; however $234,678 remained available from the prior cash advance. In February 2024, PSI returned funding of $52,193 but an outstanding advance of $679,619 still remained on hand for this award that exceeded the cash needs. Further, we noted PSI does maintain advance payments of Federal awards in interest-bearing accounts. However PSI does not track the amount of interest earned on these advance payments. After year-end PSI prepared a schedule to estimate what the amount of interest earned would have been in order to remit interest earned in excess of $500 annually to the Department of Health and Human Services Payment Management System. As PSI earned approximately $3,151.81 of interest during the year ended December 31, 2024 on cash advances, PSI owed the United States Government $2,651.81 of interest. Questioned Costs: There are no questioned costs related to this finding. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments, PSI’s programmatic and finance team did not adequately monitor remaining budget and projected expenditures for any changes in spending levels to adequately adjust the spending projection of the award resulting in PSI requesting and receiving funds that were not able to be liquidated timely enough. Furthermore, the PSI management team did not have a sufficient review process to calculate the interest earned on cash advances to remit to the U.S. Government at the end of the year. Effect: Failure to perform cash management procedures in accordance with PSI’s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This is a repeat finding and was reported as finding 2023-003 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.309, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “obligations” means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period as described in §200.71. Condition: We identified two instances out of 25 sample items selected, whereby expenses were incurred outside of the award period of performance. These expenses totaled $298 for award AID- 654-A-17-00003 and $99 for award 72069523CA00002. Questioned Costs: We identified $397 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Context: BDO’s testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. BDO also performed specific period of performance procedures on those awards that began or ended during 2024. A total of 25 samples were selected across the awards that began or ended during 2024. As a result of that testing two compliance matters were identiifed. Cause: PSI management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award. Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs that need to be returned to the U.S. Agency for International Development. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program. Repeat Finding: This finding is a repeat finding and was reported as finding 2023-005 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, §200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with §200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for awards AID-654-A-17-00003 and 72061220CA00003, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. For award AID-654-A-17-00003, PSI requested an advance payment in June 2024 of $1,291,991; however $351,749 remained available from this advance in July 2024 exceeding the cash needs. For award 72061220CA00003, PSI requested an advance payment in January 2024 of $463,615; however $234,678 remained available from the prior cash advance. In February 2024, PSI returned funding of $52,193 but an outstanding advance of $679,619 still remained on hand for this award that exceeded the cash needs. Further, we noted PSI does maintain advance payments of Federal awards in interest-bearing accounts. However PSI does not track the amount of interest earned on these advance payments. After year-end PSI prepared a schedule to estimate what the amount of interest earned would have been in order to remit interest earned in excess of $500 annually to the Department of Health and Human Services Payment Management System. As PSI earned approximately $3,151.81 of interest during the year ended December 31, 2024 on cash advances, PSI owed the United States Government $2,651.81 of interest. Questioned Costs: There are no questioned costs related to this finding. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments, PSI’s programmatic and finance team did not adequately monitor remaining budget and projected expenditures for any changes in spending levels to adequately adjust the spending projection of the award resulting in PSI requesting and receiving funds that were not able to be liquidated timely enough. Furthermore, the PSI management team did not have a sufficient review process to calculate the interest earned on cash advances to remit to the U.S. Government at the end of the year. Effect: Failure to perform cash management procedures in accordance with PSI’s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This is a repeat finding and was reported as finding 2023-003 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management’s corrective action plan for additional information.

2023-002 Internal Control over Compliance and Compliance with Procurement Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with §200.319 and must be performed using the appropriate procurement method as outlined in §200.320. In accordance with §200.320(c), Noncompetitive Procurement, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: During the audit, we tested a total of 19 procurements noting the following matters: o For one procurement sample under award 72038620CA00002, management did not provide supporting documentation for the procurement transaction. BDO was only provided a copy of the authorized contract between the procured entity and country office. Therefore, BDO was unable to conclude that PSI complied with the required procurement regulations. o For one procurement sample under award 72061224CA00005, management renewed a lease agreement in Malawi without performing any procurement procedures to determine the renewal complied with the requirements of §200.318(a). o For one procurement sample under award 72061224CA00005, BDO noted that management utilized a single source or sole source justification for the selection rationale; however, that rationale did not conform to the requirements of limited competition per §200.320(c). Questioned Costs: There are no questioned costs. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of this finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: PSI personnel did not adhere to PSI’s documented policies and procedures for tracking procurements, for ensuring complete documentation of the history of the procurement, and for ensuring proper suspension and debarment validations were performed. Effect: Failure to perform procurement procedures in accordance with PSI’s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency across PSI’s international office locations. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.

Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, §200.303 Internal Controls states that a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI’s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: BDO tested 120 payroll and non-payroll expenditures. BDO also separately tested 40 transactions from the indirect cost pool. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid expenditures within the overall award period. o BDO identified one of the 80 payroll and non-payroll transactions tested totaling $860 was improperly recorded on the Schedule as it related to a prior period (calendar year 2023). o For indirect cost pool testing, one of the 40 transactions tested totaling $180 was recorded in error as it related to a prior period (2023). Questioned Costs: As all of the costs noted were within the award period of performance, there are no questioned costs to report. Context: This is a condition identified per review of PSI’s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred. However, as identified above, the review and approval process for the samples identified above did not operate as designed. Effect: The lack of adherence to established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of award agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This is a repeat finding from the previous year. This was reported as finding 2023-001 in the 2023 schedule of findings and questioned costs. Recommendation: BDO recommends PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide additional training to staff members to ensure compliance with established policies and procedures. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.309, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “obligations” means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period as described in §200.71. Condition: We identified two instances out of 25 sample items selected, whereby expenses were incurred outside of the award period of performance. These expenses totaled $298 for award AID- 654-A-17-00003 and $99 for award 72069523CA00002. Questioned Costs: We identified $397 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Context: BDO’s testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. BDO also performed specific period of performance procedures on those awards that began or ended during 2024. A total of 25 samples were selected across the awards that began or ended during 2024. As a result of that testing two compliance matters were identiifed. Cause: PSI management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award. Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs that need to be returned to the U.S. Agency for International Development. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program. Repeat Finding: This finding is a repeat finding and was reported as finding 2023-005 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

2023-002 Internal Control over Compliance and Compliance with Procurement Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with §200.319 and must be performed using the appropriate procurement method as outlined in §200.320. In accordance with §200.320(c), Noncompetitive Procurement, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: During the audit, we tested a total of 19 procurements noting the following matters: o For one procurement sample under award 72038620CA00002, management did not provide supporting documentation for the procurement transaction. BDO was only provided a copy of the authorized contract between the procured entity and country office. Therefore, BDO was unable to conclude that PSI complied with the required procurement regulations. o For one procurement sample under award 72061224CA00005, management renewed a lease agreement in Malawi without performing any procurement procedures to determine the renewal complied with the requirements of §200.318(a). o For one procurement sample under award 72061224CA00005, BDO noted that management utilized a single source or sole source justification for the selection rationale; however, that rationale did not conform to the requirements of limited competition per §200.320(c). Questioned Costs: There are no questioned costs. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of this finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: PSI personnel did not adhere to PSI’s documented policies and procedures for tracking procurements, for ensuring complete documentation of the history of the procurement, and for ensuring proper suspension and debarment validations were performed. Effect: Failure to perform procurement procedures in accordance with PSI’s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency across PSI’s international office locations. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, §200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with §200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for awards AID-654-A-17-00003 and 72061220CA00003, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. For award AID-654-A-17-00003, PSI requested an advance payment in June 2024 of $1,291,991; however $351,749 remained available from this advance in July 2024 exceeding the cash needs. For award 72061220CA00003, PSI requested an advance payment in January 2024 of $463,615; however $234,678 remained available from the prior cash advance. In February 2024, PSI returned funding of $52,193 but an outstanding advance of $679,619 still remained on hand for this award that exceeded the cash needs. Further, we noted PSI does maintain advance payments of Federal awards in interest-bearing accounts. However PSI does not track the amount of interest earned on these advance payments. After year-end PSI prepared a schedule to estimate what the amount of interest earned would have been in order to remit interest earned in excess of $500 annually to the Department of Health and Human Services Payment Management System. As PSI earned approximately $3,151.81 of interest during the year ended December 31, 2024 on cash advances, PSI owed the United States Government $2,651.81 of interest. Questioned Costs: There are no questioned costs related to this finding. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments, PSI’s programmatic and finance team did not adequately monitor remaining budget and projected expenditures for any changes in spending levels to adequately adjust the spending projection of the award resulting in PSI requesting and receiving funds that were not able to be liquidated timely enough. Furthermore, the PSI management team did not have a sufficient review process to calculate the interest earned on cash advances to remit to the U.S. Government at the end of the year. Effect: Failure to perform cash management procedures in accordance with PSI’s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This is a repeat finding and was reported as finding 2023-003 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.309, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “obligations” means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period as described in §200.71. Condition: We identified two instances out of 25 sample items selected, whereby expenses were incurred outside of the award period of performance. These expenses totaled $298 for award AID- 654-A-17-00003 and $99 for award 72069523CA00002. Questioned Costs: We identified $397 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Context: BDO’s testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. BDO also performed specific period of performance procedures on those awards that began or ended during 2024. A total of 25 samples were selected across the awards that began or ended during 2024. As a result of that testing two compliance matters were identiifed. Cause: PSI management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award. Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs that need to be returned to the U.S. Agency for International Development. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program. Repeat Finding: This finding is a repeat finding and was reported as finding 2023-005 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, §200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with §200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for awards AID-654-A-17-00003 and 72061220CA00003, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. For award AID-654-A-17-00003, PSI requested an advance payment in June 2024 of $1,291,991; however $351,749 remained available from this advance in July 2024 exceeding the cash needs. For award 72061220CA00003, PSI requested an advance payment in January 2024 of $463,615; however $234,678 remained available from the prior cash advance. In February 2024, PSI returned funding of $52,193 but an outstanding advance of $679,619 still remained on hand for this award that exceeded the cash needs. Further, we noted PSI does maintain advance payments of Federal awards in interest-bearing accounts. However PSI does not track the amount of interest earned on these advance payments. After year-end PSI prepared a schedule to estimate what the amount of interest earned would have been in order to remit interest earned in excess of $500 annually to the Department of Health and Human Services Payment Management System. As PSI earned approximately $3,151.81 of interest during the year ended December 31, 2024 on cash advances, PSI owed the United States Government $2,651.81 of interest. Questioned Costs: There are no questioned costs related to this finding. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments, PSI’s programmatic and finance team did not adequately monitor remaining budget and projected expenditures for any changes in spending levels to adequately adjust the spending projection of the award resulting in PSI requesting and receiving funds that were not able to be liquidated timely enough. Furthermore, the PSI management team did not have a sufficient review process to calculate the interest earned on cash advances to remit to the U.S. Government at the end of the year. Effect: Failure to perform cash management procedures in accordance with PSI’s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This is a repeat finding and was reported as finding 2023-003 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management’s corrective action plan for additional information.

2023-002 Internal Control over Compliance and Compliance with Procurement Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with §200.319 and must be performed using the appropriate procurement method as outlined in §200.320. In accordance with §200.320(c), Noncompetitive Procurement, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: During the audit, we tested a total of 19 procurements noting the following matters: o For one procurement sample under award 72038620CA00002, management did not provide supporting documentation for the procurement transaction. BDO was only provided a copy of the authorized contract between the procured entity and country office. Therefore, BDO was unable to conclude that PSI complied with the required procurement regulations. o For one procurement sample under award 72061224CA00005, management renewed a lease agreement in Malawi without performing any procurement procedures to determine the renewal complied with the requirements of §200.318(a). o For one procurement sample under award 72061224CA00005, BDO noted that management utilized a single source or sole source justification for the selection rationale; however, that rationale did not conform to the requirements of limited competition per §200.320(c). Questioned Costs: There are no questioned costs. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of this finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: PSI personnel did not adhere to PSI’s documented policies and procedures for tracking procurements, for ensuring complete documentation of the history of the procurement, and for ensuring proper suspension and debarment validations were performed. Effect: Failure to perform procurement procedures in accordance with PSI’s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency across PSI’s international office locations. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.

Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, §200.303 Internal Controls states that a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI’s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: BDO tested 120 payroll and non-payroll expenditures. BDO also separately tested 40 transactions from the indirect cost pool. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid expenditures within the overall award period. o BDO identified one of the 80 payroll and non-payroll transactions tested totaling $860 was improperly recorded on the Schedule as it related to a prior period (calendar year 2023). o For indirect cost pool testing, one of the 40 transactions tested totaling $180 was recorded in error as it related to a prior period (2023). Questioned Costs: As all of the costs noted were within the award period of performance, there are no questioned costs to report. Context: This is a condition identified per review of PSI’s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred. However, as identified above, the review and approval process for the samples identified above did not operate as designed. Effect: The lack of adherence to established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of award agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This is a repeat finding from the previous year. This was reported as finding 2023-001 in the 2023 schedule of findings and questioned costs. Recommendation: BDO recommends PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide additional training to staff members to ensure compliance with established policies and procedures. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.309, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “obligations” means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period as described in §200.71. Condition: We identified two instances out of 25 sample items selected, whereby expenses were incurred outside of the award period of performance. These expenses totaled $298 for award AID- 654-A-17-00003 and $99 for award 72069523CA00002. Questioned Costs: We identified $397 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Context: BDO’s testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. BDO also performed specific period of performance procedures on those awards that began or ended during 2024. A total of 25 samples were selected across the awards that began or ended during 2024. As a result of that testing two compliance matters were identiifed. Cause: PSI management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award. Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs that need to be returned to the U.S. Agency for International Development. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program. Repeat Finding: This finding is a repeat finding and was reported as finding 2023-005 in the 2023 schedule of findings and questioned costs. Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.

2023-002 Internal Control over Compliance and Compliance with Procurement Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with §200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with §200.319 and must be performed using the appropriate procurement method as outlined in §200.320. In accordance with §200.320(c), Noncompetitive Procurement, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: During the audit, we tested a total of 19 procurements noting the following matters: o For one procurement sample under award 72038620CA00002, management did not provide supporting documentation for the procurement transaction. BDO was only provided a copy of the authorized contract between the procured entity and country office. Therefore, BDO was unable to conclude that PSI complied with the required procurement regulations. o For one procurement sample under award 72061224CA00005, management renewed a lease agreement in Malawi without performing any procurement procedures to determine the renewal complied with the requirements of §200.318(a). o For one procurement sample under award 72061224CA00005, BDO noted that management utilized a single source or sole source justification for the selection rationale; however, that rationale did not conform to the requirements of limited competition per §200.320(c). Questioned Costs: There are no questioned costs. Context: This is a condition based on testing of PSI’s compliance with specified requirements. The prevalence of this finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: PSI personnel did not adhere to PSI’s documented policies and procedures for tracking procurements, for ensuring complete documentation of the history of the procurement, and for ensuring proper suspension and debarment validations were performed. Effect: Failure to perform procurement procedures in accordance with PSI’s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management refine their procurement tracking method by clarifying established policies and procedures to create more consistency across PSI’s international office locations. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.

Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2024, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. • In Sierra Leone, records for mobile money batch payments to Community Health Workers were manipulated to divert payments to the wrong phone numbers. The total loss to award 7200AA18C00014 was $244 and to award 7200AA19CA00002 was $365. • In Cote d’Ivoire, a fraudulent invoicing system involving fraudulent service providers, suspicious use of billers and potential conflict of interests resulting in $8,221 of questioned costs to award 7206242CA00003. • In Angola, allegations regarding the improper receipt of per diem was substantiated. The total loss to award AID-654-A-17-00003 was $129. • In Mozambique, a whistleblower report revealed that a staff member had defrauded the Organization through the theft of cash payments made by staff remitting their federal sick leave salary refunds from the government. The total financial loss to award 72065622CA00009 was $174 and to award 7200AA20CA00007 was $102. • In Sierra Leone, a driver exaggerated mileage to cover for fuel payments that could not be accounted for and submitted falsified accommodation payment receipts. The total financial loss to award 7200AA19CA000032 was $106. • In Mali, an internal audit conducted on a subrecipient noted that there were differences in salaries charged to donor funds and actual salary received by the employees as well as fictitious competition and manipulation of expenses vouchers on behalf of the subrecipieint. The total financial loss to award 7200AA20CA00007 was $63,660. • In Zimbabwe, medical records were doctored and members of the public were bribed to misrepresent circumcision information. The total financial loss to award 72061318CA0009 was $41,307.50. PSI has ongoing investigations involving U.S. Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, PSI has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. Context: These conditions were identified through PSI’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2024. Cause: Individuals intentionally circumvented PSI’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included for the prior year as findings 2023-004 in the December 31, 2023 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.