Assistance Listing 14.231 Emergency Solutions Grants Program Condition: During our testing of subrecipient expenditures, we noted that the Office of Homeless Services (OHS) failed to pay 19 out of 33 subrecipient invoices within 30 days of receiving the subrecipient’s payment request, with nine of these 19 invoices paid more than 60 days after receipt of the request. Funding for the Emergency Solutions Grants Program is received directly from the U.S. Department of Housing and Urban Development (HUD) and passed through the PA Department of Community and Economic Development. Criteria: 24 CFR 576.203(c) requires that the recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient's complete payment request. Effect: Failure to make timely payments to subrecipients could lead to noncompliance and affect program services at the subrecipient level. Cause: There are often significant delays between when invoices are received and when vouchers are processed in the city’s accounting system, FAMIS. Recommendation: OHS management should strengthen its policies and procedures for processing invoices to ensure that all subrecipient invoices are reviewed and paid timely. Views of the Responsible Officials and Corrective Action Plan: The Office of Homeless Services acknowledges the finding. The delays in processing invoices were due to heightened fiscal oversight implemented after it was determined that the Office had exceeded its budget allocation. As a result, all invoices for OHS-contracted services were subject to additional layers of review beyond the standard OHS and Finance approval process. These invoices were routed to the Managing Director’s Office before payment authorization, which extended the normal processing timelines. To prevent recurrence, the Office of Homeless Services will strengthen its invoice-processing policies and procedures to ensure timely review and payment of all subrecipient invoices, consistent with applicable federal requirements. Now that the enhanced review protocols are no longer in effect, OHS will reestablish standard review timelines and reinforce internal expectations for prompt processing. OHS will also provide guidance to fiscal staff on escalation procedures should future budgetary reviews impact invoice timeliness. These corrective actions will support improved compliance and reduce the likelihood of processing delays. Contact Person: Jerome Hill, Director of Compliance, OHS, 215-686-0371
Assistance Listing 14.231 Emergency Solutions Grants Program Condition: During our audit of the Emergency Solutions Grant program, we found that the Office of Homeless Services (OHS) had charged the program for ten expenditures beyond the 120 day deadline24 established for the period of performance. Funding for this program was received directly from the U.S. Department of Housing and Urban Development and through the Commonwealth of Pennsylvania Department of Community and Economic Development. Criteria: 2 CFR Part 200.344 states that the recipient must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must liquidate all financial obligations incurred under a subaward no later than 90 calendar days after the conclusion of the period of performance of the subaward (or an earlier date as agreed upon by the pass-through entity and subrecipient). Additionally, the recipient or subrecipient must promptly refund any unobligated funds that the federal agency or pass-through entity paid and that are not authorized to be retained. Effect: Expenditures totaling $228,594, which we consider to be questioned costs, were improperly reported in the SEFA. Additionally, the city may have to reimburse the federal agency for any expenditure that was charged to the federal grant beyond the deadline established for the period of performance. Cause: OHS did not appropriately liquidate all financial obligations by the deadline established for the period of performance. Recommendation: We recommend that OHS review all financial obligations at the end of the period of performance and timely liquidate any remaining obligations in accordance with 2 CFR 200.344. Views of the Responsible Officials and Corrective Action Plan: The Office of Homeless Services acknowledges the finding. The delay in liquidating obligations resulted from internal control procedures that appropriately identified a potential contract concern involving the Resources for Human Development. In accordance with established financial oversight protocols, the Finance Department placed a temporary hold on related payments pending further review. Once the review was concluded, the payments were released. Additionally, limitations within the FAMIS system, specifically its inability to retain original voucher creation dates after rejection and resubmission, contributed to the appearance of delayed liquidation. To prevent recurrence, the Office of Homeless Services will strengthen its closeout procedures to ensure timely review and liquidation of all obligations in accordance with 2 CFR § 200.344. The Office will also initiate earlier coordination with the Finance Department when payment holds arise and reinforce staff training on grant closeout and escalation protocols. These corrective actions will enhance compliance and reduce the likelihood of future delays. Contact Person: Jerome Hill, Director of Compliance, OHS, 215-686-0371
Assistance Listing 93.136 Injury Prevention and Control Research and State/Community Based Programs Assistance Listing 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Program Assistance Listing 93.354 Public Health Emergency Response Program Condition: The city’s Department of Public Health (DPH) acts as a pass-through entity for several of the grants it receives from the federal government. For three grants we tested, DPH could not provide evidence showing that subawards given to subrecipient entities were accurately and/or timely reported to the Federal Subaward Reporting System (FSRS)25, as required by the Federal Funding Accountability and Transparency Act (FFATA). For the Injury Prevention and Control Research and State/Community Based Program (ALN 93.136) and the Epidemiology and Lab Capacity Program (ALN 93.323), DPH could not provide evidence that sampled subawards were reported at all. For the Public Health Emergency Response Program (ALN 93.354), none of the six subawards were reported timely, with submission dates ranging from 20 months to two years after the subaward date. Information submitted for four of these entities also reported inaccurate subaward amounts. Criteria: 2 CFR Part 170 specified that recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the FSRS. Additionally, 2 CFR Part 170 – Appendix A states that the subaward information be reported no later than the end of the month following the month in which the subaward was issued. Effect: Federal grantors may not have complete and accurate information to make fiscal decisions on federal awards. Cause: DPH did not have a systematic process in place for reporting subawards into the FSRS system. Recommendation: DPH should prepare written policies and procedures to ensure that its FFATA reporting is performed accurately and submitted timely, and that the source documentation, used for reporting purposes, contains all applicable subaward information. Views of the Responsible Officials and Corrective Action Plan: ALN 93.136 – Injury Prevention and Control Research and State/Community Based Programs PDPH acknowledges that Federal Funding Accountability and Transparency Act (FFATA) reporting requirements were not consistently met during the audit period due to limited staff capacity and lack of clearly defined procedures for subaward reporting. In response, SUPHR will establish procedures to ensure timely and accurate FFATA reporting in accordance with federal requirements. These procedures include designating responsible staff, assigning appropriate SAM.gov access roles, and providing orientation and training on subaward reporting processes. Standardized documentation and retention practices will also be implemented to ensure proper recordkeeping and verification of all submissions. SUPHR is committed to maintaining compliance with FFATA requirements going forward and will continue to monitor adherence through routine oversight by the grants management team. Initial implementation of corrective measures will begin upon receipt of an approved Year 3 budget from the Centers of Disease Control. ALN 93.323 – Epidemiology and Lab Capacity Program PDPH acknowledges the error that occurred with FFATA reporting with respect to its incomplete reporting. This grant had previously been connected in the FSRS.gov system to a PDPH division that was created during the COVID pandemic that no longer exists. Although the grant was listed under the Division of Disease Control by FY24, the FFATA was overlooked and not completed. The Division of Disease Control will work toward implementing additional internal controls to support accurate and timely FFATA reporting going forward. ALN 93.354 – Public Health Emergency Response PDPH acknowledges that errors occurred with FFATA reporting with respect to both the timing of the reporting and the amounts of subawards reported. The Division of Disease Control will work toward implementing additional internal controls to support accurate and timely FFATA reporting going forward. Contact Persons: Daniel Teixeira da Silva, Director, Division of Substance Use Prevention and Harm Reduction (SUPHR), 267-760-0307 Jessica Caum, Public Health Preparedness Program Manager, Philadelphia Department of Public Health, 215-685-6731
Assistance Listing 97.083 Staffing for Adequate Fire and Emergency Condition: The Philadelphia Fire Department (PFD) submitted a semi-annual Federal Financial Report (FFR reported on form SF-425) that was inaccurate for federal awards received under the Staffing for Adequate Fire and Emergency Response (SAFER) program. Our review of the semi-annual SF-425 submitted for the reporting period ended June 30, 2024, disclosed that the amounts reported for “Federal share of expenditures”, “Total Federal Share”, and “Unobligated balance of Federal funds” were incorrect. The “Federal share of expenditures” was overstated by $19,237,509 which resulted in the “Total Federal share” being overstated and the “Unobligated balance of Federal funds” being understated by the same amount. Funding for this program is received from the U.S. Department of Homeland Security and administered by the Federal Emergency Management Agency (FEMA). Criteria: OMB’s Uniform Guidance, Title 2, Part 200, Subpart D, paragraph 200.302 (b)(2) specifies that the recipient must disclose accurate, current, and complete financial results. Effect: The SF-425 report tracks the status of financial data for this federal award. Failure to properly report accurate information on the SF-425 report leads to noncompliance with reporting requirements. Also, federal grantors will not have complete and accurate information to make fiscal decisions on future federal awards. Cause: The Fire Department has not provided the proper training for its staff to prepare the SF-425 report. Recommendation: PFD should ensure their staff has proper training to prepare the SF-425 report and submit a revised report to FEMA. Views of the Responsible Officials and Corrective Action Plan: This finding pertains to a single Federal Financial Report (FFR) for period ending June 30th, 2024. This was the first and only FFR for this grant that the Philadelphia Fire Department prepared independently. The report was subsequently reviewed, approved, and accepted by FEMA. All subsequent and future FFRs have been submitted through the FEMA GO portal, where FEMA pre-populates the digital worksheet with the relevant figures. It should be noted that these pre-populated amounts align with PFD reimbursement requests for each reporting period, rather than the city’s total expenditures on salaries and benefits during the same period. Upon notification of the discrepancy by the Controller’s office, PFD promptly contacted both FEMA and the City’s Grants office to seek clarification and guidance. Due to the federal government shutdown, FEMA has not yet responded. PFD will re-engage FEMA once normal operations resume, and if warranted will submit a revised FFR. PFD emphasizes that the discrepancy identified on the single FFR does not impact the available grant funding. Contact Person: Kelly Collins, Deputy Commissioner, Fire, 215-906-8976
Assistance Listing 93.136 Injury Prevention and Control Research and State/Community Based Programs Condition: The City’s Department of Public Health (DPH) did not perform risk assessments or monitor the performance of the eight subrecipients tested for this program. Specifically, DPH did not evaluate the risk of fraud and non-compliance or review the financial and performance reports for these eight entities, Funding for this program is received from the U.S. Department of Health and Human Services. Criteria: OMB’s Uniform Guidance 2 CFR Part 200.332(c) states that the pass-through entity is responsible for evaluating each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring.2 CFR Part 200.332(f)further states that depending on the pass-through entity’s assessment of the risk posed by the subrecipient, the pass-through entity may need to provide training and technical assistance on program matters, perform site visits to review program operations, or arrange for other agreed-upon procedures, to ensure compliance with program requirements and achievement of performance goals. Finally, 2 CFR Part 200.332(e) requires the pass-through entity to monitor the activities of subrecipients by reviewing the financial and performance reports of subrecipients to ensure that the entities comply with federal statutes, regulations, and the terms and conditions of their subawards. Effect: Failure to perform risk assessments and review the financial and performance reports of subrecipients resulted in noncompliance with subrecipient monitoring requirements set forth in the Uniform Guidance. Without these reviews, DPH may not adequately determine the appropriate level of monitoring needed to ensure that subrecipients comply with program requirements, federal regulations, and other requirements of their subawards. This noncompliance could also lead to the city having to pay back federal awards. Cause: DPH incurred significant staff turnover. Recommendation: DPH should strengthen its policies and procedures to ensure that risk assessments and required monitoring procedures are performed for all subrecipients. Additionally, for subrecipients determined to be high-risk, DPH should provide training and technical assistance, perform site visits, and/or apply other agreed-upon procedures to help ensure that subrecipients are properly accountable for subawards and comply with program requirements. Views of the Responsible Officials and Corrective Action Plan: The Philadelphia Department of Public Health (PDPH) acknowledges the findings of the Office of the City Controllers. PDPH confirms that risk assessments and related monitoring documentation for all subrecipients were not consistently completed or retained during the audit period, primarily due to staff turnover and limited administrative capacity within the grants management function. To address this, the Division of Substance Use Prevention and Harm Reduction (SUPHR) has initiated corrective measures to strengthen compliance with the requirements of 2 CFR 200.332. These measures include implementation of standardized tools and procedures to ensure that subrecipient risk assessments, monitoring activities, and the review of financial and performance reports are conducted in a consistent, timely, and well-documented manner. Implementation of these improvements will enhance internal controls, ensure appropriate oversight of subrecipients, and promote full compliance with federal regulations. The Department anticipates that tools and standard operating procedures will be finalized by December 19, 2025, with full implementation of corrective actions by March 3, 2026. Contact Person: Daniel Teixeira da Silva, Director, Division of Substance Use Prevention and Harm Reduction (SUPHR), 267-760-0307
Assistance Listing 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Program Condition: The city’s Department of Public Health (DPH) did not perform risk assessments or monitor the performance of three subrecipient entities tested for this program. Specifically, DPH did not evaluate the risk of fraud and non-compliance or review the financial and performance reports for these three entities. Funding for this program is received from the U.S. Department of Health and Human Services. Criteria: OMB’s Uniform Guidance 2 CFR Part 200.331(a) states that a subaward recipient may be considered a subrecipient of the pass-through agency if the recipient 1) determines who is eligible to receive federal assistance, 2) has its performance measured in relation to whether the objectives of a federal program were met, and 3) has responsibility for programmatic decision-making. OMB’s Uniform Guidance 2 CFR Part 200.332(c) states that the pass-through entity is responsible for evaluating each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring. 2 CFR Part 200.332(f) further states that depending on the pass-through entity’s assessment of the risk posed by the subrecipient, the pass-through entity may need to provide training and technical assistance on program matters, perform site visits to review program operations, or arrange for other agreed-upon procedures, to ensure compliance with program requirements and achievement of performance goals. Finally, 2 CFR Part 200.332(e) requires the pass-through entity to monitor the activities of subrecipients by reviewing the financial and performance reports of subrecipients to ensure that the entities comply with federal statutes, regulations, and the terms and conditions of their subawards. Effect: Failure to perform risk assessments and review financial and performance reports for subrecipients resulted in noncompliance with subrecipient monitoring requirements set forth in the Uniform Guidance. Without these reviews, DPH may not adequately determine the appropriate level of monitoring needed to ensure that subrecipients comply with program requirements, federal regulations, and other requirements of their subawards. This noncompliance could also lead to the city having to pay back federal awards. Cause: DPH management misclassified these three entities as contractors, rather than subrecipients. For purposes of the Epidemiology and Laboratory Capacity Program, contracts between DPH and the three entities in question specifically state that each of the entities would serve as subrecipients for grant funding awarded through the contracts. Subawards were used to hire additional staff for DPH’s COVID-19 Containment Program, for duties that included determining who is eligible to receive federal assistance, achieving the objectives established by the program, making programmatic decisions, and adhering to all applicable federal program compliance requirements. Recommendation: DPH management should reevaluate the criteria used to determine whether subaward recipients are classified as subrecipients or contractors. Additionally, management should ensure that risk assessments and required monitoring procedures are performed for all entities classified as subrecipients. Views of the Responsible Officials and Corrective Action Plan: The Philadelphia Department of Public Health (PDPH) acknowledges the Office of the City Controller’s finding. PDPH maintains a process to identify subrecipients during the contracting process. Contracts with subrecipients include federal compliance language. The three entities identified in this finding, including Concilio, Urban Affairs Coalition (UAC), and Public Health Management Corporation (PHMC), should have been classified as vendors and not subrecipients. These entities were not responsible for programmatic decision-making. This error has been corrected in subsequent contracts. Despite the misclassification, appropriate vendor monitoring was conducted, including supervision of staff hiring and monitoring and reconciliation of monthly invoice packages. Contact Person: Jessica Caum, Director, Department of Public Health, 215-685-6731 Naomi Mirowitz, Performance and Compliance Officer, Department of Public Health, 215-964-5050
Assistance Listing 93.914 HIV Emergency Relief Project Grants Condition: The Office of Health and Human Services' (HHS) Audit Unit failed to issue a management decision for audit findings related to two subrecipients of the city, who each had audit findings reported in their respective single audits. The fiscal year 2023 single audit of Bebashi and the fiscal year 2024 single audit of The Children's Hospital of Pennsylvania had a significant deficiency reported under the HIV Emergency Relief Program (ALN 93.914) in the Internal Controls over Major Programs section of the Schedule of Findings and Questioned Costs. Funding for HIV Emergency Relief program is received directly from the U.S. Department of Health and Human Services. Criteria: 2 CFR section 200.332(e) states that the pass-through entity must issue a management decision for audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Effect: The management decision serves to confirm the audit findings and outline a corrective action plan for the subrecipient. Failure to issue a management decision could lead to unresolved findings at the subrecipient level. Cause: HHS incorrectly relies on the auditing firms that perform subrecipient single audits to issue a management decision per 2 CFR section 200.312(e). Recommendation: We recommend that HHS management modifies and/or strengthens its current policies and procedures to ensure that a management decision letter will be issued for audit findings relating to any federal awards that were provided to subrecipients. Views of the Responsible Officials and Corrective Action Plan: HHS acknowledges the Controller’s finding that management decision letters were not issued for specific subrecipient audit findings under ALN 93.914, as required under 2 CFR 200.332(e) and 200.521. While the formal letters were not issued, HHS did review the audit findings, obtained and evaluated the subrecipients’ corrective action plans and confirmed that no questioned costs or additional risks remained. These steps ensured that the underlying corrective actions were completed. To strengthen documentation and ensure consistency across all federal programs, HHS will adopt the following corrective measures: 1. Standard management Decision Template • HHS will adopt a simple, uniform management decision template and clear steps for documenting decisions within the required federal timelines. 2. Central Location for Documentation • HHS will store all management decision letters and related materials in one designated shared location to ensure accessibility and consistent record-keeping. 3. Brief Staff Guidance • HHS will provide concise written guidance to staff outlining: o When a management decision is required, o How to complete it using the template, and o What documentation must be retained? These corrective actions will ensure consistent compliance with federal requirements while supporting the City’s long-term goal of standardizing financial processes across departments. Contact Person: Landuleni Shipanga, Controller, City of Philadelphia Office of Children and Families, 215-683-6366
Assistance Listing 14.231 Emergency Solutions Grants Program Assistance Listing 93.224 & 93.527 Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing 93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Assistance Listing 93.667 Social Services Block Grant Assistance Listing 93.914 HIV Emergency Relief Project Grants Condition: In our review of the fiscal year (FY) 2024 SEFA, we noted that GAAU improperly reported prior period expenditures for six grant programs in the current year SEFA. Specifically, we noted expenditures for the programs in Table 5 below, occurred in FY 2023, but were not included in the year end accounts payable accrual or reported in the FY 2023 SEFA. Instead, GAAU inappropriately reported those expenditures in the FY 2024 SEFA. Criteria: OMB’s Uniform Guidance, Title 2, Part 200, Subpart F, paragraph 200.510(b) specifies that the grantee must prepare a SEFA for the period covered by the financial statements which must include the total federal awards expended as determined in accordance with 200.502 Basis for Determining federal awards expended. OMB’s Uniform Guidance, Title 2, Part 200, Subpart F, paragraph 200.502(a) specifies that the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Additionally, the city’s financial statements are prepared on the modified accrual basis and follow Generally Accepted Accounting Principles (GAAP). GAAP requires that governments report a liability in the period in which it is incurred. Accordingly, governmental entities should record expenditures when a liability is incurred, or when the activity related to a federal award occurs and not based on when the invoice is received. Effect: Failure to report grant expenditures on the SEFA during the correct fiscal year is a departure from GAAP and caused inaccurate reporting of federal expenditures. Cause: Finance provides the departments with a list of payables and a list of open encumbrances with a cut-off date of September. The departments are required to review any pending invoices, open encumbrances, and payables for any payables that need to be recorded. During the audit, the departments did not perform a thorough review of their pending invoices and open encumbrances, so Finance was unable to detect significant payables. Recommendation: Finance should improve its accounts payable process by following GAAP and the accrual basis of accounting by recording expenditures in the fiscal year they occur. All other city departments should review pending invoices and unliquidated encumbrances and follow up with contractors and subrecipients to ensure that the invoices are processed within the cut-off date for accounts payable. Views of the Responsible Officials and Corrective Action Plan: Although we acknowledge that certain prior-year expenditures were recorded in the FY24 SEFA, we do not believe these errors were material to the basic financial statements. In addition, we do not believe that including these expenditures affected the determination of major programs or our compliance with any federal grant requirements. We confirm that our financial statements are prepared in accordance with Generally Accepted Accounting Principles and that, as presented, they are materially accurate. For FY 2025, we expanded our search for unrecorded liabilities to include activity through seven months after year-end. Because the risk of unrecorded liabilities declines as we move further from fiscal year-end, we focused our review on transactions that could reasonably have a material impact on the financial statements. We will work closely with all departments to ensure that any outstanding obligations that have not yet been vouchered are identified and addressed. Contact Person: Shantae Thorpe, Accounting Manager, Finance, 215-686-5629