Audit 379941

Finding 2025-001 – Allowable Costs/Cost Principles Identification of the federal program: Health Resources and Services Administration HIV Emergency Relief Project Grants Assistance Listing No. 93.914 Pass Through Numbers Pass Through Entity Grant Period 11987 PREV King County Public Health 3/1/2024–2/28/2025 13548 PREV King County Public Health 3/1/2025–2/28/2026 Location: Virginia Mason Medical Center, Bailey-Boushay House (Bailey-Boushay House) Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 (a) requires that a non-federal entity must “(a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.430 (i) states “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflected the work performed. These records must: (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official records of the non-Federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) encompass both federal assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) comply with the established accounting policies and practices of the non-Federal entity.” Condition: Bailey-Boushay House did not have effective internal controls addressing the requirements of 2 CFR 200.303(a) and 2 CFR 200.430, including consistent approval of employees’ timecards. Cause: Bailey-Boushay House’s management did not execute their intended corrective action to implement internal controls in response to the prior year finding. Effect or potential effect: Unallowable and/or inaccurate payroll expenditures could be charged to the federal program. Questioned costs: None. Context: For 2 of 8 payroll expenditures selected for testing, Bailey-Boushay House’s management did not properly approve the employee timecard for time charged to the grant. Total payroll expenditures, including fringe benefits, for Bailey-Boushay House were approximately $1.1 million and represent 29% of the total HIV Emergency Relief Project Grants expenditures of approximately $3.8 million. Identification of a repeat finding: This is a repeat finding – Findings 2024-001, 2023-003, 2022-007, and 2021-008. Recommendation: We recommend management at Bailey-Boushay House execute its processes to properly approve all time charged to federal grants in accordance with 2 CFR 200.430. Views of responsible officials: Management agrees with the finding. Corrective action over timecard approval will be implemented in January 2026.

Finding 2025-002 – Eligibility Identification of the federal program: Health Resources and Services Administration HIV Emergency Relief Project Grants Assistance Listing No. 93.914 Pass Through Number Pass Through Entity Grant Period 11987 PREV King County Public Health 3/1/2024–2/28/2025 13548 PREV King County Public Health 3/1/2025–2/28/2026 Location: Virginia Mason Medical Center, Bailey-Boushay House (Bailey-Boushay House) Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 (a) requires that a non-federal entity must “(a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: Bailey-Boushay House has processes in place to verify whether participants are eligible; however, documentation to evidence the execution of the controls was not retained. Cause: Bailey-Boushay House management did not retain evidence of the execution of controls due to lack of understanding of the need to retain the documentation. Effect or potential effect: Ineligible individuals may be provided services. Questioned costs: None. Context: We issued a material weakness for Bailey-Boushay House related to internal controls in the prior year. Based upon the implementation date of February 2025 for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a material weakness consistent with the prior year finding. Total expenditures for Bailey-Boushay House were approximately $1.1 million and represent 29.8% of the total HIV program expenditures of approximately $3.8 million. However, expenditures are not based upon serving eligible patients. Identification of a repeat finding: This is a repeat finding – Finding 2024-004. Recommendation: We recommend management maintain evidence of the execution of internal controls related to documentation that individuals served are eligible to participate in the program. Views of responsible officials: Management agrees with the finding and implemented corrective action in February 2025.