Audit 381668

Section lll - Federal Award Findings and Questioned Costs Finding 2025-001 - Significant Deficiency Finding Condition: Adequate procedures were not in place to ensure all program incomewas considered as a part of program income and level of effort requirements. Program income generated from net patient service revenue related to services provided under the grant was not included in the Organization’s monitoring. Criteria: Per 45 CFR §75.307, program income must be properly accounted for and used in accordance with the terms and conditions of the federal award. Additionally, the Ryan White legislation (42 USC 300ff-22(d)(2)(B)) requires recipients to ensure that federal funds supplement and do not supplant other funding sources. Cause: The Organization lacked formal policies and procedures to ensure complete monitoring of program income and verifying compliance with the supplement-not-supplant requirement. Effect: Noncompliance with requirements to monitor program income and demonstrate that federal funds supplemented, rather than supplanted, other funding sources increases the risk of noncompliance with federal regulations, potential disallowance of costs, and inaccurate reporting to the awarding agency. Recommendation: We recommend that the Organization develop and implement writtenpolicies and procedures to ensure all elements of program incomeare properly tracked, reported, and utilized in accordance with federal requirements. We recommend that the Organization establish a process for documenting compliance with the supplement-notsupplant requirement, including periodic reviews of funding sources and expenditures related to services provided under the grant. View of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See management's corrective action plan.