Audit 384454

The AAIHB did not submit its Data Collection Form by the required due date. Uniform Guidance requires that the audit be completed and the data collection form and reporting package be submitted by the earlier date of either 30 days after the receipt of the auditor's report(s), or nine months after the end of the fiscal year end date, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. The AAIHB is not in compliance with Federal award requirements and could jeopardize future federal funding. The AAIHB was unable to complete the final trial balance and SEFA due to several factors, including late invoice submissions from subawardees, delays in completing bank reconciliations, and missing documentation for direct debit entries. In addition, accounts receivable were not recorded timely because certain programs did not provide copies of billing invoices for contractual services rendered. The situation was further affected by staff turnover in a key finance position and the ongoing operational challenges resulting from the COVID-19 pandemic. We recommend that the AAIHB implement procedures to ensure the completion of the data collection form in a timely manner.

AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $4,125 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.

The AAIHB did not submit its Federal Financial Reports by the required due dates. Uniform Guidance requires that AAIHB complete the Federal Financial Reports quarterly to report cumulative expenses incurred under each grant number. These reports must be submitted no later than 30 calendar days after the reporting period. The AAIHB is not in compliance with federal award requirements and could jeopardize future federal funding. The AAIHB was unable to complete the final trial balance and SEFA due to several factors, including late invoice submissions from subawardees, delays in completing bank reconciliations, and missing documentation for direct debit entries. In addition, accounts receivable were not recorded timely because certain programs did not provide copies of billing invoices for contractual services rendered. The situation was further affected by staff turnover in a key finance position and the ongoing operational challenges resulting from the COVID-19 pandemic. We recommend that the AAIHB implement procedures to ensure the completion of all Federal Financial Reports in a timely manner.