Audit 391960

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Period: NU50CK000346 (8/1/2024 – 7/31/2029) (93.323) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Per CFR §200.430 Compensation – personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing we noted for one of twenty-five samples tested, the employee’s wages were improperly allocated to the program. The employee did not work for the program during the sampled period and the timesheet’s project ID had not been updated accordingly. Management was able to properly adjust the error to the correct program. Questioned Costs: None Cause: Lack of management oversight. Effect: Auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grants. Repeat Finding: No Recommendation: We recommend the Department provide additional training to ensure supervisors properly review employees’ time and verify that time worked is allocated to the appropriate federal award. Agency Response: The Department acknowledges this finding and provides the following corrective action plan to prevent future findings. The Department agrees that the procedures in place to ensure accuracy can be improved. Newly imposed supervisory review of the bi-weekly payroll correction process will ensure that miscoded employees are detected. Discrepancies will be addressed immediately. The Department is working on remediation of this finding and anticipates completion before June 30, 2026. Responsible Persons: Division Finance Directors, Program Grant Administrators, and Federal Grants Director.

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Periods: • NU50CK000548 (8/1/2019 – 7/31/2024) (93.323) • NU50CK000346 (8/1/2024 – 7/31/2029) (93.323) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Per §200.313, property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the Federal Award Identification Number (FAIN)), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use, and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Per Manual of Model Accounting Practices (MAPs) FIN 6.1, State agencies shall mark or tag each capital asset at the time it is acquired with a unique number that identifies the agency and the specific asset. Condition: During our testing we noted the following: • The Department was unable to provide an asset listing that included Asset Tag IDs for all capital assets. • The SAGE Asset Listing did not consistently identify the capital asset’s Serial Number or Other Identification Number. Questioned Costs: None Cause: Noncompliance with applicable regulations and lack of complete adherence to MAPs. Effect: Compliance with Capital Assets purchased with Federal Funds requirements was not monitored during the year. Repeat Finding: Yes Recommendation: The Department should establish policies and procedures to ensure compliance with Federally Purchased Capital Assets. 2025-005 (2024-002) Equipment (Significant Deficiency, Other Noncompliance) (Continued) Agency Response: The Department acknowledges this finding and provides the following corrective action plan to prevent future findings. The Department agrees that they are noncompliant with applicable regulations and lack complete adherence to Model Accounting Practices (MAPs). The Department will implement a policy and procedure to include asset tag information, such as QR codes, serial numbers, and other identification numbers for capital assets. This information will be entered into our SAGE Asset system. SAGE Asset system will be used with another system to help identify assets and their locations when conducting the Annual Capital Assets Physical Inventory Certification. The additional system utilizes QR codes to track assets and their related maintenance. The Department’s new Capital Asset Manager is in the process of cross-referencing the assets between the two systems. This process will ensure compliance with MAPS FIN 6.1 and FIN 6.6, as well as adhere to the requirements for capital assets purchased with federal funds during the fiscal year. The Department is committed to addressing this finding and aims to resolve it by June 30, 2026. This action plan will comply with Per §200.313, Property records; Per Manual of Model Accounting Practices (MAPs) FIN 6.1; Per MAPs FIN 6.6. Responsible Persons: Capital and Fixed Assets Director, Division Financial Director, IT, Division Directors.

Federal Agency: • U.S. Department of Agriculture • U.S. Department of Health and Human Services Federal Program Titles: • WIC Special Supplemental Nutrition Program for Women, Infants, and Children • Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health Assistance Listing Numbers: • 10.557 • 93.967 Award Periods: • 265NM504W1003-256NM504W1006 (10/1/2024 - 9/30/2025) (10.557) • NE11OE000056 (12/1/2022 – 11/30/2027) (93.967) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Post Federal Award Requirements and Cost Principles for Federal Award requires compliance with the provisions of procurement and suspension and debarment. The Department should have internal controls designed to ensure compliance with these provisions. Condition: During our testing we noted the following: • 10.557 - For one of five procurement transactions tested, the Department was unable to provide documentation supporting they verified the vendor was not suspended or debarred prior to entering into the covered transaction. • 93.967 - For one of four procurement transactions tested, the Department was unable to provide documentation supporting they verified the vendor was not suspended or debarred prior to entering into the covered transaction. 2025-006 (2024-003) Procurement, Suspension, and Debarment (Significant Deficiency, Other Noncompliance) (Continued) While the Department has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with federal laws, regulations, and program compliance requirements as well as Department policy. Questioned Costs: None Cause: Policies and procedures were not well defined or communicated to staff to ensure suspension and debarment requirements are met prior to entering into a contract with vendors. Effect: The Department was not in compliance with federal procurement, suspension, and debarment requirements. Continued noncompliance can result in sanctions by the federal awarding agency, including withholding future funding. Repeat Finding: Yes Recommendation: We recommend the Department provide additional training to ensure employees are properly completing the suspension and debarment checks prior to finalizing agreements with vendors. Agency Response: The Department acknowledges this finding and provides the following corrective action plan to prevent future findings. As a result of previous audit findings, the department engaged with Deloitte Consulting. Deloitte Consulting provided state road maps for financial controls and process improvements. These will help to develop policy and procedures to ensure that all procurement policies are implemented. The Department has implemented procedures to ensure federal procurement requirements are met and suspension and debarment checks are completed prior to finalizing agreements with vendors. The Department will provide training on the steps needed for verification of debarment and suspensions on sam.gov for applicable procurements and keep on file and/or attach to the purchase order submission in SHARE to assure the division did their due diligence to fulfill this requirement. The Department is working on remediation of this finding and anticipates completion before June 30, 2026. This action plan will comply with 2 CFR Part 200 Uniform Administrative Requirements, Post Federal Award Requirements and Cost Principles for Federal Award. Responsible Persons: Chief Procurement Officer, Federal Grant Director, and Division Finance Directors.

Federal Agency: U.S. Department of Health and Human Services Federal Program Titles: • Emerging Infections Programs • Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Numbers: • 93.317 • 93.323 Award Periods: • NU50CK000649 (1/1/2024 – 12/31/2028) (93.317) • NU50CK000548 (8/1/2019 – 7/31/2024) (93.323) • NU50CK000346 (8/1/2024 – 7/31/2029) (93.323) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Post Federal Award Requirements and Cost Principles for Federal Award requires compliance with the grantee to submit reports as required by Federal statutes, regulations, and terms and conditions of the subaward. 2025-007 (2024-004) Reporting (Significant Deficiency, Other Noncompliance) (Continued) Condition: During our testing, we noted the following: • We were unable to verify whether the Department is meeting the Federal Funding Accountability and Transparency Act (FFATA) requirements and reporting subaward activities in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Questioned Costs: None Cause: The Department does not have procedures in place to ensure FFATA reports are submitted timely and in accordance with the terms and conditions of the federal awards. 2025-007 (2024-004) Reporting (Significant Deficiency, Other Noncompliance) (Continued) Effect: The Department was not in compliance with federal award reporting requirements. Continued noncompliance could result in sanctions by the federal awarding agency, including withholding future funding. Repeat Finding: Yes Recommendation: The Department should establish policies and procedures to ensure FFATA reporting activities are performed for all federal awards. Agency Response: The Department acknowledges this finding and provides a corrective action plan to prevent future similar findings. The Department agrees that it did not have procedures in place to ensure reports are submitted timely and in accordance with the terms and conditions of the federal awards. The Department has implemented new policies and procedures to ensure reporting activities are performed for all federal awards. The Program will meet with the Federal Funding Accountability and Transparency Act (FFATA) requirements and reporting subaward activities in SAM.gov no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Grants Management Bureau (GMB) will be oversight in making sure that these requirements are being met and will be verifying the information in SAM.gov. The Department is working on remediation of this finding and anticipates completion before June 30, 2026. This action plan will comply with 2 CFR Part 200 Uniform Administrative Requirements, Post Federal Award Requirements and Cost Principles for Federal Award. Responsible Persons: Federal Grants Director, Division Finance Directors, and Grant Administrators.

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: • Emerging Infections Programs • Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Numbers: • 93.317 • 93.323 Award Periods: • NU50CK000649 (1/1/2024 – 12/31/2028) (93.317) • NU50CK000548 (8/1/2019 – 7/31/2024) (93.323) • NU50CK000346 (8/1/2024 – 7/31/2029) (93.323) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Per §200.332, Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: We noted during our testing the programs did not evaluate the subrecipient’s risk of noncompliance with a subaward to determine appropriate subrecipient monitoring. While the Department has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with federal laws, regulations, and program compliance requirements as well as Department policy. Questioned Costs: None Cause: The Department continues to lack established subrecipient monitoring internal controls and procedures that comply with the uniform administrative requirements. Effect: The Department was not in compliance with federal award subrecipient monitoring requirements. Continued noncompliance could result in sanctions by the federal awarding agency, including withholding future funding. Repeat Finding: Yes 2025-008 (2024-005) Subrecipient Monitoring (Significant Deficiency, Other Noncompliance) (Continued) Recommendation: The Department should establish policies and procedures to ensure monitoring activities are performed for all subawards. Agency Response: The Department acknowledges this finding and provides a corrective action plan to prevent future similar findings. The Department does not have written procedures in place to ensure subrecipient expenditures are incurred for authorized purposes in accordance with the terms and conditions of the subaward. The Department has implemented new policies and procedures to ensure subrecipient activity controls and processes are performed for all subawards. The Division Heads will monitor their program staff and grant administrators to ensure that they are monitoring grantee activities of subrecipients to ensure that subaward is used for authorized purposes, in compliance with Federal statues, regulations and terms and conditions of the subaward. The Department is working on remediation of this finding and anticipates completion before June 30, 2026. This action plan will comply with 2 CFR Part 200 Uniform Administrative Requirements, Post Federal Award Requirements and Cost Principles for Federal Award. Responsible Persons: Federal Grants Director, Chief Procurement Officer, Contract Managers, Division Finance Directors, and Grant Administrators.