Audit 397225

Finding #2025-002 – Significant Deficiency and Other Noncompliance. U. S. Department of Treasury, Passed through Harris County Public Health, COVID-19 Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #: 21.027, Contract #: 220163, Contract period: 08/23/22 – 03/13/25. Criteria: Procurement – In accordance with 2 CFR 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirement for Federal Awards (the Uniform Guidance) recipients of federal funds must maintain and use documented procedures for procurements. 2 CFR Part 180 restricts making federal awards, subawards, and contracts with parties that are disbarred, suspended or otherwise excluded from receiving or participating in federal awards. Condition and context: In testing 1 out of 6 vendors subject to procurement, NBHP had not verified and documented that the Houston Health Department was not suspended or disbarred. Cause: NBHP’s procurement policy does not require verification of lack of suspension or disbarment for recipients of subawards or contracts. Effect: Failure to verify suspension and disbarment status could result in unallowable costs if a contract is entered into with a suspended or disbarred person or organization. Recommendation: Amend the procurement policy to require verification that person or organization is not suspended or disbarred. Views of responsible officials and planned corrective actions: Management agrees with finding. See corrective action plan.

Finding #2025-003 – Significant Deficiency and Other Noncompliance. U. S. Department of Treasury, Passed through Harris County Public Health, COVID-19 Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #: 21.027, Contract #: 220163, Contract period: 08/23/22 – 03/13/25. Criteria: Allowable costs – Management is responsible for establishing and maintaining an effective system of internal control over financial reporting in order to prepare the schedule of expenditures of federal awards in accordance with Uniform Guidance to reflect accurate allowable costs. Condition and context: In testing 40 nonpayroll transactions, we found one instance of an unallowable cost for a late fee charged to the grant and 2 instances of transactions recognized in the incorrect fiscal year. Additionally, 1 out of 9 payroll transactions were incorrectly allocated resulting in the understatement of payroll charged to the grant. Cause: NBHP’s policies do not include independent review of transactions and payroll allocations to ensure allowability and recognition in the proper period. Effect: Failure to have independent reviews of costs charged to federal programs resulted in unallowable costs being charged to the grant and an understatement of costs allocated to the grant. Recommendation: Amend NBHP’s policies and procedures to include independent review of allowability of cost and payroll allocations. Views of responsible officials and planned corrective actions: Management agrees with finding. See corrective action plan.