Audit 398759

Finding 2025-002: Allowable Costs/Cost Principles – Compensation for Personal Services (Significant Deficiency) Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Effective internal controls over payroll include documented supervisory review and approval of employee timesheets to ensure that time charged to Federal programs is complete, accurate, and properly authorized. Condition: During our testing of payroll expenditures at the headquarters level, we identified two instances in which employee timesheets lacked documented evidence of supervisory review and approval. Cause: The condition appears to be a result of termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Without documented supervisory review and approval of timesheets, IntraHealth lacks sufficient evidence that payroll costs charged to Federal awards are accurate, properly allocated, and allowable. This increases the risk that unallowable or inaccurately allocated payroll costs could be charged to Federal programs and may result in noncompliance with Federal cost principles. Questioned Costs: N/A, as no misallocations were noted according to the timesheet. Context: The exceptions were identified through our testing of payroll transactions charged to Federal awards across multiple locations and were not isolated to a single location or individual. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over payroll processing by requiring timely documented supervisory review and approval of all employee timesheets prior to processing payroll charges to Federal awards. Management should implement procedures to ensure approvals are retained and periodically monitored for compliance. Reinforcing this control will provide reasonable assurance that payroll costs charged to Federal programs are accurate, properly supported, and compliant with 2 CFR §200.430.

Finding 2025-003: Conflict of Interest Attestations Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Under 2 CFR §200.112, non-Federal entities must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity. Additionally, 2 CFR §200.318(c)(1) requires organizations to maintain written standards of conduct governing the performance of employees engaged in the administration of Federal awards. Effective internal controls require employees to periodically acknowledge and attest to compliance with IntraHealth’s conflict of interest policy to ensure transparency, accountability, and compliance with Federal regulations. Condition: During our testing of payroll and employee personnel files at both headquarters and the field office level, we noted instances in which employee-signed conflict of interest attestation forms were not available for our review. For various employees included in our sample, there was no documentation evidencing that the employee had acknowledged or certified compliance with IntraHealth’s conflict of interest policy. Cause: Based on discussions with management, the condition appears to be the result of employees which were terminated prior to the fiscal year 2025 attestation date. However, we were unable to verify that the employees had signed the conflict of interest forms for the immediately preceding period (which their sampled pay periods pertained to). This limitation was due to the inability to access systems which were discontinued, as well as the termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Failure to obtain and retain signed conflict of interest attestations increases the risk that potential or actual conflicts may not be identified, disclosed, or appropriately managed. This weakens IntraHealth’s internal control environment and increases the risk of noncompliance with Federal conflict of interest requirements. Without documented attestations, IntraHealth cannot demonstrate that employees involved in the administration of Federal awards are aware of and complying with established standards of conduct. Questioned Costs: N/A, as the condition does not lead to unallowable costs. Context: The exceptions were identified across multiple locations and arose from our testing of internal controls around the payroll cycle. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over its conflict of interest compliance process by implementing procedures to ensure all employees complete and sign conflict of interest attestations upon hire and on a periodic basis thereafter. Management should establish a centralized tracking mechanism and perform periodic monitoring to ensure documentation is complete and retained in personnel files. Strengthening this process will enhance transparency, promote ethical conduct, and provide reasonable assurance of compliance with Federal conflict of interest requirements.