Audit 402431

Item: 2025-001 Assistance Listing Number: 21.027 Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: City of Phoenix, Arizona Department of Economic Security Contract Numbers: CTR062832; 157666-005; 163621-0; 159341 Award Year: October 1, 2024 – September 30, 2025 Compliance Requirement: Reporting Criteria: In accordance with the grant agreements, the Organization is required to submit periodic financial and programmatic reports for each contract within certain prescribed timeframes. Documentation should be maintained to support that the reports required were submitted to the granting agencies and that the submissions were submitted timely. Condition: In a nonstatistical sample of 14 financial reports and 40 programmatic reports, we noted one financial report and seven programmatic reports were not submitted to the granting agency within the prescribed reporting deadlines. Questioned Costs: N/A Context: In a population of 136 financial reports and over 250 programmatic reports, we conducted a nonstatistical sample resulting in 14 financial reports and 40 programmatic reports being selected for testing. Of the 14 financial reports and 40 programmatic reports selected for testing, we noted one financial report and seven programmatic reports were not submitted to the granting agency within the prescribed reporting deadlines. Effect: Untimely reporting can increase the risk that the pass-through entity and federal agency did not have timely information to monitor grant performance and cash needs, and could lead to delayed reimbursements, questioned costs, or other administrative actions. Late reporting also impairs management’s ability to make informed decisions, weakens accountability over federal funds, and may adversely affect the entity’s eligibility for future funding or impose additional oversight by the awarding agency. This is deemed to be a material weakness in internal control over compliance. Cause: The delays occurred due to insufficient internal controls over the reporting process, including lack of a centralized compliance calendar with established internal due dates, and inadequate supervisory review to ensure completeness and timeliness. Identification as a Repeat Finding: Repeat finding. See 2024-002. Recommendation: Management should strengthen the reporting control environment by assigning clear ownership for each required report, establishing written procedures that include a centralized compliance calendar with internal due dates prior to the federal deadlines, and implementing automated reminders and supervisory review checkpoints. The Organization should also provide periodic training on federal and pass-through reporting requirements, ensure cross-training to mitigate the impact of turnover, and perform a retrospective review to identify and remediate bottlenecks in the report preparation and approval process. Policies and procedures should also be updated to reflect these controls, and management should monitor compliance with the new process and report results to governance. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2025-002 Assistance Listing Number: 93.788 Program: Opioid STR Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Mercy Care Contract Numbers: YH22-0061R-01 Award Year: October 1, 2024 – September 30, 2025 Compliance Requirement: Reporting Criteria: In accordance with the grant agreements, the Organization is required to submit periodic financial reports for each contract within certain prescribed timeframes. Documentation should be maintained to support that the reports required were submitted to the granting agencies and that the submissions were submitted timely. Condition: In a nonstatistical sample of 9 financial reports, we noted one financial report was not submitted to the granting agency within the prescribed reporting deadlines. Questioned Costs: N/A Context: In a population of 84 financial reports, we conducted a nonstatistical sample resulting in 9 financial reports being selected for testing. Of the 9 financial reports selected for testing, we noted one financial report was not submitted to the granting agency within the prescribed reporting deadlines. Effect: Untimely reporting can increase the risk that the pass-through entity and federal agency did not have timely information to monitor grant performance and cash needs, and could lead to delayed reimbursements, questioned costs, or other administrative actions. Late reporting also impairs management’s ability to make informed decisions, weakens accountability over federal funds, and may adversely affect the entity’s eligibility for future funding or impose additional oversight by the awarding agency. This is deemed to be a material weakness in internal control over compliance. Cause: The delays occurred due to insufficient internal controls over the reporting process, including lack of a centralized compliance calendar with established internal due dates, and inadequate supervisory review to ensure completeness and timeliness. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend strengthening the reporting control environment by assigning clear ownership for each required report, establishing written procedures that include a centralized compliance calendar with internal due dates prior to the federal deadlines, and implementing automated reminders and supervisory review checkpoints. The Organization should also provide periodic training on federal and pass-through reporting requirements, ensure cross-training to mitigate the impact of turnover, and perform a retrospective review to identify and remediate bottlenecks in the report preparation and approval process. Policies and procedures should also be updated to reflect these controls, and management should monitor compliance with the new process and report results to governance. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2025-003 Assistance Listing Number: 93.958 Program: Block Grants for Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Complete Health - North (Care1st) Contract Numbers: Unknown Award Year: October 1, 2024 – September 30, 2025 Compliance Requirement: Reporting Criteria: In accordance with the grant agreements, the Organization is required to submit periodic financial and programmatic reports for each contract within certain prescribed timeframes. Documentation should be maintained to support that the reports required were submitted to the granting agencies and that the submissions were submitted timely. Condition: In a nonstatistical sample of 7 programmatic reports, we noted 5 programmatic reports were not submitted to the granting agency within the prescribed reporting deadlines. Additionally, we noted that the Organization was not able to provide documentation supporting that one report was completed and submitted to the granting agency. Questioned Costs: N/A Context: In a population of 74 programmatic reports, we conducted a nonstatistical sample resulting in 7 programmatic reports being selected for testing. Of the 7 programmatic reports selected for testing, we noted 5 programmatic reports were not submitted to the granting agency within the prescribed reporting deadlines. Additionally, we noted that the Organization was not able to provide documentation supporting that one report was completed and submitted to the granting agency. Effect: Untimely reporting can increase the risk that the pass-through entity and federal agency did not have timely information to monitor grant performance and cash needs, and could lead to delayed reimbursements, questioned costs, or other administrative actions. Late reporting also impairs management’s ability to make informed decisions, weakens accountability over federal funds, and may adversely affect the entity’s eligibility for future funding or impose additional oversight by the awarding agency. This is deemed to be a material weakness in internal control over compliance. Cause: The delays and omission occurred due to insufficient internal controls over the reporting process, including lack of a centralized compliance calendar with established internal due dates, and inadequate supervisory review to ensure completeness and timeliness. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend management determine if the one missing report had been completed and submitted to the granting agency. Additionally, management should strengthen the reporting control environment by assigning clear ownership for each required report, establishing written procedures that include a centralized compliance calendar with internal due dates prior to the federal deadlines, and implementing automated reminders and supervisory review checkpoints. The Organization should also provide periodic training on federal and pass-through reporting requirements, ensure cross-training to mitigate the impact of turnover, and perform a retrospective review to identify and remediate bottlenecks in the report preparation and approval process. Policies and procedures should also be updated to reflect these controls, and management should monitor compliance with the new process and report results to governance. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.