Audit 406259

Federal Agency: Major Program – U.S. Department of Health and Human Services. Other Program –U.S. Department of Justice Federal Program Name: Major Program – HIV Prevention Activities: Non-Governmental Organization Based. Other Program – Grants for Outreach and Services to Underserved Populations Assistance Listing Number: Major Program – 93.939. Other Program – 16.889 Federal Award Identification Number: Major Program – NU65PS923746. Other Program – 15JOVW-22-GG-00404-UNDE Award Period: Major Program – July 1, 2024 through June 30, 2025. Other Program – October 1, 2024 through September 30, 2025. Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Cash Management. Criteria or Specific Requirement: Per the Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement for program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: During the audit of federal program compliance, it was identified that the entity drew down federal funds in excess of the amounts incurred for allowable expenses. Specifically, cash management procedures did not ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned Costs: Major Program – $339,859. Other Program – $110,783. Context: We noted through our testing of drawdowns and related expenses that as of June 30, 2025 Mazzoni Center had drawn down $339,859 more funds than it had expended on the contract for Assistance Listing No. 93.939 HIV Prevention Activities. It was also identified that $110,783 of funds were drawn down in excess of funds expended for Assistance Listing No. 16.889 Grants for Outreach and Services to Underserved Populations which was not deemed to be a major program. The individual drawing down funds from the federal agencies did not draw down funds based on the expenses incurred each month. Cause: The entity lacked effective internal controls to reconcile actual drawdowns with expenditures incurred. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed the entity to potential interest liabilities and reputational risk. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat Finding: Yes Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expenses. This should include: • Pre-drawdown verification of expense documentation. • Monthly reconciliations of drawdown activity to actual expenditures. • Training for staff involved in federal fund management on Uniform Guidance requirements. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: HIV Prevention Activities: Non-Governmental Organization Based Assistance Listing Number: 93.939 Federal Award Identification Number: NU65PS923746 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Reporting Criteria or Specific Requirement: Per 2 CFR §200.302 and §200.328, recipients of federal awards must provide accurate, current, and complete disclosure of financial results of each federally-sponsored project or program in accordance with the reporting requirements of the federal awarding agency. Condition: It was noted that the expenditures reported on the FFR matched the cash receipts for the period rather than the actual expenditures incurred. Questioned Costs: $117,889 Context: During the testing of reporting compliance of the contract during the fiscal year ended 6/30/25, we identified errors in the interim FFR reporting during the period of 4/1/22-9/30/24 for the actual expenditures in the amount of $117,889.20. Cause: The Organization lacked effective internal controls to reconcile actual expenditures incurred within reporting periods. The process relied on estimates and did not include timely reconciliation of actual costs. Effect: This deficiency resulted in noncompliance with federal reporting requirements. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat finding: Yes Recommendation: We recommend that management implement procedures to ensure that expenditures reported on the Federal Financial Report reflect actual costs incurred during the reporting period and are supported by appropriate documentation. Staff responsible for preparing the Federal Financial Report should be trained in federal reporting requirements to ensure compliance. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: HIV Prevention Activities: Non-Governmental Organization Based Assistance Listing Number: 93.939 Federal Award Identification Number: NU65PS923746 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Compliance – Procurement and Suspension & Debarment Criteria or Specific Requirement: Per 2 CFR §180.300 and §200.213, non-federal entities must verify that entities receiving subawards or contracts are not suspended or debarred prior to entering into a covered transaction. Non-federal entities must also conduct all procurement transactions in line with Uniform Grant Guidance. Condition: It was noted through our testing that no documentation could be provided in order to confirm that the exclusions listing was checked prior to commitments entered. It was also noted through our testing that proper procurement procedures were not followed in obtaining bids or price comparisons for various vendors prior to contract engagement. Questioned Costs: $90,467 Context: Although one subrecipient was confirmed as not listed on the federal exclusions list as of July 31, 2025, the Organization did not retain documentation demonstrating that this verification was performed prior to entering into the covered transaction. Also, the Organization has a procurement policy in place that aligns with the Uniform Guidance standards, but proper procedures were not followed in obtaining bids or price comparisons prior to contract engagement for one item tested. Cause: The lack of documentation appears to be due to insufficient procedures for retaining evidence of procurement, suspension and debarment checks prior to executing subawards and contracts with vendors. Effect: This deficiency resulted in noncompliance with federal procurement, suspension and debarment requirements. Failure to document verification prior to entering into a covered transaction and competitive procurement may result in noncompliance with federal requirements and could lead to inefficient use of federal funds or disallowed costs. Repeat Finding: Yes Recommendation: We recommend that management reinforce procedures to ensure that verification of procurement, suspension and debarment practices are performed and documented prior to entering into any covered transaction or subaward. This may include retaining screenshots from SAM.gov, signed certifications, contract clauses confirming compliance, and documentation of competitive pricing retained for records. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.