Audit 406943

Finding 2025-002: Deficiency in Internal Control Over Subrecipient Monitoring Classification: Significant Deficiency in Internal Control Over Compliance Federal Programs: CFDA 93.310 (All of Us); CFDA 93.137 (OASH HEALS); CFDA 93.185 (Vaccination Coverage/CDC-F) Compliance Requirement: Subrecipient Monitoring — 2 CFR §§200.331–.333 Questioned Costs: None Criteria: Under 2 CFR §200.331, AHC as a pass-through entity must issue written subaward agreements containing all required elements, assess subrecipient risk prior to award, monitor subrecipient activities and performance during the award period and verify subrecipient UEIs against SAM.gov prior to payment. Condition: AHC passed approximately $542,500 through to community-based subrecipients across all three major programs during FY2025. Our testing found no written subaward agreements containing the required elements under 2 CFR §200.331(a), no pre-award risk assessments, no monitoring of subrecipient performance or financial activity, and no SAM.gov UEI verification. AHC has no formal subrecipient monitoring policies or designated staff responsible for this function. Cause: AHC has not developed a subrecipient monitoring program and has relied on informal program-level relationships with its community partners in lieu of structured compliance oversight. Effect: AHC cannot provide reasonable assurance that federal funds passed through to subrecipients were used for authorized purposes or that subrecipients complied with applicable requirements. This deficiency affects the Subrecipient Monitoring compliance requirement across all three major programs. Recommendation: AHC should establish a written subrecipient monitoring policy that includes subaward agreement templates with all required §200.331(a) elements, pre-award risk assessments, annual review of subrecipient financial and programmatic reports, SAM.gov UEI verification prior to each payment, and a designated staff member responsible for compliance oversight. Management’s Response. See accompanying Corrective Action Plan.

Classification: Instance of Noncompliance / Known Questioned Costs Federal Program: Community Programs to Improve Minority Health / OASH HEALS (CFDA 93.137) Award Numbers: 1 CPIMP221349-01-00; 5 CPIMP211321-02-00 Compliance Requirement: Budget Management — 2 CFR §200.302(b)(7) Questioned Costs: $8,158.59 (known) Criteria. Under 2 CFR §200.302(b)(7), recipients must compare actual expenditures to budgeted amounts and may not exceed the approved award budget without prior written approval from the federal awarding agency. Condition. AHC expended approximately $492,170.59 against a combined OASH HEALS award budget of $484,012.00 ($370,000 under Award No. 1 CPIMP221349-01-00 and $114,012 under Award No. 5 CPIMP211321-02-00), exceeding the approved budget by $8,158.59 without prior written agency approval. The overage originated entirely under Award No. 1 CPIMP221349-01-00, for which cumulative FY2025 costs incurred (per GL account 4280 — DHHS-OASH HEALS) totaled $378,158.59 against an approved ceiling of $370,000.00. Of the $378,158.59 in program costs incurred under Award No. 1 CPIMP221349-01-00, only $370,000 was charged to and drawn from federal funds; the $8,158.59 excess was absorbed by AHC using non-federal, unrestricted resources and was not billed to or reimbursed by the federal award, consistent with the amount reported on the Schedule of Expenditures of Federal Awards. Management identified this condition and is addressing it with OASH. The matter is also disclosed in Note 14 of the financial statements. Cause. AHC’s budget monitoring controls did not provide timely notification that cumulative expenditures were approaching the combined award ceiling. Effect. Expenditures of $8,158.59 in excess of the approved budget constitute known questioned costs under 2 CFR §200.516(a)(3). Although below the $25,000 reporting threshold for likely questioned costs, this amount is required to be reported as a known questioned cost for a major program compliance requirement. Recommendation. AHC should implement monthly budget-to-actual tracking for each federal award with alerts when expenditures approach award ceilings, and should obtain prior agency approval before exceeding approved budget limits. AHC should work with OASH to resolve the current over-award and document the agency’s allowability determination. Management’s Response. See accompanying Corrective Action Plan.