Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Identification of the Federal Programs: As this is an indirect cost allocation finding, all Population Services International (PSI) awards on the SEFA are impacted. See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.303 Internal Controls, a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, §200.475(e) Travel costs, states that airfare costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines are unallowable except when such accommodations would: (i) require circuitous routing; (ii) require travel during unreasonable hours; (iii) excessively prolong travel; (iv) result in additional costs that would offset the transportation savings; or (v) offer accommodations not reasonably adequate for the traveler's medical needs. The recipient or subrecipient must justify and document these conditions on a case-by-case basis for the use of first-class or business-class airfare to be allowable in such cases. Condition: HealthXP has documented policies and internal controls over allowability of expenditures incurred. However, as identified below, the review and approval process did not operate effectively. During our testing of the indirect cost pool, we identified one unallowable unapproved expense out of 25 samples tested. The exception involved a business-class airfare totaling $5,930, which does not comply with 2 CFR §200.475, Travel costs. Questioned Costs: Known questioned costs associated with the business class airfare totaled $5,930. Context: This is a condition identified per review of HealthXP’s compliance with allowability and allocability provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: HealthXP has documented expenditure policies and procedures regarding the review and approval of expenditures incurred. However, as identified above, the review and approval process for the sample identified above did not operate effectively. Effect: Because this unallowable amount was included in the indirect cost pool allocated across all federal programs, this noncompliance affects all PSI federal awards listed on HealthXP’s Schedule of Expenditures of Federal Awards for the year ended December 31, 2025. Repeat Finding: This is not a repeat finding. Recommendation: We recommend HealthXP adhere to documented policies and procedures regarding review and approval of expenditures. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations set forth within and will provide additional training to staff members to ensure compliance with established policies and procedures. Refer to management’s corrective action plan for additional information.
Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement Identification of the Major Federal Program: United States Agency for International Development (USAID) Assistance Listing Number: 98.NoAL Assistance Listing Name: USAID – Cost-Reimbursable Contracts and Other Awards Grant Award Number under the Uniform Guidance Requirements: See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.309 Modification to Period of Performance, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Additionally, §200.344(c) Closeout, states that unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “financial obligations”, as defined in §200.1 Definitions, means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period. Condition: During the period of performance completeness testing, we identified $31,281 of costs related to EGPAF and $1,285 related to PSI that were recorded after the period of performance. Questioned Costs: $32,566 of known questioned costs. Context: Our testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. Our subsequent testing of additional detailed expenditures identified no further samples that were recorded incorrectly. Cause: HealthXP management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award. Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs billed and received that need to be returned to the USAID. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should be reviewed and approved by individuals at HealthXP’s headquarters. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.
Internal Control over Compliance and Compliance with the Reporting Compliance Requirement Identification of the Major Federal Program: U.S. Department of Health and Human Services Assistance Listing Number: 93.067 Assistance Listing Name: Global AIDS Grant Award Number under the Uniform Guidance Requirements: See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.303(a), Internal Controls, a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In accordance with the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Subaward Reporting in SAM.gov. The prime awardee is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition: We tested HealthXP’s compliance with specific FFATA reporting requirements. Of the six sub-award reports selected for testing, three of the reports with subaward amounts totaling $668,694 were not submitted within the required timeframe. Specifically, the three FFATA reports were filed between 5 and 36 days later than the required filing date. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of HealthXP’s compliance with specified requirements. The samples were selected using a non-statistical sampling method. Cause: Although HealthXP has existing internal control policies and procedures ensuring appropriate filing of sub-award information in SAM.gov, it failed to file the FFATA reports on time. Effect: Failure to report subrecipient information in a timely manner can result in lack of transparency and accountability, which is contrary to the intent of FFATA. Such non-compliance also increases the risk of loss of future awards if compliance with the provisions of Uniform Guidance is not met. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management ensure that all FFATA reports are filed in a timely manner. In addition, management should strengthen the existing internal controls and conduct refresher training to personnel emphasizing timely submission of FFATA reports. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations and will enhance the processes around timely submission of FFATA reports.
Internal Control over Compliance and Compliance with Cash Management Requirements Identification of the Major Federal Program: U.S. Department of Health and Human Services Assistance Listing Number: 93.067 Assistance Listing Name: Global AIDS Grant Award Numbers under the Uniform Guidance Requirements: See Schedule of Findings and Questioned Costs for table. Criteria or Specific Requirement: In accordance with §200.305(b)(11), Federal Payment, the recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts unless one of the following applies: (i) the recipient or subrecipient receives less than $250,000 in Federal funding per year; (ii) The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; (iii) The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; (iv) A foreign government or banking system prohibits or precludes interest-bearing accounts; or (v) An interest-bearing account is not readily accessible (for example, due to public or political unrest in a foreign country). Condition: During our testing of compliance, we noted that EGPAF, a HealthXP subsidiary, failed to maintain the advance payments of Federal funds under the awards NU2GGH002211, NU2GGH002301, NU2GGH002315, NU2GGH002369, NU2GGH002421, NU2GGH002425, and NU2GGH002551 in an interest-bearing account, which is noncompliant with §200.305(b)(11). Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing HealthXP’s compliance with specified cash management compliance requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: HealthXP’s management team failed to consistently maintain advance payments received from the funding agencies in an interest-bearing account as required. Effect: Failure to perform cash management procedures in accordance with HealthXP’s documented policies and relevant compliance requirements could result in non-compliance with federal statutes and contractual agreements. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management ensure that cash management policies and procedures align with U.S. Government funding requirements. Views of Responsible Officials: HealthXP management agrees with the findings and recommendations set forth within and will refine its cash management policies and procedures. Refer to management’s corrective action plan for additional information.
Allegations of Fraud Identification of the Federal Programs: See Schedule of Findings and Questioned Costs for table. Criteria: §200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2025, HealthXP identified three instances of fraud through its internal reporting mechanisms that impacted the Organization’s federally funded programs. These incidents have been reported to the appropriate U.S. Office of the Inspector General. See details below. • In Mozambique, a subrecipient confirmed fraudulent expenditures of $359.66 and questioned costs of $186.00. This resulted from a falsified contract for office rent and misrouted utility invoices. The amount was remitted by the subrecipient, as such, there was no loss to the U.S. Government. Centers for Disease Control award NU2GGH002369. • In Tanzania, a subrecipient’s program officer circumvented controls for the entity’s payment system, forged authorization documents and redirected payments totaling $3,366. Duplicate payments of $240 were also identified. Amounts were fully recovered from the subrecipient. There was no financial loss to the U.S. Government. USAID contract #72062122C00001. • In Cote d’Ivoire, allegations regarding falsified hotel receipts of per diem was substantiated. The impact to award 72062421CA00003 was $129 and was subsequently fully recovered. There was no financial loss to the U.S. Government. HealthXP has ongoing investigations involving Federal funding pending in multiple countries for which the facts and circumstances and full effect of the fraud investigations have not been determined. Where investigations are still pending and conclusions of the matters identified through whistleblower or other communications have not been reached, HealthXP has reported such matters to the appropriate U.S. agency. Questioned Costs: There are no questioned costs as the questioned amounts have been, or are in the process of, being reimbursed to the respective Federal agency. The questioned amounts are not included or presented in the Schedule. Context: These conditions were identified through HealthXP’s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2025. Cause: Individuals intentionally circumvented HealthXP or related subrecipient’s established internal controls. Effect: These conditions could result in unallowable expenses being charged to U.S. Government awards if controls in place had not identified the conditions. Repeat Finding: The specific items identified above were not reported in the prior year; however, findings related to fraud were included in the prior year report of PSI for the prior year as findings 2024-004 in the December 31, 2024 schedule of findings and questioned costs. Recommendation: Because of the international environment in which HealthXP entities operate, the potential for fraud is heightened. Given this, we recommend management continue to utilize its global internal audit team and fraud reporting hotline, as well as other policies and procedures around fraud identification to mitigate the fraud risk. Views of Responsible Officials: HealthXP management agrees with the finding and recommendations set forth within and will proactively report and investigate allegations of fraud and to raise awareness of the actions to be taken when there is a suspicion of fraud. Refer to management’s correction action plan for additional information.