2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-004 Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, ?200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with ?200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). In accordance with the 2022 OMB Compliance Supplement, when the reimbursement payment method is used, program costs must be paid using non-federal entity funds before submitting a payment request to the federal awarding agency. Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for major program AL# 93.067 - Award NU2GGH002005, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. In October 2022, PSI requested an advance payment of $168,477 even though $170,259 remained available from a previous cash advance. Additionally, in November 2022, PSI requested an additional advance payment of $59,000 when an outstanding advance of $276,230 still remained. As of December 31, 2022, PSI had $348,287 in cash available from advance payments with no disbursements for direct expenditures. We noted that PSI provided a refund to the U.S. Department of Health and Human Services in February totaling $250,600 and in May totaling $56,103 related to the amount of cash available without actual disbursements as of December 31, 2022. The cash balance remaining as of the date of this report is being reconciled as part of PSI?s close out process. During our cash management testing, we identified instances where expenses were paid after the invoice to the federal government was submitted for reimbursement: ?For major program AL# 93.067, two instances of 10 samples tested, expenses totaling $1,092 were paid after the invoice to the federal government was submitted ? award NU2GGH002170. Questioned Costs: For major program AL# 93.067, PSI earned interest on the available cash for the funds advanced for Award NU2GGH002005. We calculated an estimate of interest earned and determined the likely questioned costs are $2,133 as of December 31, 2022. Interest continued to accrue on the available fund balance subsequent to year end and is estimated to be an additional $2,448 of likely questioned costs. There are no questioned costs related to the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement. Context: This is a condition based on testing of PSI?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments for Award NU2GGH002005, PSI?s programmatic and finance team did not adequately monitor remaining budget and projected expenditures at the end of the period of performance of the award resulting in PSI requesting and receiving funds that were not able to be liquidated. Furthermore, as of December 31, 2022, the PSI management team did not review open deferred revenue balances in sufficient detail to identify the need to reimburse the federal agency for overpayment of funds. In relation to both the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement, PSI personnel did not comply with documented review and approval policies to ensure timely payment of local office expenditures incurred. Effect: Failure to perform cash management procedures in accordance with PSI?s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This finding is a repeat finding from 2020 and was reported as finding 2020-004 in the 2020 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-006 Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table Criteria or Specific Requirement: In accordance with ?200.309, 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. 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, ?obligations? 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 as described in ?200.71. Condition: We identified 12 instances out of 162 sample items selected, whereby expenses were incurred after the end of the award period of performance. These expenses totaled $1,725 for Award NU2GGH002005. Questioned Costs: For Award NU2GGH002005, we identified $1,557 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Further analysis of the population of expenses incurred during the close-out period resulted in the identification of an additional $16,690 in known questioned costs that were outside of the period of performance and not permitted to be charged to the award based on the terms of the close-out budget. In addition, we identified $168 in known questioned costs as a result of our testing procedures for the period of performance of the original term of Award NU2GGH002005. Likely questioned costs associated with expenses incurred outside the period of performance of the original award totaled $83,585. Context: BDO?s 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. Testing of those 120 expenses for AL# 93.067 resulted in one exception totaling $33 related to Award NU2GGH002005 (included in the questioned costs of $168 above), and testing of 120 expenses for AL# 98.NoAL resulted in no exceptions to the period of performance requirements. BDO also performed specific period of performance procedures on those awards that began or ended during 2022. A total of 42 expenses for AL# 93.067 were selected across the awards that began or ended during 2022, and the compliance matters identified above resulted from those specific 42 items tested for AL# 93.067. No specific period of performance procedures were required for AL# 98.NoAL based on the individual grant period(s) of the awards. Cause: PSI 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 that need to be returned to the U.S. Department of Health and Human Services. Continued noncompliance with federal statutes, regulations, and the provisions of the grant agreements could ultimately result in additional disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from 2021 and was reported as finding 2021-006 in the 2021 schedule of findings and questioned costs. 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 go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-003 Internal Control over Compliance with Subrecipient Monitoring Requirements See Schedule of Findings and Questioned Costs for chart/table Criteria or Specific Requirement: ?200.303 Internal Controls states that 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. Condition: During the audit, we tested PSI?s monitoring of the only subrecipient within the major program AL# 93.067. We noted that PSI has documented policies and procedures in addition to a multitude of tools to comply with the subrecipient monitoring process. However, in the single sample tested, PSI obtained the statutory audit report from the subrecipient and reviewed the contents of that audit report. However, the subrecipient?s audit was not performed in accordance with 2 CFR 200, Subpart F. The Centers for Disease Control and Prevention (CDC) mandates a foreign-based subrecipient is required to conduct a single audit or program specific audit if expenditures are $300,000 or greater in a given fiscal year. The subrecipient?s statutory report did not comply with the CDC guidelines. PSI management provided email communication between PSI and the subrecipient inquiring about the need for an audit in accordance with 2 CFR 200, Subpart F; however, the email documentation did not document PSI management?s considerations and conclusions regarding the fact that the subrecipient had a statutory audit performed, instead of an audit in accordance with 2 CFR 200, Subpart F. Questioned Costs: There are no questioned costs. Context: This is a condition identified based on our review of the internal control documentation used to support the monitoring of the subrecipient selected for testing. No sampling was required as there was only one subrecipient for the major program AL# 93.067. Cause: PSI?s subrecipient monitoring policies and procedures contain requirements for PSI to obtain subrecipient audit reports and review those reports. However, based on the matter identified, the policies and procedures do not contain adequate guidance to address a subrecipient?s noncompliance with the audit requirements of 2 CFR 200, Subpart F. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major federal program. Repeat Finding: This is not a repeat finding. Recommendation: BDO recommends that PSI implement specific documentation requirements related to PSI management?s considerations and conclusions regarding subrecipient noncompliance with a particular federal statue or condition of an award. While PSI?s procedures may address risk associated with subrecipient noncompliance, the maintenance of written documentation to evidence considerations and conclusions is imperative to PSI?s risk management process. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will work with program management teams to provide guidance and training related to non-U.S. subrecipient organization audit requirements. Refer to management?s corrective action plan for additional information.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-004 Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, ?200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with ?200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). In accordance with the 2022 OMB Compliance Supplement, when the reimbursement payment method is used, program costs must be paid using non-federal entity funds before submitting a payment request to the federal awarding agency. Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for major program AL# 93.067 - Award NU2GGH002005, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. In October 2022, PSI requested an advance payment of $168,477 even though $170,259 remained available from a previous cash advance. Additionally, in November 2022, PSI requested an additional advance payment of $59,000 when an outstanding advance of $276,230 still remained. As of December 31, 2022, PSI had $348,287 in cash available from advance payments with no disbursements for direct expenditures. We noted that PSI provided a refund to the U.S. Department of Health and Human Services in February totaling $250,600 and in May totaling $56,103 related to the amount of cash available without actual disbursements as of December 31, 2022. The cash balance remaining as of the date of this report is being reconciled as part of PSI?s close out process. During our cash management testing, we identified instances where expenses were paid after the invoice to the federal government was submitted for reimbursement: ?For major program AL# 93.067, two instances of 10 samples tested, expenses totaling $1,092 were paid after the invoice to the federal government was submitted ? award NU2GGH002170. Questioned Costs: For major program AL# 93.067, PSI earned interest on the available cash for the funds advanced for Award NU2GGH002005. We calculated an estimate of interest earned and determined the likely questioned costs are $2,133 as of December 31, 2022. Interest continued to accrue on the available fund balance subsequent to year end and is estimated to be an additional $2,448 of likely questioned costs. There are no questioned costs related to the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement. Context: This is a condition based on testing of PSI?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments for Award NU2GGH002005, PSI?s programmatic and finance team did not adequately monitor remaining budget and projected expenditures at the end of the period of performance of the award resulting in PSI requesting and receiving funds that were not able to be liquidated. Furthermore, as of December 31, 2022, the PSI management team did not review open deferred revenue balances in sufficient detail to identify the need to reimburse the federal agency for overpayment of funds. In relation to both the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement, PSI personnel did not comply with documented review and approval policies to ensure timely payment of local office expenditures incurred. Effect: Failure to perform cash management procedures in accordance with PSI?s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This finding is a repeat finding from 2020 and was reported as finding 2020-004 in the 2020 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-004 Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, ?200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with ?200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). In accordance with the 2022 OMB Compliance Supplement, when the reimbursement payment method is used, program costs must be paid using non-federal entity funds before submitting a payment request to the federal awarding agency. Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for major program AL# 93.067 - Award NU2GGH002005, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. In October 2022, PSI requested an advance payment of $168,477 even though $170,259 remained available from a previous cash advance. Additionally, in November 2022, PSI requested an additional advance payment of $59,000 when an outstanding advance of $276,230 still remained. As of December 31, 2022, PSI had $348,287 in cash available from advance payments with no disbursements for direct expenditures. We noted that PSI provided a refund to the U.S. Department of Health and Human Services in February totaling $250,600 and in May totaling $56,103 related to the amount of cash available without actual disbursements as of December 31, 2022. The cash balance remaining as of the date of this report is being reconciled as part of PSI?s close out process. During our cash management testing, we identified instances where expenses were paid after the invoice to the federal government was submitted for reimbursement: ?For major program AL# 93.067, two instances of 10 samples tested, expenses totaling $1,092 were paid after the invoice to the federal government was submitted ? award NU2GGH002170. Questioned Costs: For major program AL# 93.067, PSI earned interest on the available cash for the funds advanced for Award NU2GGH002005. We calculated an estimate of interest earned and determined the likely questioned costs are $2,133 as of December 31, 2022. Interest continued to accrue on the available fund balance subsequent to year end and is estimated to be an additional $2,448 of likely questioned costs. There are no questioned costs related to the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement. Context: This is a condition based on testing of PSI?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments for Award NU2GGH002005, PSI?s programmatic and finance team did not adequately monitor remaining budget and projected expenditures at the end of the period of performance of the award resulting in PSI requesting and receiving funds that were not able to be liquidated. Furthermore, as of December 31, 2022, the PSI management team did not review open deferred revenue balances in sufficient detail to identify the need to reimburse the federal agency for overpayment of funds. In relation to both the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement, PSI personnel did not comply with documented review and approval policies to ensure timely payment of local office expenditures incurred. Effect: Failure to perform cash management procedures in accordance with PSI?s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This finding is a repeat finding from 2020 and was reported as finding 2020-004 in the 2020 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management?s corrective action plan for additional information.
2022-005 Allegations of Fraud See Schedule of Findings and Questioned Costs for chart/table. Criteria: ?200.516(a) Audit findings requires known or suspected fraud be reported by the auditor. Condition: During 2022, PSI identified multiple fraud incidents through its internal reporting mechanisms that impacted its federally funded programs. These fraud incidents have been reported to the appropriate U.S. Office of the Inspector General by PSI. ?In the Republic of Malawi, a demand creation supervisor knowingly assigned walk-in clients to an external party through a contract that was wrongfully issued with the intention to defraud PSI Malawi. The total financial loss to award 72061220CA00003 was $112. ?In the Democratic Republic of the Congo, allegations of possible manipulation of procurement of COVID-19 personal protective equipment led to an expanded investigation of procurements and unsupported transactions related to task order #14 of the COVID-19 funding for award 7200AA18C00014. This investigation resulted in the disallowance of $216,227. ?In the Republic of Tanzania, a clinical advisor breached mentorship protocols and did not visit health facilities as required in the approved activities plan. The costs incurred related to the unapproved mentorship activities totaled $12,749 for award 7200AA18C00014. ?In the Republic of Zimbabwe, enhanced peer mobilizers overclaimed the number of clients who were successfully referred to the program. The attributable financial loss to award 72061318CA00009 is $1,314. The falsification of information from the enhanced peer mobilizers did not affect the accuracy of actual clients who received services because the actual client service delivery records are maintained by an independent service provider based on actual clients served. ?In the Republic of Sierra Leone, a third-party vendor used by PSI Sierra Leone to obtain motorcycle registration and licensing fees colluded with PSI Sierra Leone staff to inflate the charges levied by the relevant authority and administration fee payable to the vendor. The total financial loss to award 7200AA18C00014 was $1,335. ?In the Republic of Zimbabwe, two employees misappropriated project cash advances meant for training and beneficiary payments. One of those same employees improperly accounted for mileage and fuel use. Both of these matters resulted in a total financial loss to award 72061318CA00009 of $1,758. ?In Washington D.C. at PSI?s headquarters, a technical advisor fraudulently reported lodging costs on an expense report. The expense was not reimbursed to the technical advisor and no amounts were charged to award AID-OAA-I-17-00008. Therefore, there was no financial loss to the award. ?In the Republic of Sierra Leone, an administrative officer received a 5% kickback on certain procurement transactions. There were 46 total transactions totaling $116,005 for which kickbacks were received. The financial loss to award 7200AA18C00014 was determined by calculating 5% of the total transactions, totaling $5,800. ?In the Republic of Zimbabwe, an investigation revealed that certain program ambassadors working on award 72061318CA00009 claimed unusually high mobilization fees due to data falsification. The data falsification did not impact the reportable outputs because different controls were in place for the final output data. There was also no loss to the award because payments to the program ambassadors were withheld until the investigation was completed. ?In the Kingdom of Lesotho, certain employees falsified travel expense report records resulting in a financial loss to award NU2GGH002005 totaling $185. ?In the Republic Cameroon, payment records for reimbursement of certain expatriate education benefits were falsified. This falsification of records resulted in the overpayment of tuition of $38,607 related to award 7200AA18C00014. ?In the Republic of Niger, certain employees falsified expense reports related to per diem amounts for activities that did not occur. This resulted in a financial loss to award 7200AA18C00014 totaling $2,942. ?In the Republic of Zimbabwe, data falsification related to circumcisions in the Makoni district resulted in a financial loss to award 72061318CA00009 totaling $2,644. ?In the Kingdom of Lesotho, certain fixed assets including computers, chairs, tables, and gas cylinders were stolen. Upon filing of a police report, certain assets were recovered. The value of items that were unable to be recorded totaled $3,326 for award NU2GGH002005. ?In the Republic of Zimbabwe, an employee falsified documentation related to fuel usage totaling $30 for award 72061318CA00009. ?In the Kingdom of Cambodia, an employee falsified expense records for meeting refreshments which resulted in a loss to award 72044218CA00006 of $665. PSI has ongoing investigations involving U.S. 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, PSI 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. Context: These conditions were identified through PSI?s internal review and audit processes and were reported to us during our internal control assessment for the year ended December 31, 2022. Cause: Individuals intentionally circumvented PSI?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 for the prior three years as findings 2021-005 in the December 31, 2021 schedule of findings and questioned costs, 2020-005 in the December 31, 2020 schedule of findings and questioned costs, and 2019-004 in the December 31, 2019 schedule of findings and questioned costs. Recommendation: Because of the international environment in which PSI operates, 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: PSI 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.
2022-006 Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement See Schedule of Findings and Questioned Costs for chart/table Criteria or Specific Requirement: In accordance with ?200.309, 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. 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, ?obligations? 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 as described in ?200.71. Condition: We identified 12 instances out of 162 sample items selected, whereby expenses were incurred after the end of the award period of performance. These expenses totaled $1,725 for Award NU2GGH002005. Questioned Costs: For Award NU2GGH002005, we identified $1,557 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award. Further analysis of the population of expenses incurred during the close-out period resulted in the identification of an additional $16,690 in known questioned costs that were outside of the period of performance and not permitted to be charged to the award based on the terms of the close-out budget. In addition, we identified $168 in known questioned costs as a result of our testing procedures for the period of performance of the original term of Award NU2GGH002005. Likely questioned costs associated with expenses incurred outside the period of performance of the original award totaled $83,585. Context: BDO?s 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. Testing of those 120 expenses for AL# 93.067 resulted in one exception totaling $33 related to Award NU2GGH002005 (included in the questioned costs of $168 above), and testing of 120 expenses for AL# 98.NoAL resulted in no exceptions to the period of performance requirements. BDO also performed specific period of performance procedures on those awards that began or ended during 2022. A total of 42 expenses for AL# 93.067 were selected across the awards that began or ended during 2022, and the compliance matters identified above resulted from those specific 42 items tested for AL# 93.067. No specific period of performance procedures were required for AL# 98.NoAL based on the individual grant period(s) of the awards. Cause: PSI 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 that need to be returned to the U.S. Department of Health and Human Services. Continued noncompliance with federal statutes, regulations, and the provisions of the grant agreements could ultimately result in additional disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from 2021 and was reported as finding 2021-006 in the 2021 schedule of findings and questioned costs. 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 go through the review and approval of individuals at PSI Headquarters. Views of Responsible Officials: PSI 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.
2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that 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. In accordance with ?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 meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI 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. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-003 Internal Control over Compliance with Subrecipient Monitoring Requirements See Schedule of Findings and Questioned Costs for chart/table Criteria or Specific Requirement: ?200.303 Internal Controls states that 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. Condition: During the audit, we tested PSI?s monitoring of the only subrecipient within the major program AL# 93.067. We noted that PSI has documented policies and procedures in addition to a multitude of tools to comply with the subrecipient monitoring process. However, in the single sample tested, PSI obtained the statutory audit report from the subrecipient and reviewed the contents of that audit report. However, the subrecipient?s audit was not performed in accordance with 2 CFR 200, Subpart F. The Centers for Disease Control and Prevention (CDC) mandates a foreign-based subrecipient is required to conduct a single audit or program specific audit if expenditures are $300,000 or greater in a given fiscal year. The subrecipient?s statutory report did not comply with the CDC guidelines. PSI management provided email communication between PSI and the subrecipient inquiring about the need for an audit in accordance with 2 CFR 200, Subpart F; however, the email documentation did not document PSI management?s considerations and conclusions regarding the fact that the subrecipient had a statutory audit performed, instead of an audit in accordance with 2 CFR 200, Subpart F. Questioned Costs: There are no questioned costs. Context: This is a condition identified based on our review of the internal control documentation used to support the monitoring of the subrecipient selected for testing. No sampling was required as there was only one subrecipient for the major program AL# 93.067. Cause: PSI?s subrecipient monitoring policies and procedures contain requirements for PSI to obtain subrecipient audit reports and review those reports. However, based on the matter identified, the policies and procedures do not contain adequate guidance to address a subrecipient?s noncompliance with the audit requirements of 2 CFR 200, Subpart F. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major federal program. Repeat Finding: This is not a repeat finding. Recommendation: BDO recommends that PSI implement specific documentation requirements related to PSI management?s considerations and conclusions regarding subrecipient noncompliance with a particular federal statue or condition of an award. While PSI?s procedures may address risk associated with subrecipient noncompliance, the maintenance of written documentation to evidence considerations and conclusions is imperative to PSI?s risk management process. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will work with program management teams to provide guidance and training related to non-U.S. subrecipient organization audit requirements. Refer to management?s corrective action plan for additional information.
2022-001 Internal Control over Compliance and Compliance with the Reporting Compliance Requirement See Schedule of Findings and Questioned Costs for chart/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. ?200.328, Monitoring and Reporting Program Performance, documents that the non-federal entity is responsible for oversight of the operations of the federal award supported activities. The non-federal entity must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. Monitoring by the non-federal entity must cover each program, function or activity. The non-federal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the federal award or could significantly affect program outcomes. 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, hereafter referred as the ?Transparency Act? 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 Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime awardee is required to file a Transparency Act 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: During BDO?s testing of the performance reporting requirements, BDO noted management continues to rely upon a manual process related to tracking and monitoring performance reporting. Programmatic Report Testing For one of six performance reports tested for major program AL# 93.067, a report was submitted after the due date without approval for late submission. Federal Funding Accountability and Transparency Act Reporting Testing We also performed testing over the Transparency Act reporting requirements outlined in the criteria section above. The OMB Compliance Supplement requires certain information be included in the finding when non-compliance exists. Of the 72 subaward original agreements and modifications totaling $10,993,519 (award amounts) for award 7200AA18C00014 that were tested, nine of the 72 reports with award amounts totaling $505,573 were not submitted timely. Of the four subaward original agreements and modifications totaling $731,250 (award amounts) for award NU2GGH002295 that were tested, one of the four reports with an award amount totaling $166,250 was not submitted timely. Questioned Costs: There are no questioned costs as the items described above are all related to late submission of reports. Context: This is a condition identified during BDO?s testing of performance reports and Transparency Act reports. Our sample for performance reporting was selected through a non-statistical sample. Our sample for Transparency Act reporting was selected based on a population of Transparency Act reports provided by management as well as through our subrecipient monitoring testing at the subrecipient level. We tested all Transparency Act report submissions in 2022 for the subrecipients selected for testing. Our sample for Transparency Act reporting was selected through non-statistical sampling. Cause: The quasi-manual performance reporting continues to challenge PSI given the number of awards under management and the number of reports required. PSI programmatic personnel have been unable to ensure the timely submission of reports because of this manual process. Effect: Failure to properly track all performance reporting requirements and Transparency Act reporting requirements impacts the Federal agency from obtaining performance information required to assess award performance on a macro level. Such non-compliance also increases the risk of loss of future awards if compliance with award terms are not met. Repeat Finding: This is a repeat finding from the prior year. This was reported as finding 2021-001 in the 2021 schedule of findings and questioned costs. Recommendation: In order to facilitate accurate and timely reporting and compliance with the terms and conditions of federal awards, BDO recommends management ensure all performance reporting requirements are maintained, updated, and available in a central location. BDO also recommends management implement a process by which approvals, submission considerations and supporting documentation for programmatic reports and Transparency Act reports is maintained in a centralized location. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and will work with project teams to review and confirm the accuracy of reporting deadlines. Refer to management?s corrective action plan for additional information.
2022-004 Internal Control over Compliance and Compliance with Cash Management Requirements See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.305, Federal Payment, for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Specifically, ?200.305(b)(1), Federal Payment, indicates: Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Also in accordance with ?200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). In accordance with the 2022 OMB Compliance Supplement, when the reimbursement payment method is used, program costs must be paid using non-federal entity funds before submitting a payment request to the federal awarding agency. Condition: During our testing of compliance, we identified the following matters: During our testing of advance payments received for major program AL# 93.067 - Award NU2GGH002005, management did not minimize the amount of time between the Federal advance payments and the actual disbursements for direct program expenditures and related indirect costs. In October 2022, PSI requested an advance payment of $168,477 even though $170,259 remained available from a previous cash advance. Additionally, in November 2022, PSI requested an additional advance payment of $59,000 when an outstanding advance of $276,230 still remained. As of December 31, 2022, PSI had $348,287 in cash available from advance payments with no disbursements for direct expenditures. We noted that PSI provided a refund to the U.S. Department of Health and Human Services in February totaling $250,600 and in May totaling $56,103 related to the amount of cash available without actual disbursements as of December 31, 2022. The cash balance remaining as of the date of this report is being reconciled as part of PSI?s close out process. During our cash management testing, we identified instances where expenses were paid after the invoice to the federal government was submitted for reimbursement: ?For major program AL# 93.067, two instances of 10 samples tested, expenses totaling $1,092 were paid after the invoice to the federal government was submitted ? award NU2GGH002170. Questioned Costs: For major program AL# 93.067, PSI earned interest on the available cash for the funds advanced for Award NU2GGH002005. We calculated an estimate of interest earned and determined the likely questioned costs are $2,133 as of December 31, 2022. Interest continued to accrue on the available fund balance subsequent to year end and is estimated to be an additional $2,448 of likely questioned costs. There are no questioned costs related to the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement. Context: This is a condition based on testing of PSI?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: For the advance payments for Award NU2GGH002005, PSI?s programmatic and finance team did not adequately monitor remaining budget and projected expenditures at the end of the period of performance of the award resulting in PSI requesting and receiving funds that were not able to be liquidated. Furthermore, as of December 31, 2022, the PSI management team did not review open deferred revenue balances in sufficient detail to identify the need to reimburse the federal agency for overpayment of funds. In relation to both the findings identified whereby expenses were paid after the invoice to the federal government was submitted for reimbursement, PSI personnel did not comply with documented review and approval policies to ensure timely payment of local office expenditures incurred. Effect: Failure to perform cash management procedures in accordance with PSI?s documented policies could result in obtaining funds from the U.S. Government in advance of actual expenditures incurred thus resulting in non-compliance with contractual agreements. Repeat Finding: This finding is a repeat finding from 2020 and was reported as finding 2020-004 in the 2020 schedule of findings and questioned costs. Recommendation: We recommend management review all deferred revenue balances monthly for federal programs where advance funds are received in sufficient detail to determine whether expenses will be available in the immediate near term to spend down federal advances. We also recommend management ensure the compliance cash management policies that align to U.S. Government funding requirements. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will refine its method for calculating drawdowns on federal awards. Refer to management?s corrective action plan for additional information.