Audit 56241

THE PENNSYLVANIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION III ? FEDERAL AWARD FINDINGS ALN Number: 84.425F Federal Agency: U.S. Department of Education Compliance: Reporting/Special Reporting- Quarterly Budget and Expenditure Reporting for HEERF I, II, and III (a)(1) Institutional Portion, (a)(2), and (a)(3) Finding: 2022-002 - Deficiency Criteria ? Guidance in the Quarterly Budget and Expenditure Reporting for HEERF I, II, and III (a)(1) Institutional Portion, (a)(2), and (a)(3) Reporting instructions state that the reporting form must be conspicuously posted on the institution?s primary website on the same page the reports of the institution of higher education?s activities as to the emergency financial aid grants to students made with funds from the University?s? allocation under Section 18004(a)(1) of the CARES Act (Student Aid Portion) are posted. It may be posted in an HTML webpage format or as a link to a PDF. A new, separate, form must be posted covering each quarterly reporting period (September 30, December 31, March 31, June 30), concluding after either (1) posting the quarterly report ending September 30, 2022, or (2) when an institution has expended and liquidated all (a)(1) Institutional Portion, (a)(2), and (a)(3) funds and checks the ?final report? box. The University must post this quarterly reporting form no later than 10 days after the end of each calendar quarter (October 10, January 10, April 10, July 10) apart from the first report, which is due October 30, 2020. Condition - The University received HEERF III (a)(1) funding from the U.S. Department of Education. The University submitted Quarterly Budget and Expenditure Reporting for HEERF III (a)(1) Institutional Portion, (a)(2), and (a)(3) on a quarterly basis. However, it was noted that one (1) report for the Quarter ending June 30, 2021, was due on July 10, 2021, and was submitted on August 16, 2021. Cause - The University did not ensure that report was submitted by the required due date. Effect - The funding agency could reject the report and reject the reimbursement request. Repeat Finding ? No Recommendation ? We recommend that the University submit the required report within the time frame prescribed by U.S. Department of Education. Questioned Costs - None Views of Responsible Officials ? While the University agrees that the report for HEERF III for the quarter ended June 30, 2021 was submitted late, it should be noted that $0 was expended for this time period. The University was still attempting to interpret the somewhat fluid reporting requirements at the time and as soon as the error was realized, the report was submitted. It is also worth noting that the University timely reported on HEERF II funding spent for this same quarter, and all future HEERF III reports have been submitted timely.

THE PENNSYLVANIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION III ? FEDERAL AWARD FINDINGS (Continued) ALN Number: 93.155 Federal Agency: Health Resources and Services Administration (HRSA) Compliance: Reporting- Federal Funding Accountability and Transparency Act Finding: 2022-003 ? Deficiency Criteria ? Guidance in the HRSA Grants and Cooperative Agreements- Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting into FFATA instructions state that the Prime Recipient is required to submit Subaward Reporting by the end of the month following the month in which the pass-through entity awards any subaward greater than or equal to $30,000. Subaward information must be submitted on a rolling basis by the end of the month following the month in which the obligation was made. The prime recipient?s executive compensation information must be provided in SAM by the end of the month following the month in which the obligation was made by HRSA, and annually thereafter during the period of support. As per FFATA regulation only one report is allowed to be filed per award per report month. All subaward activity for the report?s month should be included in the report, if sub-awards made multiple different subawards in multiple different months, then the University is required to file multiple reports; one for each month the subawards were issued. Condition - The University provided subawards to various Hospitals during the fiscal year ended June 30, 2022. We reviewed the FFATA submitted by the University and noted that FFATA submission was not within time frame as required by the HRSA. Cause - The University did not ensure that FFATA was submitted by the required due dates. Effect - The funding agency could reject the reimbursement request. Repeat Finding ? No Recommendation ? We recommend that the University submit the required FFATA reports within the time frame prescribed by HRSA. Questioned Costs - None Views of Responsible Officials ? The University has a system to identify first tier subawards of $30,000 or more and a system to identify Purchase Orders (PO) generating vendor payments of $30,000 or more. These established processes are managed by the Office of Sponsored Programs (OSP) and the Office of Central Procurement (OCP), respectively. The identified hospital payments were not processed as subaward payments, nor were they processed through OCP where a payment would be generated via PO. The payments were made under unit specific service contracts and paid via non-PO payment (or direct payment) to the hospital partners. While this type of payment is authorized by Penn State systems, it was unknown at the time of payment that non-PO payments were not routed to OCP for review and validation of the FFATA reporting requirements. To ensure future compliance: ? OCP will conduct a retroactive review of all non-PO payments $30,000 or greater from July 2020 through present to ensure FFATA reporting is complete and accurate ? OSP and OCP will work with colleges to develop a unit-level process to review and identify eligible FFATA reporting prior to submission of non-PO payment requests ? OCP will conduct a bi-weekly review of all non-PO payments $30,000 or greater to ensure any transactions meeting FFATA requirements are reported timely and appropriately

THE PENNSYLVANIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION III ? FEDERAL AWARD FINDINGS ALN Number: 84.425F Federal Agency: U.S. Department of Education Compliance: Reporting/Special Reporting- Quarterly Budget and Expenditure Reporting for HEERF I, II, and III (a)(1) Institutional Portion, (a)(2), and (a)(3) Finding: 2022-002 - Deficiency Criteria ? Guidance in the Quarterly Budget and Expenditure Reporting for HEERF I, II, and III (a)(1) Institutional Portion, (a)(2), and (a)(3) Reporting instructions state that the reporting form must be conspicuously posted on the institution?s primary website on the same page the reports of the institution of higher education?s activities as to the emergency financial aid grants to students made with funds from the University?s? allocation under Section 18004(a)(1) of the CARES Act (Student Aid Portion) are posted. It may be posted in an HTML webpage format or as a link to a PDF. A new, separate, form must be posted covering each quarterly reporting period (September 30, December 31, March 31, June 30), concluding after either (1) posting the quarterly report ending September 30, 2022, or (2) when an institution has expended and liquidated all (a)(1) Institutional Portion, (a)(2), and (a)(3) funds and checks the ?final report? box. The University must post this quarterly reporting form no later than 10 days after the end of each calendar quarter (October 10, January 10, April 10, July 10) apart from the first report, which is due October 30, 2020. Condition - The University received HEERF III (a)(1) funding from the U.S. Department of Education. The University submitted Quarterly Budget and Expenditure Reporting for HEERF III (a)(1) Institutional Portion, (a)(2), and (a)(3) on a quarterly basis. However, it was noted that one (1) report for the Quarter ending June 30, 2021, was due on July 10, 2021, and was submitted on August 16, 2021. Cause - The University did not ensure that report was submitted by the required due date. Effect - The funding agency could reject the report and reject the reimbursement request. Repeat Finding ? No Recommendation ? We recommend that the University submit the required report within the time frame prescribed by U.S. Department of Education. Questioned Costs - None Views of Responsible Officials ? While the University agrees that the report for HEERF III for the quarter ended June 30, 2021 was submitted late, it should be noted that $0 was expended for this time period. The University was still attempting to interpret the somewhat fluid reporting requirements at the time and as soon as the error was realized, the report was submitted. It is also worth noting that the University timely reported on HEERF II funding spent for this same quarter, and all future HEERF III reports have been submitted timely.

THE PENNSYLVANIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) SECTION III ? FEDERAL AWARD FINDINGS (Continued) ALN Number: 93.155 Federal Agency: Health Resources and Services Administration (HRSA) Compliance: Reporting- Federal Funding Accountability and Transparency Act Finding: 2022-003 ? Deficiency Criteria ? Guidance in the HRSA Grants and Cooperative Agreements- Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting into FFATA instructions state that the Prime Recipient is required to submit Subaward Reporting by the end of the month following the month in which the pass-through entity awards any subaward greater than or equal to $30,000. Subaward information must be submitted on a rolling basis by the end of the month following the month in which the obligation was made. The prime recipient?s executive compensation information must be provided in SAM by the end of the month following the month in which the obligation was made by HRSA, and annually thereafter during the period of support. As per FFATA regulation only one report is allowed to be filed per award per report month. All subaward activity for the report?s month should be included in the report, if sub-awards made multiple different subawards in multiple different months, then the University is required to file multiple reports; one for each month the subawards were issued. Condition - The University provided subawards to various Hospitals during the fiscal year ended June 30, 2022. We reviewed the FFATA submitted by the University and noted that FFATA submission was not within time frame as required by the HRSA. Cause - The University did not ensure that FFATA was submitted by the required due dates. Effect - The funding agency could reject the reimbursement request. Repeat Finding ? No Recommendation ? We recommend that the University submit the required FFATA reports within the time frame prescribed by HRSA. Questioned Costs - None Views of Responsible Officials ? The University has a system to identify first tier subawards of $30,000 or more and a system to identify Purchase Orders (PO) generating vendor payments of $30,000 or more. These established processes are managed by the Office of Sponsored Programs (OSP) and the Office of Central Procurement (OCP), respectively. The identified hospital payments were not processed as subaward payments, nor were they processed through OCP where a payment would be generated via PO. The payments were made under unit specific service contracts and paid via non-PO payment (or direct payment) to the hospital partners. While this type of payment is authorized by Penn State systems, it was unknown at the time of payment that non-PO payments were not routed to OCP for review and validation of the FFATA reporting requirements. To ensure future compliance: ? OCP will conduct a retroactive review of all non-PO payments $30,000 or greater from July 2020 through present to ensure FFATA reporting is complete and accurate ? OSP and OCP will work with colleges to develop a unit-level process to review and identify eligible FFATA reporting prior to submission of non-PO payment requests ? OCP will conduct a bi-weekly review of all non-PO payments $30,000 or greater to ensure any transactions meeting FFATA requirements are reported timely and appropriately