CORRECTIVE ACTION PLAN SEPTEMBER 4, 2024 The POISE Foundation respectfully submits the following corrective action plan for the year ended December 31, 2023. Name and address of independent public accounting firm:
Maher Duessel, CPAs
503 Martindale Street, Suite 600
Pittsburgh, PA 15212 Audit period...
CORRECTIVE ACTION PLAN SEPTEMBER 4, 2024 The POISE Foundation respectfully submits the following corrective action plan for the year ended December 31, 2023. Name and address of independent public accounting firm:
Maher Duessel, CPAs
503 Martindale Street, Suite 600
Pittsburgh, PA 15212 Audit period: January 1, 2023 to December 31, 2023 The findings from the December 31, 2023 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule.Finding 2023-001 - Internal Control over Financial Reporting - Allowable Costs U.S. Department of Health and Human Services, Passed through the Pennsylvania Department of Health Immunization Cooperative Agreements, ALN 93.268 Allowable Costs Condition: The Foundation did not have adequate procedures in place to ensure that all costs submitted to the Pennsylvania Department of Health (DOH) were allowable. Close monitoring of invoices was performed by DOH, resulting in repeated requests to adjust invoicing of grant costs to remove unallowable costs. This cycle of submission and rejection went on for many months, elongating the reimbursement process. During our compliance testing, we noted three of twenty-five expenditures charged to the federal grant and selected for detailed testing that were determined to be unallowable costs. These unallowable costs were also identified by the DOH during their invoice review.Total federal expenditures between 2021 and 2023 were $2,549,344. Of this amount, expenditures totaling $1,049,850 have been reviewed in totality and ultimately approved by the DOH as allowable costs, after corrections were made by the Foundation. Remaining federal expenditures incurred in 2023 of $1,499,494 are pending DOH approval. Based on previously identified unallowable costs, we acknowledge there could be additional unallowable costs as the DOH reviews and approves invoices relating to the remaining 2023 federal expenditures. The amount of potential unallowable costs cannot be quantified. As was understood by the Foundation to be the case from grant inception, the DOH intends to review each monthly invoice to ensure 100% of costs are allowable, and will not move forward to the next month until the month under review is corrected by the Foundation and approved by DOH for reimbursement. Criteria: The Foundation administered the federal 93.268 grant passed through from the Pennsylvania Department of Health and therefore committed to following the internal control and compliance regulations set forth in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).Cause: The Foundation does not have internal controls in place to ensure adequate review of allowable costs for the DOH grant. Effect: The Foundation was not in compliance with allowable costs. As described above, significant effort was required on the part of the Foundation to invoice and make corrections and re-submit and significant effort was required on the part of DOH to monitor the grant submissions. This resulted in significant delays in the receipt of additional grant reimbursements by the Foundation and negatively impacted the Foundation's cash flows. Questioned costs: Unknown.Context: 100% testing by DOH to date has indicated systemic issues. Our sampling resulted in similar findings. DOH intends to do a 100% test of all transactions.Repeat Finding from Prior Year: No. Recommendation: We recommend that management establish procedures to ensure that all costs charged to the grant are appropriately reviewed and determined allowable per the grant agreement, ideally before even being incurred but certainly before being invoiced to the DOH. POISE Foundation Response: Management acknowledges several costs included in the initial invoice were deemed to be unallowable costs. It was communicated to management that it could not submit the initial invoice until all expenses had occurred for the initial payment. The initial invoice included a span of 19 months and many of the unallowable costs were reoccurring costs that were deemed unallowable. Management has hired a new Managing Director who has oversight of the invoicing process. The Managing Director has reviewed all unsubmitted invoices to ensure past costs that were deemed unallowable will not be charged in subsequent invoices and will review any new costs to ensure they comply with allowable costs. This is currently being done as of the date of this letter. Finding 2023-002: Internal Control over Financial Reporting and Account Adjustments Condition: During the audit process, several adjustments involving contribution revenue and related contributions receivable were proposed by the auditors in order for the financial statements to be prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Then, using the information provided by management, the auditors prepared the GAAP financial statements, which were subsequently reviewed by management. These adjustments were necessary to properly reflect current year operations and account balances as of year-end. Criteria: Auditing standards continue to place emphasis on determining an entity's ability to fully prepare their own external financial statements, including the posting of all adjustments necessary to present financial statements in accordance with GAAP and evaluating the need for all necessary financial statement disclosures.Cause: Internal controls were not in place to ensure that the Foundation follow appropriate contribution revenue recognition standards for conditional and unconditional grant awards and the Foundation did not post necessary adjustments for contribution revenue to be recorded in accordance with GAAP. Effect: Adjustments were required to be recorded in order for the financial statements to be prepared in accordance with GAAP. Recommendation: We recommend that management evaluate the internal controls over the financial reporting process to ensure that an individual is assigned to review contributions received for proper revenue recognition and to ensure the financial statements are prepared in accordance with GAAP. POISE Foundation Response: POISE Foundation has put in place a process whereby revenue will be classified as conditional or unconditional and booked accordingly based on a review of funding agreements and contracts by the development, program and finance department staff to ensure there is agreement on the nature of the revenue to ensure proper accounting in a timely manner.This is currently being done as of the date of this letter. If the Pennsylvania Department of Health has questions regarding this plan, please contact Mark S. Lewis at 412-281-4967