Finding 2023-008 – Allowable Costs (Significant Deficiency and Non-compliance) Information on the Federal Program: U.S. Department of Justice, Assistance Listing No.16.575 Victims of Crime Act Criteria: 2 CFR 200.405 establishes requirements for costs allocated to a grant award. These requirements include that costs must be approximated using a reasonable method. Condition/Context: We selected 50 disbursements for testing. Of those 50, 25 were for payroll and 25 were non-payroll disbursements. Of the 25 payroll, 4 employees’ pay allocated to the grant did not agree to the supporting timesheets and pay rates. Of the 25 non-payroll, there were 2 instances in which the costs allocated was not properly documented or supported by a reasonable method. Cause: Expenses allocated to the VOCA grant were not properly supported. Effect: The Organization did not comply with allowable cost documentation requirements. Questioned costs: $2,313 Recommendation: We recommend the Organization strengthen its policies and procedures surrounding the disbursement process to ensure the Organization is in compliance with all required documentation and disclosure requirements. Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: Identify the award and the applicable requirements to each subrecipient. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for an authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $290,000, were provided to two different entities. Both subrecipient agreements associated with the subawards were selected for testing. For the two agreements tested, the following information was incomplete or missing: The federal award identification number (FAIN). The federal award date of award to the recipient by the federal agency. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The County did not request any financial or audit documentation from the subrecipients. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in § 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; INDIANA STATE BOARD OF ACCOUNTS 22 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. INDIANA STATE BOARD OF ACCOUNTS 23 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by the management of the County was not properly designed nor implemented. The County was unable to provide documentation that monitoring procedures were in place over subrecipients. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot be sure subrecipients are provided an adequate subaward agreement, with all required elements and are adequately monitored. As such, subaward agreements entered into by the County did not include all the required elements. In addition, the County did not properly monitor the non-profit to ensure proper spending of the federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 24 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
#2023-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding – Allowable Costs and Material Weakness in Internal Controls Over Compliance This is a repeat of prior year finding #2022-006. Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For payroll costs and 1 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls to allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
#2023-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding – Allowable Costs and Material Weakness in Internal Controls Over Compliance This is a repeat of prior year finding #2022-006. Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For payroll costs and 1 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls to allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
Unallowable Use of Housing Choice Voucher Cluster Programs’ Funds (Material Weakness, Material Non-Compliance) Section 8 Housing Choice Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.871, Emergency Housing Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.EHV, Grant Period: Year-End December 31, 2023 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs’ subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management and Book-keeping Fees. Condition and Perspective During 2023, the Authority’s Section 8 Housing Choice Voucher Program advanced $255,941 out of its Program. The Emergency Housing Choice Voucher Program advanced $186,741 out of its Program. Questioned Costs – $255,941 and $186,741 from the Programs. Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management’s Response The Authority will limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only. The Authority’s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2024.
Unallowable Use of Housing Choice Voucher Cluster Programs’ Funds (Material Weakness, Material Non-Compliance) Section 8 Housing Choice Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.871, Emergency Housing Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.EHV, Grant Period: Year-End December 31, 2023 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs’ subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management and Book-keeping Fees. Condition and Perspective During 2023, the Authority’s Section 8 Housing Choice Voucher Program advanced $255,941 out of its Program. The Emergency Housing Choice Voucher Program advanced $186,741 out of its Program. Questioned Costs – $255,941 and $186,741 from the Programs. Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management’s Response The Authority will limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only. The Authority’s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2024.
Federal Agency: Department of Justice Federal Assistance Listing Number: 16.756 Program: Court Appointed Special Advocates Award Number: 15JDP-21-GK-02762-CASA Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 16 subrecipient awards. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. The population consisted of 79 subawards made totaling to $2,428,200 provided to subrecipients in 2023. The sample consisted of 16 subawards totaling $515,618 provided to subrecipients in 2023. Identification as a Repeat Finding: 2022-005. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Condition: Allegheny County Economic Development (ACED) charges CDBG program accounts for the salary and benefits of numerous employees, including employees that do not work full time on the CDBG Program. Hours for each employee are tracked by the program(s) the employee works on each day. ACED needs to calculate the salary and benefit amounts for time not related to CDBG, charge the proper non-CDBG program, and reduce the CDBG Program expense, based on these hours. ACED indicated these cross-charges are done on a quarterly basis. We tested the cross-charges for one quarter of calendar year 2023. Based on records provided by ACED, $178,382 in salaries and related fringe benefits were charged to CDBG for hours not worked on CDBG. ACED provided supporting documentation that CDBG expenses were reduced by $129,732; however, five of these entries totaling $72,088 were recorded in 2024 instead of 2023. In addition, it appears the CDBG Program expenses were not reduced for the remaining $48,650. This is a repeat finding from 2022. Criteria: Allowable costs include those that are incurred specifically for the Federal award (2 CFR Part 200 Subpart E -Cost Principles (2 CFR 200.405.a.1). Cause: ACED has a process to cross-charge time not worked on CDBG to the proper program, but due to department turnover, these cross-charges were not properly completed, or were not completed timely. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $48,650 Recommendation: ACED should establish procedures to ensure that all cross-charges are properly calculated and completed in a timely manner. Management Response: Management agrees with the finding, see attached Corrective Action Plan.
Condition: Allegheny County Economic Development (ACED) charges CDBG program accounts for the salary and benefits of numerous employees, including employees that do not work full time on the CDBG Program. ACED tracks the time these employees worked by program and calculates the salary and benefit amounts to be cross-charged out of CDBG to the proper program based on the hours worked on a quarterly basis. We tested the cross-charge records for one quarter of calendar year 2023. ACED calculated the salary cross-charge amount using the hours worked and the employees’ hourly rate. However, the fringe benefit cross-charge was calculated by applying a percentage to the salary cross-charge amount, instead of using actual fringe benefit costs and hours worked. In addition, the percentage was calculated based on one paycheck for two employees and used incorrect amounts, such as federal income tax, in the calculation. The use of a blended fringe benefit rate was identified as a finding in the prior year. ACED indicated they would use actual fringe rates from JDE using ReportsNOW to calculate the fringe benefit cross-charge amounts. This is a repeat finding from 2022. Criteria: Allowable costs include those that are incurred specifically for the Federal award (2 CFR Part 200 Subpart E -Cost Principles (2 CFR 200.405.a.1). Cause: ACED has not established a procedure to determine the actual fringe benefit cost to be used in the cross-charge calculation that transfers fringe benefits out of CDGB to the proper program. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: The amount of questioned costs, if any, were unable to be determined. Recommendation: ACED should establish procedures that will use JDE data to calculate the actual fringe benefit costs that will be used in the fringe benefit cross-charge calculation. This will allow for program expenditures of CDBG, and other ACED programs, to be more accurately stated. Management Response: Management agrees with the finding, see attached Corrective Action Plan.
2023-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2022-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2023 Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 3 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control). • For 27 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $24,563. Cause: The Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Over the past year, the Corporation has made significant improvements, reducing the occurrence of these findings compared to 2022. To continue to improve on and address this, the Corporation implemented a new HR solution, Rippling, in 2024, which will ensure all future agreements and rate changes are properly tracked and documented. This system will enhance the Corporation's document retention process and ensure compliance with federal regulations moving forward.
2023-002 – SIGNIFICANT DEFICIENCY – Claims Payments Made Based on Incorrect Calculations of Amounts to be Reimbursed (Originated in 2022) U.S. Department of Treasury – Passed through the State of Alabama Department of Treasury – COVID 19 Coronavirus State and Local Fiscal Recovery Fund – ALN #21.027 – Program Year 2023 Criteria – Per 2 CFR Subpart E - 200.403(a) and (b), allowable costs under federal award programs must be necessary and reasonable for the performance of the federal award and must conform to any limitations or exclusions set forth in the federal award as to types or amounts of cost items. In addition, per 2 CFR Subpart E – 200.405(a), a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award in accordance with relative benefits received. Finally, per CFR 200.303(a), non-federal entities are required to establish and maintain effective internal controls over federal awards. Condition – For 1 of 60 disbursements sampled, reimbursed claims amounts included un-allowable costs due to the reimbursement calculations being performed incorrectly in the determination of the appropriate reimbursement amount. Cause – As a result of the Foundation’s reliance solely on certifications received, amounts were not appropriately disbursed under the federal award program. Effect – Claims payments included amounts that were not chargeable or assignable to the federal award in accordance with relative benefits received. Questioned Costs – $95,663 known questioned costs (total amounts paid based on incorrect reimbursement calculations), $529,835 likely questioned costs – amount extrapolated to entire population based on % of known questioned costs. Auditor’s Recommendation – Policies and procedures should be designed, implemented, and monitored which ensure that detailed supporting documentation is obtained and reviewed for all disbursements in accordance with federal award requirements. In addition, all calculations of amounts to be reimbursed should be appropriately recalculated to ensure the proper amount is included in the claims payments. Management response and current status – See management corrective action plan
Finding 2023-001 Material weakness in internal controls over compliance and instances of noncompliance related to allowable costs/cost principles compliance requirements. Federal Agency: Department of Health and Human Services (HHS) Pass-Through: State of Washington Department of Health (DOH) Program Title: HIV Prevention Activities Health Department Assistance Listing Number: 93.940 Award Number: CBO27200; CBO28119 Award Period: July 01, 2022 through August 31, 2023 and July 01, 2023 through December 31, 2023 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart E ‐ Cost Principles, Section 200.405 requires that a non-federal entity allocate costs based on the benefits received and costs that benefit both the federal award and other work of the non-federal entity are distributed in proportions that may be approximated using reasonable methods. Condition/Context for Evaluation During our testing of allowable costs, we noted that the non-federal entity applied costs for bonuses, insurance, and the audit fee to the federal program without performing an allocation of the costs to the program and others based on the proportional benefit. Cause The Organization's management was not aware of the allocation requirements of 2 CFR section 200.405. Effect or Potential Effect The Organization did not apply the Uniform Guidance 2 CFR in the allocation of bonuses, insurance, and audit fees resulting in questioned costs. Questioned Costs $29,512 Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that its allocation methodology follow the allocability requirements of Subpart E in 2 CFR Part 200. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Item: 2023-002 Assistance Listing Number: 93.914 Program: HIV Emergency Relief Project Grants Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Pass-Through Grantor Identifying Number: A22MHSSWC, A23MHSSWC, A22MNSSWC, A23MNSSW, A22MCMSWC, A23MCMSWC, A22NMCMSWC, A23NMCMSWC, A22FBMSWC, A23FBMSWC Award Year: March 1, 2022 - February 28, 2023; March 1, 2023 - February 28, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 1 selection was charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amount charged and the amount supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2023-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 5 selections were charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amounts charged and the amounts supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
Questioned Costs: $44,046 - The overbilled amount has been reclassified to a liability to the funder but has not been repaid or settled. Criteria: In accordance with 2 CFR § 200.403 and 2 CFR § 200.405, costs charged to federal awards must be allowable, allocable, and necessary to the performance of the federal award. Under the terms of a cost-reimbursement federal contract, as governed by 2 CFR § 200.403, § 200.404, and § 200.405, all costs charged to a federal award must be: • Actually incurred, • Allocable to the program, • Allowable under federal cost principles, and • Supported by adequate documentation. Under 2 CFR § 200.414 indirect costs may only be charged based on an approved rate (e.g., NICRA or de minimis), applied to the proper base and only if such costs are actually incurred during the performance period. Billing the full invoice amount of shared costs without allocating based on an approved indirect cost rate is not compliant with Uniform Guidance. Condition: The Organization billed indirect costs totaling $45,096 to a federal cost-reimbursement contract, despite not having incurred qualifying indirect costs during the contract period. The Organization charged entire invoice amounts for shared indirect costs. The billed amounts were based solely on the approved indirect cost rate applied to direct cost invoices, however, there is a maximum of $1,050 in actual indirect expenses for administrative support, or other shared costs incurred or allocated. Cause: The Organization misinterpreted the cost allocation rules and did not have an adequate process for applying the approved indirect cost rate. Billing practices defaulted to charging the entire invoice amount to federal awards when costs benefitted multiple programs. The Organization lacked adequate controls over indirect cost invoicing and did not perform timely reconciliations between budgeted and actual costs incurred. The outside accountant relied on budgeted percentages rather than actual expenses, and there was no final adjustment process in place to reconcile at year-end. Effect: The Organization received $44,046 in federal funds that were not supported by actual indirect costs incurred. These funds represent unallowable costs and are considered questioned costs under the Uniform Guidance. Identification of Repeat Finding ☐ Yes ☑ No Recommendation: We recommend that the Organization: • Implement policies and procedures to reconcile indirect costs billed to actual costs incurred. • Implement a post-invoicing reconciliation process to compare actual indirect costs with amounts billed. • Ensure that all invoicing for federal awards complies with the approved indirect cost rate agreement. • Return the $44,046 of unexpended indirect cost reimbursements to the granting agency. • Provide additional training to accounting and grants management staff on the treatment of indirect costs under 2 CFR Part 200.
Questioned Costs: $88,135 Criteria: In accordance with 2 CFR § 200.403–.405, costs charged to federal awards must be allowable, allocable, and supported by valid documentation. Additionally, under 2 CFR § 200.318–.320, all contracts must be awarded with clear terms and timeframes and must be executed prior to the provision of goods or services. For subawards, 2 CFR § 200.331 requires that subrecipient agreements be in writing and include all legally required terms and conditions. Payments made outside the terms of a written, active contract — particularly beyond expiration dates — may be deemed unallowable due to lack of legal obligation and documentation. Condition: Of the ten contracts selected for testing, seven were expired at the time payments were made. In total, the Organization paid $88,135 for services rendered beyond the contract end dates, including payments to one subrecipient and multiple consultants or contractors. The Organization indicated that all payments were budgeted within the approved federal grant agreements; however, these payments were not supported by amendments, extensions, or new agreements authorizing continued work or compensation. Additionally, in four additional instances, one selected for testing, contracts specified hourly or deliverable rates and defined service periods but contained inaccurate or inconsistent total compensation amounts. One of four contracts made payments under these agreements that exceeded the stated contract total. Overall, the discrepancies created ambiguity about the authorized funding limit and raise concerns about enforceability and allowability of the costs under federal award terms. Cause: The Organization did not have sufficient procedures in place to monitor contract expiration dates or to ensure that updated agreements were executed before authorizing payments. In these cases, services continued based on verbal agreements or historical practice rather than a valid, enforceable contract. Effect: As a result, $88,135 in costs were incurred and charged to the federal grant without a valid contractual basis. Even though the costs were budgeted, the lack of a valid, active contract invalidates the legal obligation required for allowability under 2 CFR § 200.403 and § 200.405. Therefore, the costs are questioned pending resolution with the federal awarding agency. Furthermore, the absence of executed agreements represents a significant internal control deficiency and increases the risk of unauthorized or disputed expenditures. The inconsistencies in contractual rates expose the Organization to the risk of paying amounts not clearly authorized by written agreements and may result in questioned or disallowed costs, especially if contract limits are exceeded. Weaknesses in contract drafting and review also constitute a significant deficiency in internal control over compliance. Identification of Repeat Finding: ☐ Yes ☑ No Recommendation: We recommend that the Organization: • Develop and implement a contract tracking system to monitor start and end dates. • Require that all contracts, extensions, and amendments be executed before services are rendered or payments are issued. • Provide training to program and procurement staff on federal procurement standards and contract management. • Review existing contracts to ensure compliance and take corrective action for any others that may have expired. • Work with the awarding agency to determine whether any portion of the $88,135 must be refunded.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding number: 2023-006 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #2 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Name of pass-through entity: Multiple Repeat finding: No Criteria: 2 CFR §200.405 requires that costs be allocable to the federal program based on relative benefits received and be supported by appropriate documentation. For personnel costs, 2 CFR §200.430(i) requires that compensation for employees whose time is charged to federal awards be based on records that accurately reflect the work performed, such as time and effort reporting or equivalent documentation. For shared costs, 2 CFR §200.412-200.414 requires that cost allocations be based on documented methodologies that are reasonable and supported by underlying calculations. Condition: The Organization does not have formalized internal controls to support the rationale for allocation of shared costs and employee time across federal programs. Specifically: Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs. Often, employees charge hours to specific programs in excess of amounts allocated to the program as expenditures. The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in the time and effort records, are determined by members of the finance staff. The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in the time and effort records, is not documented. Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained. Cause: The deficiency exists because the Organization has not implemented a structured process for documenting the extent to which allowable compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: The absence of documented allocation methodologies in instances where allowable compensation costs exceed the amount allocated for reimbursement increases the risk that: Costs may be improperly allocated between federal programs, resulting in potential noncompliance with federal cost principles. Federal expenditures may be misstated, impacting financial and grant reporting. Although questioned costs were not identified, the lack of specific supporting documentation and controls represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization implement the following corrective actions: 1. Develop and Implement a Written Cost Allocation Policy – Establish a formal policy outlining the methodology for allocating shared costs and personnel time across programs, especially in instances where allowable costs exceed amounts allocated for reimbursement, ensuring compliance with 2 CFR Part 200 cost principles. 2. Document Allocation Methodologies for Shared Costs – Ensure that allocations for shared costs (e.g., rent, utilities, and administrative expenses) are based on a reasonable and documented methodology that can be reviewed and reperformed. 3. Retain Evidence of Implementation of Internal Controls - Implement review and approval controls over all requests for reimbursement, including review and approval of allocation of personnel and shared costs to specific funding sources. In circumstances where costs can be appropriately allocated to multiple funding sources, document the rationale for allocating the specific amount to each funding source. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management respectfully disagrees with this Finding. Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.
Finding No.2023-003: Improve Controls Over Expense Reporting and Payroll Charges Assistance Listing Number: 93.566 Assistance Listing Program Title: Refugee and Entrant Assistance – State - Administered Programs Federal Agency: Department of Health and Human Services (HHS) Passed Through Entity: 1. San Diego Refugee Communities Coalition/United Women of East Africa Support Team 2. California Department of Social Services (CDSS) Federal Award Number: 1. Not available in the contract 2. ACS22-05-CAIR-A1 Federal Award Year: 1. February 1, 2023 – March 31, 2024 2. November 1, 2022 – March 31, 2025 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirements: In accordance with 2 CFR 200.403 and 200.405, costs charged to a federal award must be necessary, reasonable, and allocable. In addition, 2 CFR 200.430 Compensation-personal services, provides that compensation for personal services must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of 21 non-payroll expenses, we identified one instance wherein translation services amounting to $795, provided by a staff member, were charged under professional fees, even though the individual's salary was recorded and billed under salary expenses. Additionally, in our testing of 25 payroll expenses, we identified one instance of overbilling in the amount $622. This occurred because the payroll charge was based on budgeted Full Time Equivalents (FTEs) rather than the actual time worked. Cause: CAIR-CA's current internal controls for reviewing billings under the federal program were not sufficient to consistently prevent or detect duplicate or inaccurate charges. Furthermore, CAIR-CA lacked adequate internal controls to ensure that payroll allocations were based on actual time worked on the federal program. Effect: These control deficiencies resulted in the overbilling of federal funds. Questioned Cost: $1,417 Recommendation: To ensure compliance with the Uniform Guidance, we recommend that CAIR-CA strengthen its internal controls over expense reporting by implementing enhanced review procedures to verify the allowability of costs charged to federal awards. Additionally, CAIR-CA should establish formal procedures to ensure that payroll charges to federal programs are based on actual time and effort records. Management should conduct regular reviews and make necessary adjustments to payroll allocations to accurately reflect the work performed on federally funded activities. Views of Responsible Officials and Corrective Action Plan: Management concurs with the finding and has already initiated enhancements to its review process to ensure that expense reports are consistently reviewed and approved by both supervisors and finance personnel prior to being charged to federal awards. These steps are designed to further strengthen internal controls and support compliance with federal requirements. In addition, Finance staff are formalizing procedures to reconcile payroll charges on a regular basis to ensure compliance with federal requirements and to confirm that all charges to federal programs are supported by actual time and effort records. Responsible person: Jackie Ramirez, Operations & Finance Associate Director Expected Implementation date: October 31, 2025
Finding No.2023-003: Improve Controls Over Expense Reporting and Payroll Charges Assistance Listing Number: 93.566 Assistance Listing Program Title: Refugee and Entrant Assistance – State - Administered Programs Federal Agency: Department of Health and Human Services (HHS) Passed Through Entity: 1. San Diego Refugee Communities Coalition/United Women of East Africa Support Team 2. California Department of Social Services (CDSS) Federal Award Number: 1. Not available in the contract 2. ACS22-05-CAIR-A1 Federal Award Year: 1. February 1, 2023 – March 31, 2024 2. November 1, 2022 – March 31, 2025 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirements: In accordance with 2 CFR 200.403 and 200.405, costs charged to a federal award must be necessary, reasonable, and allocable. In addition, 2 CFR 200.430 Compensation-personal services, provides that compensation for personal services must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of 21 non-payroll expenses, we identified one instance wherein translation services amounting to $795, provided by a staff member, were charged under professional fees, even though the individual's salary was recorded and billed under salary expenses. Additionally, in our testing of 25 payroll expenses, we identified one instance of overbilling in the amount $622. This occurred because the payroll charge was based on budgeted Full Time Equivalents (FTEs) rather than the actual time worked. Cause: CAIR-CA's current internal controls for reviewing billings under the federal program were not sufficient to consistently prevent or detect duplicate or inaccurate charges. Furthermore, CAIR-CA lacked adequate internal controls to ensure that payroll allocations were based on actual time worked on the federal program. Effect: These control deficiencies resulted in the overbilling of federal funds. Questioned Cost: $1,417 Recommendation: To ensure compliance with the Uniform Guidance, we recommend that CAIR-CA strengthen its internal controls over expense reporting by implementing enhanced review procedures to verify the allowability of costs charged to federal awards. Additionally, CAIR-CA should establish formal procedures to ensure that payroll charges to federal programs are based on actual time and effort records. Management should conduct regular reviews and make necessary adjustments to payroll allocations to accurately reflect the work performed on federally funded activities. Views of Responsible Officials and Corrective Action Plan: Management concurs with the finding and has already initiated enhancements to its review process to ensure that expense reports are consistently reviewed and approved by both supervisors and finance personnel prior to being charged to federal awards. These steps are designed to further strengthen internal controls and support compliance with federal requirements. In addition, Finance staff are formalizing procedures to reconcile payroll charges on a regular basis to ensure compliance with federal requirements and to confirm that all charges to federal programs are supported by actual time and effort records. Responsible person: Jackie Ramirez, Operations & Finance Associate Director Expected Implementation date: October 31, 2025
Finding 2023-008 – Allowable Costs (Significant Deficiency and Non-compliance) Information on the Federal Program: U.S. Department of Justice, Assistance Listing No.16.575 Victims of Crime Act Criteria: 2 CFR 200.405 establishes requirements for costs allocated to a grant award. These requirements include that costs must be approximated using a reasonable method. Condition/Context: We selected 50 disbursements for testing. Of those 50, 25 were for payroll and 25 were non-payroll disbursements. Of the 25 payroll, 4 employees’ pay allocated to the grant did not agree to the supporting timesheets and pay rates. Of the 25 non-payroll, there were 2 instances in which the costs allocated was not properly documented or supported by a reasonable method. Cause: Expenses allocated to the VOCA grant were not properly supported. Effect: The Organization did not comply with allowable cost documentation requirements. Questioned costs: $2,313 Recommendation: We recommend the Organization strengthen its policies and procedures surrounding the disbursement process to ensure the Organization is in compliance with all required documentation and disclosure requirements. Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: Identify the award and the applicable requirements to each subrecipient. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for an authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $290,000, were provided to two different entities. Both subrecipient agreements associated with the subawards were selected for testing. For the two agreements tested, the following information was incomplete or missing: The federal award identification number (FAIN). The federal award date of award to the recipient by the federal agency. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The County did not request any financial or audit documentation from the subrecipients. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 21 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in § 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; INDIANA STATE BOARD OF ACCOUNTS 22 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. INDIANA STATE BOARD OF ACCOUNTS 23 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by the management of the County was not properly designed nor implemented. The County was unable to provide documentation that monitoring procedures were in place over subrecipients. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot be sure subrecipients are provided an adequate subaward agreement, with all required elements and are adequately monitored. As such, subaward agreements entered into by the County did not include all the required elements. In addition, the County did not properly monitor the non-profit to ensure proper spending of the federal funds. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 24 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
#2023-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding – Allowable Costs and Material Weakness in Internal Controls Over Compliance This is a repeat of prior year finding #2022-006. Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For payroll costs and 1 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls to allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
#2023-005 – Major Federal Award Finding – Allocation of Costs Nature of Finding: Compliance Finding – Allowable Costs and Material Weakness in Internal Controls Over Compliance This is a repeat of prior year finding #2022-006. Criteria/Condition: Federal regulations 2 CFR 200.405 provide that costs benefiting two or more projects in proportions that can be easily determined must be allocated to the projects based on the proportional benefit. If proportions cannot be easily determined, the costs may be allocated to the benefitted projects on a reasonable and documented basis. Questioned Costs: Not able to be determined. Identification of How Questioned Costs Were Computed: Of the major program expenditures selected for testing, certain costs charged to the major program appear to be under-allocated, while others appear to be over-allocated to the major program. These matters are not isolated or contained to any particular type of expenditure. There was no meaningful methodology identified to quantify or extend the errors to the population. Cause/Context: Controls were not in place to evaluate the allocation of costs to grants based on proportional benefit provided to each grant. For payroll costs and 1 of the 40 expenditures selected for testing, costs were divided arbitrarily when charged to grants. No documented support for the allocation methodology was present. Effect: Expenditures that involve an allocation of costs between grants are not supported. The lack of controls results in questioned costs as a disproportionate amount of expenditures may be charged to the federal program. Recommendation: We recommend management establish procedures and controls to allocate costs between grants based upon actual costs attributed to the grant and the particular expenditure allowed by the grant. Any such allocations should be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval should be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to recommend to management the establishment of procedures and controls to allocate costs between grants based on actual costs attributed to grant and the particular expenditure allowed by the grant. All such allocations will be supported by activity-level substantiation and be reviewed. Documentation of the allocation methodology, review and approval will be maintained in writing.
Unallowable Use of Housing Choice Voucher Cluster Programs’ Funds (Material Weakness, Material Non-Compliance) Section 8 Housing Choice Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.871, Emergency Housing Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.EHV, Grant Period: Year-End December 31, 2023 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs’ subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management and Book-keeping Fees. Condition and Perspective During 2023, the Authority’s Section 8 Housing Choice Voucher Program advanced $255,941 out of its Program. The Emergency Housing Choice Voucher Program advanced $186,741 out of its Program. Questioned Costs – $255,941 and $186,741 from the Programs. Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management’s Response The Authority will limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only. The Authority’s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2024.
Unallowable Use of Housing Choice Voucher Cluster Programs’ Funds (Material Weakness, Material Non-Compliance) Section 8 Housing Choice Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.871, Emergency Housing Voucher Program (Housing Choice Voucher Cluster) – Assistance Listing No. 14.EHV, Grant Period: Year-End December 31, 2023 Criteria The cost principles in 2 CFR Part 200, Sub-part E of the Uniform Guidance describe allowable and unallowable uses of federal award program subsidies. Parts 200.403 and 200.405 prohibit the use of federal award program subsidies to fund expenditures outside of the applicable federal award program. Specifically, the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs’ subsidies and reserves cannot be used to fund expenditures and/or deficits of other federal or non-federal programs, except through allowable Management and Book-keeping Fees. Condition and Perspective During 2023, the Authority’s Section 8 Housing Choice Voucher Program advanced $255,941 out of its Program. The Emergency Housing Choice Voucher Program advanced $186,741 out of its Program. Questioned Costs – $255,941 and $186,741 from the Programs. Cause Lack of non-federal funds available to finance non-federal expenditures. Effect Non-compliance with federal Allowable Cost requirements. Recommendation We recommend that the Authority limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only as specified in the Uniform Guidance and applicable HUD literature. Management’s Response The Authority will limit advancing funds from the Section 8 Housing Choice Voucher and Emergency Housing Voucher Programs, to allowable Fees only. The Authority’s Executive Director, Trey George, has assumed the responsibility of executing this corrective action as of November 1, 2024.
Federal Agency: Department of Justice Federal Assistance Listing Number: 16.756 Program: Court Appointed Special Advocates Award Number: 15JDP-21-GK-02762-CASA Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 16 subrecipient awards. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. The population consisted of 79 subawards made totaling to $2,428,200 provided to subrecipients in 2023. The sample consisted of 16 subawards totaling $515,618 provided to subrecipients in 2023. Identification as a Repeat Finding: 2022-005. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Condition: Allegheny County Economic Development (ACED) charges CDBG program accounts for the salary and benefits of numerous employees, including employees that do not work full time on the CDBG Program. Hours for each employee are tracked by the program(s) the employee works on each day. ACED needs to calculate the salary and benefit amounts for time not related to CDBG, charge the proper non-CDBG program, and reduce the CDBG Program expense, based on these hours. ACED indicated these cross-charges are done on a quarterly basis. We tested the cross-charges for one quarter of calendar year 2023. Based on records provided by ACED, $178,382 in salaries and related fringe benefits were charged to CDBG for hours not worked on CDBG. ACED provided supporting documentation that CDBG expenses were reduced by $129,732; however, five of these entries totaling $72,088 were recorded in 2024 instead of 2023. In addition, it appears the CDBG Program expenses were not reduced for the remaining $48,650. This is a repeat finding from 2022. Criteria: Allowable costs include those that are incurred specifically for the Federal award (2 CFR Part 200 Subpart E -Cost Principles (2 CFR 200.405.a.1). Cause: ACED has a process to cross-charge time not worked on CDBG to the proper program, but due to department turnover, these cross-charges were not properly completed, or were not completed timely. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: $48,650 Recommendation: ACED should establish procedures to ensure that all cross-charges are properly calculated and completed in a timely manner. Management Response: Management agrees with the finding, see attached Corrective Action Plan.
Condition: Allegheny County Economic Development (ACED) charges CDBG program accounts for the salary and benefits of numerous employees, including employees that do not work full time on the CDBG Program. ACED tracks the time these employees worked by program and calculates the salary and benefit amounts to be cross-charged out of CDBG to the proper program based on the hours worked on a quarterly basis. We tested the cross-charge records for one quarter of calendar year 2023. ACED calculated the salary cross-charge amount using the hours worked and the employees’ hourly rate. However, the fringe benefit cross-charge was calculated by applying a percentage to the salary cross-charge amount, instead of using actual fringe benefit costs and hours worked. In addition, the percentage was calculated based on one paycheck for two employees and used incorrect amounts, such as federal income tax, in the calculation. The use of a blended fringe benefit rate was identified as a finding in the prior year. ACED indicated they would use actual fringe rates from JDE using ReportsNOW to calculate the fringe benefit cross-charge amounts. This is a repeat finding from 2022. Criteria: Allowable costs include those that are incurred specifically for the Federal award (2 CFR Part 200 Subpart E -Cost Principles (2 CFR 200.405.a.1). Cause: ACED has not established a procedure to determine the actual fringe benefit cost to be used in the cross-charge calculation that transfers fringe benefits out of CDGB to the proper program. Effect: The County was not in compliance with the terms of the federal grant program. Questioned Costs: The amount of questioned costs, if any, were unable to be determined. Recommendation: ACED should establish procedures that will use JDE data to calculate the actual fringe benefit costs that will be used in the fringe benefit cross-charge calculation. This will allow for program expenditures of CDBG, and other ACED programs, to be more accurately stated. Management Response: Management agrees with the finding, see attached Corrective Action Plan.
2023-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2022-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2023 Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 3 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control). • For 27 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $24,563. Cause: The Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: Over the past year, the Corporation has made significant improvements, reducing the occurrence of these findings compared to 2022. To continue to improve on and address this, the Corporation implemented a new HR solution, Rippling, in 2024, which will ensure all future agreements and rate changes are properly tracked and documented. This system will enhance the Corporation's document retention process and ensure compliance with federal regulations moving forward.
2023-002 – SIGNIFICANT DEFICIENCY – Claims Payments Made Based on Incorrect Calculations of Amounts to be Reimbursed (Originated in 2022) U.S. Department of Treasury – Passed through the State of Alabama Department of Treasury – COVID 19 Coronavirus State and Local Fiscal Recovery Fund – ALN #21.027 – Program Year 2023 Criteria – Per 2 CFR Subpart E - 200.403(a) and (b), allowable costs under federal award programs must be necessary and reasonable for the performance of the federal award and must conform to any limitations or exclusions set forth in the federal award as to types or amounts of cost items. In addition, per 2 CFR Subpart E – 200.405(a), a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award in accordance with relative benefits received. Finally, per CFR 200.303(a), non-federal entities are required to establish and maintain effective internal controls over federal awards. Condition – For 1 of 60 disbursements sampled, reimbursed claims amounts included un-allowable costs due to the reimbursement calculations being performed incorrectly in the determination of the appropriate reimbursement amount. Cause – As a result of the Foundation’s reliance solely on certifications received, amounts were not appropriately disbursed under the federal award program. Effect – Claims payments included amounts that were not chargeable or assignable to the federal award in accordance with relative benefits received. Questioned Costs – $95,663 known questioned costs (total amounts paid based on incorrect reimbursement calculations), $529,835 likely questioned costs – amount extrapolated to entire population based on % of known questioned costs. Auditor’s Recommendation – Policies and procedures should be designed, implemented, and monitored which ensure that detailed supporting documentation is obtained and reviewed for all disbursements in accordance with federal award requirements. In addition, all calculations of amounts to be reimbursed should be appropriately recalculated to ensure the proper amount is included in the claims payments. Management response and current status – See management corrective action plan
Finding 2023-001 Material weakness in internal controls over compliance and instances of noncompliance related to allowable costs/cost principles compliance requirements. Federal Agency: Department of Health and Human Services (HHS) Pass-Through: State of Washington Department of Health (DOH) Program Title: HIV Prevention Activities Health Department Assistance Listing Number: 93.940 Award Number: CBO27200; CBO28119 Award Period: July 01, 2022 through August 31, 2023 and July 01, 2023 through December 31, 2023 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance), Subpart E ‐ Cost Principles, Section 200.405 requires that a non-federal entity allocate costs based on the benefits received and costs that benefit both the federal award and other work of the non-federal entity are distributed in proportions that may be approximated using reasonable methods. Condition/Context for Evaluation During our testing of allowable costs, we noted that the non-federal entity applied costs for bonuses, insurance, and the audit fee to the federal program without performing an allocation of the costs to the program and others based on the proportional benefit. Cause The Organization's management was not aware of the allocation requirements of 2 CFR section 200.405. Effect or Potential Effect The Organization did not apply the Uniform Guidance 2 CFR in the allocation of bonuses, insurance, and audit fees resulting in questioned costs. Questioned Costs $29,512 Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that its allocation methodology follow the allocability requirements of Subpart E in 2 CFR Part 200. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Item: 2023-002 Assistance Listing Number: 93.914 Program: HIV Emergency Relief Project Grants Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Pass-Through Grantor Identifying Number: A22MHSSWC, A23MHSSWC, A22MNSSWC, A23MNSSW, A22MCMSWC, A23MCMSWC, A22NMCMSWC, A23NMCMSWC, A22FBMSWC, A23FBMSWC Award Year: March 1, 2022 - February 28, 2023; March 1, 2023 - February 28, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 1 selection was charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amount charged and the amount supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2023-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 5 selections were charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amounts charged and the amounts supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.
In accordance with 2 CFR 200.405, costs must be allocated to the projects based on the proportional benefit. If this cannot be determined, costs may be allocated or transferred to benefitted projects on any reasonable documented basis. For the year ended December 31, 2023, AEA did not maintain support for their allocation methodology for 14 cash disbursement items selected. Allocations were made based on predetermined percentages established by the prior Chief Financial Officer. The expense allocations may not be appropriate. AEA is not in compliance with 2 CFR 200.405. There are no questioned costs reported. A random sampling of the federal expenditures. This is not a repeat finding from the prior year.We recommend that AEA review and reestablish their allocation methodology for allocated costs.