2024-003. Single Audit Report Submission Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.412, the City is required to complete and submit the data collection form within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. Condition and context: The City did not obtain an independent audit within the required period for submission. Cause: Lack of internal controls to ensure that an independent audit was completed timely. Effect or potential effect: The City did not comply with requirements of 2 CFR 200.512. Questioned costs: None. Identification as a repeat finding, if applicable: Repeat finding of 2023-002. Recommendation: The City should develop a course of action to ensure that future single audit reports are completed and submitted to the Federal Audit Clearinghouse in accordance with the requirements of 2 CFR 200.512. Views of responsible officials: As detailed in the Corrective Action Plan, management has agreed to the findings and recommendations noted above.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-005: Reportable finding considered a significant deficiency - Inadequate Controls over Identification of Unallowable Costs in the Indirect Cost Pool Program name: Applies to all federal program utilizing indirect cost rates Assistance Listing: All Federal awarding agency: All Pass-through Entity: All Criteria: In accordance with 2 CFR 200.403 and 2 CFR 200.412–415, costs charged to federal awards, whether direct or indirect, must be allowable under the cost principles of Subpart E. Organizations must have adequate internal controls to identify, segregate, and exclude unallowable costs from charges to federal programs. In particular, indirect cost pools used to calculate rates billed to federal awards must not include unallowable costs such as fundraising, entertainment, or other expressly unallowable expenses. Condition: During our audit procedures, we noted that the Organization does not identify or code unallowable costs (e.g., fundraising event expenses) within its accounting system at the time of transaction entry. As part of our review of the General and Administrative (G&A) cost pool used for indirect cost rate calculations, we identified unallowable costs included in the detailed listing. Per discussion with management, these costs are not intended to be charged to federal awards. Management explained that federal drawdowns are based on a provisional rate and unallowable costs are manually excluded during the closing and cost submission process. Cause: The Organization lacks system-based controls and procedures to flag or segregate unallowable costs during transaction coding. The current process relies heavily on manual review and adjustments at year-end, which increases the risk of unallowable costs being inadvertently included in rates charged to federal programs. Effect: Including unallowable costs in the indirect cost pool—whether or not ultimately billed—represents a significant deficiency in internal control over compliance. Although management asserts that such costs are removed prior to federal reimbursement claims, the absence of preventive controls increases the risk of noncompliance, incorrect cost submissions, and potential disallowed costs during future oversight or audits. Repeat finding: This is not a repeat finding. Questioned costs: None identified as costs were reportedly removed prior to billing; however, the issue represents a control weakness. Perspective: This control deficiency affects the Organization’s system-wide treatment of indirect costs across all federal programs using the provisional rate. Recommendation: We recommend that the Organization: • Implement accounting system enhancements or protocols to flag unallowable costs at the point of entry to ensure proper coding and segregation. • Establish written procedures and staff training to reinforce cost allowability standards under Uniform Guidance. • Consider performing interim reviews of indirect cost pool activity to ensure early identification and removal of unallowable expenses. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: Per 2 CFR §200.403 and §200.405, costs charged to federal awards must be allowable, allocable, and supported by adequate documentation. Indirect costs must be charged in accordance with an approved cost allocation plan under 2 CFR §200.412–§200.415. Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Questioned costs: Known questioned costs of $21,643. Context: As part of the audit of the County’s FY24 expenditures under the CDBG program, CLA requested a reconciliation of payroll and nonpayroll costs. The County reported $67,219 in payroll expenses, but only $45,576 could be reconciled to supporting documentation. The remaining $21,643 could not be substantiated due to the preparer being on medical leave. Additionally, payroll costs were calculated using an internal allocation method that included indirect components (e.g., supplies) and were not supported by an approved cost allocation plan. The hours charged were based on general grant administration rather than specific CDBG activities. Cause: The County relied on an internally developed allocation method without formal approval or alignment with federal cost principles. Effect: The use of an unapproved allocation basis and insufficient documentation resulted in questioned costs totaling $21,643. The methodology overstated actual costs and did not ensure that charges were specific to the CDBG program. Repeat Finding: This is not a repeat finding. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.412, the City is required to complete and submit the data collection form within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. Condition and context: The City did not obtain an independent audit within the required period for submission. Cause: Lack of internal controls to ensure an independent audit was completed timely. Effect or potential effect: The City did not comply with requirements of 2 CFR 200.512. Questioned costs: None. Identification as a repeat finding, if applicable: Not applicable. Recommendation: The City should develop a course of action to ensure that future single audit reports are completed and submitted to the Federal Audit Clearinghouse in accordance with the requirements of 2 CFR 200.512. Views of responsible officials: As detailed in the Corrective Action Plan, management has agreed to the findings and recommendations noted above.
2023-006. Single Audit Report Submission Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.412, the City is required to complete and submit the data collection form within the earlier of 30 days after receipt of the auditor’s report, or nine months after the end of the audit period. Condition and Context: The City did not submit the required reporting package within the required period for submission. Cause: Lack of internal controls to ensure an independent audit was completed timely. Effect or potential effect: The City did not comply with the requirements of 2 CFR 200.512. Questioned costs: None. Identification as a repeat finding, if applicable: Repeat of finding 2022-008. Recommendation: The City should develop a course of action to ensure that future single audit reports are completed and submitted to the Federal Audit Clearinghouse in accordance with the requirements of 2 CFR 200.512. Views of responsible officials: As detailed in the Corrective Action Plan, management has agreed to the findings and recommendation noted above.
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.
Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.412, the City is required to complete and submit the data collection form within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. Condition and context: The City did not obtain an independent audit within the required period for submission. Cause: Lack of internal controls to ensure an independent audit was completed timely. Effect or potential effect: The City did not comply with requirements of 2 CFR 200.512. Questioned costs: None. Identification as a repeat finding, if applicable: Not applicable. Recommendation: The City should develop a course of action to ensure that future single audit reports are completed and submitted to the Federal Audit Clearinghouse in accordance with the requirements of 2 CFR 200.512. Views of responsible officials: As detailed in the Corrective Action Plan, management has agreed to the findings and recommendations noted above.
2023-006. Single Audit Report Submission Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with 2 CFR 200.412, the City is required to complete and submit the data collection form within the earlier of 30 days after receipt of the auditor’s report, or nine months after the end of the audit period. Condition and Context: The City did not submit the required reporting package within the required period for submission. Cause: Lack of internal controls to ensure an independent audit was completed timely. Effect or potential effect: The City did not comply with the requirements of 2 CFR 200.512. Questioned costs: None. Identification as a repeat finding, if applicable: Repeat of finding 2022-008. Recommendation: The City should develop a course of action to ensure that future single audit reports are completed and submitted to the Federal Audit Clearinghouse in accordance with the requirements of 2 CFR 200.512. Views of responsible officials: As detailed in the Corrective Action Plan, management has agreed to the findings and recommendation noted above.
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.