Finding 1074443 (2023-004)

Finding No. 2023-004: Schedule of Expenditures of Federal Awards (SEFA) – Material Weakness – Internal Control and Compliance Finding ALN 93.834 - Capacity Building Assistance (CBA) for High Impact HIV Prevention, Grant Number 5NU65PS923672-04-00 and 5NU65PS923672-05-00, Grant Period: April 1, 2023 to December 31, 2023 Criteria HealthHIV should have internal control procedures in place to determine whether an agreement makes HealthHIV, the party receiving the funds, a subrecipient or a contractor. Pass-through federal funds should be treated by the subrecipient as though they were received directly from the federal government. Accordingly, pass-through federal awards must be included in the scope of the single audit and in the SEFA. The SEFA must list federal funds received directly, separate from those received as pass-through awards. Condition HealtHIV did not have adequate internal controls in place to determine whether HealthHIV is a subrecipient or a contractor. Context Expenditures incurred on the pass-through federal award totaled $165,062 for the year ended December 31, 2023. Thus, the SEFA was initially understated by this amount. Cause HealthHIV initially considered the organization to be a contractor and not a subrecipient of the federal award. However, upon confirmation with the prime recipient of the award, HealthHIV is a subrecipient and not a contractor. Effect Management did not fully adhere to the requirements of the Uniform Guidance. Questioned Costs None. Repeat Finding No. Recommendation We recommend that management review each subaward agreement carefully to properly determine whether an award includes pass-through federal funding and would need to be reported on the SEFA. If unsure, we recommend that management obtain clarification from the funder or pass-through entity and that the discussion be documented. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.