Finding Text
Federal Program: Ryan White HIV/AIDS Program – Part B (ALN 93.917)
Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E)
Type of Finding: Compliance and Internal Control Deficiency
Condition:
During our testing of the Ryan White Service Delivery program (grant period ending March 31, 2023), we noted that STDC initially submitted a final financial report to the Texas Department of State Health Services (DSHS) – Ryan White Division, reporting $491,993 in contractual expenditures and $69,458 in administrative expenditures.
Subsequently, STDC submitted an additional reimbursement request via Form B-13, which included $162,433 in additional contractual costs and $12,153 in administrative costs. Upon review of the supporting documentation for this supplemental submission, we were unable to obtain sufficient appropriate evidence that the additional $12,153 in administrative expenditures were actually incurred.
Despite the lack of adequate supporting documentation, the full amount was reimbursed by DSHS.
Criteria:
In accordance with 2 CFR §200.403(g), to be allowable under a federal award, costs must be adequately documented. Furthermore, §200.302(b)(3) requires recipients of federal funds to maintain records that identify adequately the source and application of funds, and §200.338(a) authorizes federal agencies to disallow costs that are not properly supported or allocable.
Cause:
STDC did not maintain contemporaneous or sufficient documentation to support administrative costs included in the post-period reimbursement request. Additionally, internal controls over the review and approval of financial reports and supplemental claims (e.g., Form B-13 submissions) were not operating effectively to prevent or detect the inclusion of unsupported expenditures.
Effect:
As a result, STDC received federal reimbursement for $12,153 in administrative costs without appropriate documentation, constituting noncompliance with federal cost principles. This condition may result in the disallowance of costs and repayment obligations to the funding agency.
Recommendation:
We recommend that STDC strengthen internal controls related to post-award financial reporting and reimbursement procedures by:
• Ensuring that all costs claimed are supported by contemporaneous documentation clearly demonstrating that costs were incurred and allocable;
• Establishing a formal review protocol for post-period adjustments, including documentation validation and supervisory sign-off;
• Performing reconciliations of claimed expenditures before submission of final or supplemental reports to granting agencies; and
• Consulting with DSHS to determine whether corrective action or repayment is necessary regarding the unsupported amount.
Questioned Costs: $12,153