Finding 1171846 (2025-001)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-01-31

AI Summary

  • Core Issue: The organization failed to comply with federal and state cost principles by not reconciling budgeted costs to actual time and effort records.
  • Impacted Requirements: Costs charged to various assistance listings (93.914, 93.917, 93.224, 93.527, 93.217) were unsupported, leading to questioned costs totaling over $2 million.
  • Recommended Follow-Up: Implement a process to accurately track and support time and effort for program expenditures to ensure compliance with cost principles.

Finding Text

HIV Emergency Relief Projects Grants – Assistance Listing No. 93.914 U.S. Department of Health and Human Services Harris County Health Department March 1, 2024 – February 29, 2025 and March 1, 2025 – February 28, 2026 HIV Care Formula Grants – Assistance Listing No. 93.917 U.S. Department of Health and Human Services Houston Regional HIV/AIDS Resource Group, Inc. April 1, 2024 – March 31, 2025 and April 1, 2025 – March 31, 2026 Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S. Department of Health and Human Services H80: May 1, 2024 – April 30,2025 and May 1, 2025 – April 30, 2026 H8K: September 1, 2023 – August 31, 2024 H8L: September 1, 2023 – December 31, 2024 H8N: September 1, 2024 – August 31, 2025 H2E: May 1, 2023 – August 31, 2024 Family Planning Services – Assistance Listing No. 93.217 U.S. Department of Health and Human Services EveryBody Texas April 1, 2024 – March 31, 2025 and April 1, 2025 – March 31, 2026 State HIV Services Grant Programs Texas Department of State Health Services Houston Regional HIV/AIDS Resource Group, Inc. September 1, 2023 – August 31, 2024, and September 1, 2024 – August 31, 2025 Criteria or specific requirement – Allowable Costs and Cost Principles (45 CFR 75.430) and TxGMS Condition - The Organization did not comply with federal and state cost principle requirements. Cause - The cost allocation plan used by the organization distributed costs to multiple federal and state programs using a budgeted full time equivalent (FTE) basis without subsequent reconciliation to actual time and effort records. Effect or potential effect - Amounts charged to Assistance Listing Numbers 93.914, 93.917, 93.224, 93.527, 93.217, and the Texas State HIV Service Grants were not supported by complete time and effort records. Questioned costs – ALN 93.914 HIV Emergency Relief Projects Grants - $1,571,196; ALN 93.917 HIV Care Formula Grants - $125,729; ALN 93.224 and 93.527 - Health Center Program Cluster $145,203; ALN 93.217 Family Planning Services - $202,495; State HIV Services Grant Programs - $124,550. Questioned costs were quantified using amounts allocated to multiple programs through the Organization's cost allocation plan. Context – Expenditures from each major program were tested. Indirect costs that were allocated across multiple programs were based on budgeted FTE data rather than actual time and effort reports. These indirect costs were identified as errors and represent questions costs of: • HIV Emergency Relief Project Grants – $1,571,196 • HIV Care Formula Grants – $125,729 • Health Center Program Cluster – $145,203 • Family Planning Services Grants – $202,495 • State HIV Services Grant Programs – $124,550 As a result, the Organization was unable to demonstrate compliance with federal cost principles requirements. The sampling methodology is not and is not intended to be statistically valid. Identification as a repeat finding, if applicable – Yes, see 2024-002. Recommendation – The Organization should develop a process to support the time and effort used as a basis of allocation for programmatic expenditures.

Corrective Action Plan

The Organization acknowledges the identified gap and concurs with the finding. The issue occurred due to personnel costs for certain employees being allocated based on a budgeted full-time equivalent basis without subsequent reconciliation to time and effort records. Legacy did not have a time and effort certification process established until recently. All costs have been determined as allowable costs, and the finding is a result of administrative challenges. Steps have already been taken to remedy the issue. In July 2025, the Organization implemented a risk-based attestation process to capture time allocation across grant programs. Following this, The Director of Grant Accounting and Director of Payroll have established a time and effort certification process within the company's time-keeping software. This process, effective from Nov 14th, 2025, requires the certification to be signed by the employee and approved by their supervisor at the end of each pay period.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1171826 2025-001
    Material Weakness Repeat
  • 1171827 2025-001
    Material Weakness Repeat
  • 1171828 2025-001
    Material Weakness Repeat
  • 1171829 2025-001
    Material Weakness Repeat
  • 1171830 2025-001
    Material Weakness Repeat
  • 1171831 2025-001
    Material Weakness Repeat
  • 1171832 2025-001
    Material Weakness Repeat
  • 1171833 2025-001
    Material Weakness Repeat
  • 1171834 2025-001
    Material Weakness Repeat
  • 1171835 2025-001
    Material Weakness Repeat
  • 1171836 2025-001
    Material Weakness Repeat
  • 1171837 2025-001
    Material Weakness Repeat
  • 1171838 2025-001
    Material Weakness Repeat
  • 1171839 2025-001
    Material Weakness Repeat
  • 1171840 2025-001
    Material Weakness Repeat
  • 1171841 2025-001
    Material Weakness Repeat
  • 1171842 2025-001
    Material Weakness Repeat
  • 1171843 2025-001
    Material Weakness Repeat
  • 1171844 2025-001
    Material Weakness Repeat
  • 1171845 2025-001
    Material Weakness Repeat
  • 1171847 2025-002
    Material Weakness Repeat
  • 1171848 2025-002
    Material Weakness Repeat
  • 1171849 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
94.006 AMERICORPS STATE AND NATIONAL 94.006 $1.41M
93.917 HIV CARE FORMULA GRANTS $902,397
93.914 HIV EMERGENCY RELIEF PROJECT GRANTS $758,764
93.939 HIV PREVENTION ACTIVITIES NON-GOVERNMENTAL ORGANIZATION BASED $395,877
93.940 HIV PREVENTION ACTIVITIES HEALTH DEPARTMENT BASED $184,293
93.224 HEALTH CENTER PROGRAM (COMMUNITY HEALTH CENTERS, MIGRANT HEALTH CENTERS, HEALTH CARE FOR THE HOMELESS, AND PUBLIC HOUSING PRIMARY CARE) $166,683
93.217 FAMILY PLANNING SERVICES $148,131
93.527 GRANTS FOR NEW AND EXPANDED SERVICES UNDER THE HEALTH CENTER PROGRAM $94,600
93.493 CONGRESSIONAL DIRECTIVES $71,878
93.918 GRANTS TO PROVIDE OUTPATIENT EARLY INTERVENTION SERVICES WITH RESPECT TO HIV DISEASE $13,235