Finding No.: 2023-012 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $558,990 Area: Allowable Costs/Cost Principles Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with allowable costs/cost principles requirements, and be directly related to, and in accordance with, program intent and objectives. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition 1: For 16 (or 33%) of 49 non-payroll transactions tested, aggregating $1,851,210 of $2,079,854 in total non-payroll program expenditures, the following deficiencies were noted: Item # Encumbrance/ Voucher # SPG # COVID Non-COVID Total 1 22/00001585 Journal 10290101 $ 5,601 $ - $ 5,601 2 22/00003730 BRV 10320101 44,463 - 44,463 3 22/00001975 BRV 10134501 - 37,900 37,900 4 22/00005845 BRV 10134501 - 1,784 1,784 5 22/00001980 BRV 10580201 20,000 - 20,000 6 22/00001585 JOURNAL 10610101 - 10,000 10,000 7 22/00002210 PORDER 10134501 - 2,520 2,520 8 22/00001931 PORDER 10290101 9,240 - 9,240 9 C1491501 10320101 6,947 - 6,947 10 C14081 10290101 264,000 - 264,000 11 22/00001633 PORDER 10520101 6,322 - 6,322 12 22/00003591 BRV 10320101 2,073 - 2,073 13 22/00001491 PORDER 10580101 - 2,780 2,780 14 22/00002713 PORDER 10136401 1,350 - 1,350 15 22/00002656 PORDER 10136401 4,514 - 4,514 16 22/0001587 JOURNAL 10610101 138,900 - 138,900 $ 503,410 $ 54,984 $ 558,394 Item #s 1 and 2 pertain to security services for which there was inadequate documentation to support cost allocation to the program. Item #s 3 through 5 pertain to RepMar’s Ministry of Health and Human Services (MOHHS) utility expenditures for which there was inadequate documentation to support cost allocation to the program. Item #s 6 through 7 pertain to MOHHS communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item # 8 pertains to MOHHS fuel expenditures for which there was inadequate documentation to support cost allocation to the program. Item # 9 pertains to the construction of MOHHS’s Laura Health Centre Extension, for which the grant Notice of Award (NOA) strictly prohibits construction to be charged to the program. Item # 10 pertains to the purchase of MOHHS’s Marshall Health Information System (MHIS) for which there was inadequate documentation to support cost allocation to the program. Item #s 11-15 pertain to the purchase of equipment (i.e laptops, copier machines, and duplicators), however we noted no budget for equipment per NOA. Item # 16 pertains to a transfer to the Marshall Island Police Department, we were not provided supporting documentation for us to ascertain the allowability of the activity. Condition 2: For 3 (or 27%) of 11 payroll transactions tested, aggregating $11,610 of $471,786 in total payroll program expenditures, the following deficiencies were noted: Item # Employee # PPE Hours Amount 1 04236064 10/08/2022 Unknown $ 103 2 04219081 6/3/2023 74.5 468 3 04231376 7/15/2023 4 25 $ 596 For item # 1, employee was paid an additional $103 which could not be verified due to lack of supporting calculation. Furthermore, the additional payment was not supported by documented approval. For item # 2, the employee's position is Purchasing Specialist II. Documentation of why this is a necessary and reasonable program cost was not available for examination. For item # 3, four leave hours paid were not supported by an approved leave form. The above are expenditures under COVID SPG codes and resulted in reportable questioned costs of $596 because the projected questioned cost exceeds the $25,000 threshold. Cause: RepMar lacks adequate internal control over compliance with applicable allowed and unallowed activity requirements, as well as obtaining and retaining sufficient documentation to support all transactions. Effect: RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable questioned cost is $504,006 (COVID) and $54,984 (non-COVID). Identification as a Repeat Finding: Finding No. 2022-003 Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: RepMar’s Corrective Action Plan does not indicate disagreement and provides planned corrective action.