Finding No.: 2024-023 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 Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $204,064 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award, in accordance with activities allowed or unallowed and 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: Of 15 payroll transactions tested, aggregating $11,918 of $462,101 in total payroll program expenditures, we noted the following: For 3 (or 20%), overtime hours charged to the program were not adequately supported or lacked justification demonstrating that the overtime costs were allocable to the grant. Accordingly, the unsupported overtime hours were identified as questioned costs. Item # Employee # PPE OT hours Expenditure Amount Questioned Cost 1 4245375 10/21/2023 11.42 $ 99 $ 99 2 4240743 12/16/2023 10 94 94 3 4091127 12/30/2023 5 51 51 $ 244 $ 244 Condition 2: For 27 (or 60%) of 45 non-payroll transactions tested, aggregating $856,345 of $1,341,003 in total non-payroll program expenditures, the following deficiencies were noted: Item # SPG # Encumbrance # COVID Non-COVID Expenditure Total Questioned Cost 1 10134502 23/00005119 BRV $ - $ 43,800 $ 43,800 $ 43,800 2 10134502 23/00005408 BRV - 15,000 15,000 15,000 3 11180109 23/00009318 BRV 15,000 - 15,000 15,000 4 10136601 23/00001683 BRV - 2,669 2,669 2,669 5 10135501 23/00006639 BRV - 5,000 5,000 5,000 6 11180104 23/00009318 BRV - 5,000 5,000 5,000 7 10580201 23/00002218PORDER - 1,936 1,936 1,936 8 10136401 23/00000509PORDER - 356 356 356 9 10131401 22/00003795PORDER - 788 788 788 10 10131401 22/00003795 PORDER - 788 788 788 11 10131501 23/00002672PORDER - 788 788 788 12 10131501 23/00002672PORDER - 244 244 244 13 10290101 22/00001901PORDER - 80 80 80 14 10132501 23/00001563PORDER - 740 740 740 15 10132501 23/00001563 PORDER - 50 50 50 16 10132401 23/00001532PORDER - 160 160 160 17 10610201 23/00004146PORDER 27,000 - 27,000 27,000 18 10610201 23/00000651 PORDER 5,500 - 5,500 5,500 19 10610201 22/00003593 PORDER 33,950 - 33,950 33,950 20 10610201 23/00001148 PORDER 23,995 - 23,995 23,995 21 10610201 23/00000597 PORDER 2,904 - 2,904 2,904 22 10610201 23/00000981 PORDER 559 - 559 559 23 10610201 23/00002757 PORDER 420 - 420 420 24 10610201 23/00004140 PORDER 1,500 - 1,500 1,500 25 10610201 23/00002042PORDER 4,000 - 4,000 4,000 26 10610201 23/00000579 PORDER 663 - 663 663 27 10480101 22/00001519 BRV - 10,930 10,930 10,930 $ 115,491 $ 88,329 $ 203,820 $ 203,820 Item # 1 pertains to Ministry of Health and Human Services (MOHHS) utility expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 2 through 6 pertain to MOHHS communication expenditures for which there was inadequate documentation to support cost allocation to the program. Item # 7 pertains to MOHHS food expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 8 through 12 pertain to MOHHS advertising expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 13 through 16 pertain to fuel expenditures for which there was inadequate documentation to support cost allocation to the program. Items #s 17 through 26 pertain to communication, motor vehicle, food, office and computer supplies, other supplies and materials, fuel, equipment and tools, and other charges and expenditures for the Marshall Islands Police Department. We are unable to ascertain relevance to the program. Items # 27 pertains to prior year contractual services for which no supporting contract was made available for examination. 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 or Potential Effect: RepMar is in noncompliance with activities allowed or unallowed and allowable cost/cost principles requirements. The reportable questioned cost is $115,735 (COVID) and $88,329 (Non-COVID). Identification as a Repeat Finding: 2023-012 Recommendation: RepMar management should strengthen monitoring controls so that expenditures are verified for validity and allowability. Views of Responsible Officials: Condition 1 All pay slips claiming OT will include supporting OT approval including justification that are allocable to grants. Condition 2 Item 1. Utilities are paid out of the de minimis rate of 10% for Federal grants. $43,800 for utilities is included in the budget breakdown of the grant. Items #1 to #27. Except for items #1, #7 to #27, the Ministry of Finance agrees with the finding and will ensure that all invoices or billings are attached to support payment accuracy and demonstrate compliance with procurement requirements. Auditor’s Response: Condition 2, item #s 1, and 7 through 27: We acknowledge management’s disagreement; however, supporting documentation was not provided by the agreed-upon deadline. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.