Finding Text
Program Title: Refugee and Entrant Assistance State Administered Programs — Afghan Supplemental Services (Contract No. CTR061924) Federal Financial Assistance Listing Number: 93.566 Federal Award Year: 2024 Federal Agency: U.S. Department of Health and Human Services, passed through the Arizona Department of Economic Security Type of Finding: Material Weakness in Internal Control over Compliance / Scope Limitation resulting in Disclaimer of Opinion Criteria: Compliance requirements identified as direct and material to Contract No. CTR061924 under ALN 93.566 include Activities Allowed or Unallowed (A), Allowable Costs/Cost Principles (B), Cash Management (C), Eligibility (E), Period of Performance (H), and Reporting (L), per the 2025 OMB Compliance Supplement, Part 4, ALN 93.566. Condition: Of these six requirements, only the administrative-claim component of Allowable Costs (B) was substantively tested, using AIRS’s own accounting records. The remaining five requirements could not be tested because the evidence needed — ARRPODS-based unit/task activity records and client A-number eligibility data — was inaccessible. The Arizona Department of Economic Security (ADES) confirmed in writing (correspondence dated September 10, 2026) that this data is currently unavailable due to a stateside data conversion, a condition compounded by the inactive status of Contract No. CTR061924 for FY2024 and FY2025. Cause: This is an inherent scope limitation arising from circumstances beyond the control of both AIRS and the engagement team, rather than a restriction imposed by management, consistent with AU-C §705.13. AIRS does not maintain source documentation independent of ADES’s ARRPODS system sufficient to support billed units under CTR061924 in the event ARRPODS is unavailable. Effect: The engagement team was unable to obtain sufficient appropriate audit evidence regarding compliance with five of six direct-and-material requirements for a contract representing approximately 79% of the dollar volume and 64% of the invoices tested within ALN 93.566. Because AIRS invoices ADES across all four ALN 93.566 contracts on a combined, purpose-code basis, this evidence gap could not be isolated to a separable population of transactions and is pervasive to the program as a whole, resulting in a disclaimer of opinion on compliance for ALN 93.566. Because CTR061924 revenue is recognized on the same unit-earned basis for financial reporting purposes, the same evidence gap also contributed to the qualified opinion on the basic financial statements taken as a whole (see the Independent Auditor’s Report).Questioned Costs: Undeterminable due to the scope limitation. An estimated $600,000–$650,000 of ALN 93.566 revenue and the related receivable could not be substantiated (applying the approximate 79% sample proportion to total program revenue of approximately $800,000 on a pre-adjustment, cash basis). Following the GAAP accrual-basis correction described in Finding 2024-002, total ALN 93.566 program revenue increased to $1,122,212, as reflected in the Schedule of Expenditures of Federal Awards; the $600,000–$650,000 estimate reflects the pre-adjustment base and was not recalculated on the adjusted amount. This amount is not characterized as a questioned cost in the 2 CFR 200.516 sense because it reflects an inability to test, rather than an identified instance of noncompliance or unallowable cost. Repeat Finding from Prior Year: No — new condition for FY2024. (ALN 93.566 received an unmodified compliance opinion in FY2023; the qualified opinion issued for FY2023 pertained to the separate ALN 93.567 program’s matching requirement, Finding 2023-006.) Recommendation: AIRS should coordinate with ADES on restoring ARRPODS access and evaluate whether independently maintained case-management task logs or client files could substitute for ARRPODS extracts in future periods, so that a similar scope limitation does not recur for FY2025. Views of Responsible Officials: Management concurs with this audit finding Corrective Action Plan: See corrective action plan