Finding Text
Condition—Contrary to the County’s award terms with the Arizona Department of Health Services (ADHS), the County’s Health Services Department (Department) requested and received reimbursement of federal program monies related to the County’s Border Region Partnership award (award number CTR057133 for the period of December 1, 2021 through May 1, 2022) for services it did not provide and for which it was ineligible to be reimbursed. Specifically, the Department requested and received reimbursement totaling $83,330 when its records reflected that it incurred only $16,346 in program expenditures during the award period and during the fiscal year.
Effect—The Department received $66,984 of federal program monies for which it did not provide services, such as vaccinations and related education services to the Arizona border region’s residents. As a result, Arizona’s border residents may not have received needed services that these monies could have provided. Further, the County may be required to repay these monies to ADHS. We extended auditing procedures and determined that these questioned costs affected only the County’s Border Region Partnership award, representing approximately 8 percent of the County’s total program expenditures of $788,255 for fiscal year 2022.
Cause—County management reported that it misinterpreted the award’s payments arrangements, which it believed to be made on a monthly fixed-price basis regardless of the number of service units the County provided and subsequently received reimbursement for $83,330 during the award’s 6-month term, rather than requesting and being paid for the actual number of service units provided. Additionally, the County lacked written policies and procedures for the Department to follow to record or prepare and maintain documentation supporting the number of service units the Department provided under the award.
Criteria—The County’s Border Region Partnership award agreement with ADHS specified it was a cost-reimbursement award with a fixed price per service unit that required the County to be reimbursed based on the number of service units it provided. The monthly fixed price amount included in the award represented the maximum amount ADHS would pay the County for providing the services each month as long as the monthly reimbursement did not exceed that amount. Also, federal regulation requires the County to establish and maintain effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303).
Recommendations—The County should:
1. Require the Department to request reimbursement of federal program monies for only those reasonable and allowable actual program costs it incurs that are funded on a cost-reimbursement basis.
2. Work with the pass-through grantor, ADHS, to repay award amounts the County received in excess of amounts it was eligible to receive.
3. Develop and implement written policies and procedures for recording the actual number of units of goods or services it provides when providing services under a federal award with fixed price per unit arrangements. These policies and procedures should include steps for departments to follow to document the support for costs when requesting reimbursement of federal program monies to help ensure that they request reimbursement for only actual costs incurred under federal programs.
The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.