FAC Explorer

Finding 396236 (2022-003)

Significant Deficiency
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2024-05-09
Audit: 305880
Organization: Houston Regional Hiv/aids Resource Group, Inc. (TX)
Auditor: Carr Riggs & Ingram LLC

AI Summary

  • Core Issue: The Resource Group failed to properly monitor subrecipient costs, leading to unsupported reimbursements.
  • Impacted Requirements: Non-compliance with 2 CFR Subpart E, which mandates effective internal controls and documentation for federal awards.
  • Recommended Follow-Up: Reinforce adherence to reimbursement policies and ensure all costs have proper documentation to meet compliance standards.

Finding Text

U.S. Department of Health and Human Services 93.918 – Ryan White Title C Passed through Health Resources and Services Administration Award Periods: April 1, 2021 to March 31, 2022, May 1, 2021 to April 30, 2022, and May 1, 2022 to April 30, 2023 Contract No. H7CHA36798-01-03, H76HA00684-22-00, and H76HA00684-23-00 Texas Department of State Health Services State HIV Service Grants Award Periods: September 1, 2021 to March 31, 2022 and April 1, 2022 to August 31, 2023 Contract No. 537-18-0097-00001 and HHS001022300002 Criteria: Pass-through entities are required to submit costs for reimbursement that meet the provisions of 2 CFR Subpart E. Further, under 2 CFR Section 200.303a, non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Condition: Certain costs reimbursed to a subrecipient were not properly supported by underlying documentation. Management represented the documentation for the costs is reviewed through financial monitoring of the subrecipient which includes the subrecipient’s cost allocation plan and underlying documentation for associated with the allocation. For the fiscal year ended December 31, 2022, The Resource Group did not perform financial monitoring of its subrecipients. As a result, the cost allocation plan for one of The Resource Group’s subrecipients was not reviewed to determine appropriateness of costs allowable or allocable to the grant and costs submitted under the allocation plan and the subrecipient did not provide alternative support to The Resource Group to determine compliance. Cause: Initially subrecipient monitoring was suspended due to COVID-19 in 2020 and reinstated late 2021. The Resource Group restarted their monitoring of subrecipients, however the monitoring was done by two individuals, one for programming and the other for financial monitoring. Monitoring of programming was completed timely, while the financial monitoring was not. Further, the Finance Director, who was responsible for the financial monitoring, resigned in 2023 and the successor Finance Director was hired in August 2023. Lastly, The Resource Group did not seek alternative documentation to support the allocated costs submitted for reimbursement as a result of not performing the financial monitoring of the subrecipient. Effect: The Resource Group did not meet the requirements of 2 CFR Subpart E for certain costs as The Resource Group did not complete their financial monitoring of the subrecipient which would have included the review of the underlying documentation to support the costs reimbursed, nor did they request alternative documentation when the financial monitoring was not completed. Questioned Costs: Ryan White Title C known questioned costs $497.14 (likely questioned costs $8,054.40) State HIV Service Grants likely questioned costs $6,808.21 Recommendation: The Resource Group should follow its policies regarding expense reimbursement grants and ensure support for costs submitted for reimbursement comply with 2 CFR Subpart E. Views of Responsible Officials: See corrective action plan.

Corrective Action Plan

2022-003 Compliance and Internal Controls over Allowable and Allocable Costs (Significant Deficiency) U.S. Department of Health and Human Services 93.918- Ryan White Title C Contract No. H7CHA36798-01-03, H76HA00684-22-00, and H76HA00684-23-00 Texas Department of State Health Services State HIV Service Grants Contract No. 537-18-0097-00001 and HHS001022300002 Recommendation: The Resource Group should follow its policies regarding expense reimbursement grants and ensure support for costs submitted for reimbursement comply with 2 CFR Subpart E. Corrective Action: To ensure expense reimbursement and support of cost submitted by subrecipients comply with 2 CFR Subpart E, The Resource Group will annually verify the subrecipient’s cost allocation plan. To verify costs are allowable and allocable to the grant, The Finance Director will conduct fiscal monitoring of subrecipients. The fiscal monitoring will be conducted at least annually in accordance with all state and federal statues, regulations and terms and conditions. As a component of the monitoring, The Resource Group will verify costs submitted for reimbursement are allowable, reasonable, approved and accurately submitted. This includes verification of the cost allocation plan and underlying documentation of associated expenses. The Finance Director is responsible for oversight and administration of fiscal monitoring. The process will include desktop/remote verification of applicable financial policy and procedures and an onsite review. A standardized monitoring tool will be used to evaluate financial compliance. The fiscal monitoring observations will result in a monitoring report, disseminated to the subrecipient within 60 days of the onsite review. In the event the Finance Director position is vacant more than 90 days, The Resource Group will contract with an appropriate financial contractor to conduct annual monitoring as needed. In the event of extenuating circumstances and the subrecipient is not reviewed annually, The Resource Group will determine the appropriateness of all costs under the cost allocation plan through the submission of alternate supporting documentation. This will be verified prior to the close of the grant period. Progress to date 1. The Finance Director was hired in August 2023. To support the financial monitoring efforts, technical assistance was received on February 5-7, 2024, from the DSHS Fiscal Support and Oversight department. The primary objective of the visit was to discuss financial monitoring requirements as it allies to state and federal regulations, statues and terms and conditions. The standardized monitoring tool was also evaluated for compliance. 2. The Finance Director has developed a fiscal monitoring schedule for 2024. Onsite reviews started in February 2024. The testing period for subrecipient monitoring has been expanded to include a testing period from Fiscal Year 2022 and Fiscal Year 2023. Responsible Party: Finance Director, Garland Thompson; Executive Director, Tiffany Shepherd, MPH Date to be Corrected: August 2024

Categories

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles Cash Management

Other Findings in this Audit

  • 396235 2022-002
    Significant Deficiency
  • 396237 2022-003
    Significant Deficiency
  • 972677 2022-002
    Significant Deficiency
  • 972678 2022-003
    Significant Deficiency
  • 972679 2022-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.917 Hiv Care Formula Grants $7.51M
14.241 Housing Opportunities for Persons with Aids $1.49M
93.918 Grants to Provide Outpatient Early Intervention Services with Respect to Hiv Disease $839,525
93.153 Coordinated Services and Access to Research for Women, Infants, Children, and Youth $728,815
93.917 Covid-19 Hiv Care Formula Grants $75,418
93.918 Covid-19 Grants to Provide Outpatient Early Intervention Services with Respect to Hiv Disease $2,046
93.153 Covid-19 Coordinated Services and Access to Research for Women, Infants, Children, and Youth $87