Finding 42668 (2022-003)

Material Weakness
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2023-09-28

AI Summary

  • Core Issue: The Foundation requested reimbursement for $186,736 in expenses incurred in December 2022, but payment was not made until May 2023, violating cash management rules.
  • Impacted Requirements: Cost-reimbursement contracts require timely payment of expenses, ideally within 30 days of reimbursement requests.
  • Recommended Follow-Up: Management should ensure that reimbursement requests and expense payments occur within a 30-day timeframe to comply with federal requirements.

Finding Text

U.S. Department of Health and Human Services, pass-through State of Tennessee Department of Health - Immunization Cooperative Agreements (ALN COVID-93.268) Federal Award Identification Number Year 34349-31823 2022 Criteria: Cost-reimbursement contracts under the federal acquisition regulation require that the non-federal entity request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Ordinary course of business would be in accordance with the terms and conditions of a subcontract or invoice and ordinarily within 30 days of the request to the federal government for reimbursement. Condition: We selected a sample of expenditures requested for reimbursement. In our testing of the sample, we noted: $186,736 in expenditures that were incurred and requested for reimbursement in December 2022; however, the payment for the expenditure was not made until May 2023. Cause: The Foundation waited for reimbursement funds to be received to pay the expenditure for cash flow purposes. Effect or potential effect: Since the federal award is a cost-reimbursement contract, the request for reimbursement was not in compliance with the cash management requirements of the federal award. Recommendation: We recommend that management limit the time between requests to the federal government for reimbursement and payment of the expense to 30 days or less. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management?s corrective action plan in appendix A.

Corrective Action Plan

2022-003: Compliance with Cash Management Requirements U.S. Department of Health and Human Services, pass-through State of Tennessee Department of Health - Immunization Cooperative Agreements (ALN COVID-93.268) Management?s Response: We concur. View of Responsible Officials and Corrective Action: The CEO and the Controller have implemented a process to submit reimbursement for prior month?s work by conclusion of the following month. The Controller has implemented a process to aggressively follow-up with the state accounting team to ensure the state is holding true to a proper timeline of reimbursement. The Controller utilizes this follow-up messaging to the state to ensure all proper documentation has been assessed properly at each stage of the state?s review process. Anticipated Completion Date: TPREF has implemented this new process as of July 1, 2023.

Categories

Cash Management Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 42669 2022-004
    Significant Deficiency
  • 50660 2022-002
    Material Weakness
  • 619110 2022-003
    Material Weakness
  • 619111 2022-004
    Significant Deficiency
  • 627102 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.268 Immunization Cooperative Agreements $627,540
93.426 Improving the Health of Americans Through Prevention and Management of Diabetes and Heart Disease and Stroke $259,853