FAC Explorer

Finding 49946 (2022-002)

Significant Deficiency Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2022
Accepted
2023-06-28
Audit: 46560
Organization: Population Services International (DC)
Auditor: Bdo

AI Summary

  • Core Issue: PSI's internal controls over financial management are ineffective, leading to unallowable expenses and questioned costs across multiple federal awards.
  • Impacted Requirements: Compliance with federal regulations (specifically 2 CFR §200.302 and §200.475) regarding accurate financial reporting and allowable costs was not met.
  • Recommended Follow-Up: Strengthen review and approval processes for expenditures, ensure proper documentation is maintained, and conduct training on compliance with federal cost principles.

Finding Text

2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles See Schedule of Findings and Questioned Costs for chart/table. Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In accordance with ?200.475(e) Travel Costs states that airfare costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines are unallowable except when such accommodations meet certain criteria. Condition: PSI has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. PSI?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ?For AL# 98.NoAL, we tested 60 payroll samples and identified one sample for which management was unable to provide the suspension and debarment check for the employee selected for testing for award 7200AA18C00014. ?For AL# 98.NoAL, we tested 60 non-payroll samples and identified three samples, whereby, the underlying documentation did not support the expense recorded for 2022, representing $872 in questioned costs for award 7200AA18C00014. ?For AL# 93.067, we tested 60 non-payroll samples and identified the following errors. o For two samples for award NU2GGH002138, the expenses incurred deviated from the established contract terms resulting in $1,146 in questioned costs. o The PSI management team?s reconciliation process for Value Added Tax did not provide sufficient detail to identify differences in amounts refunded and amounts credited in awards in the general ledger. This internal control matter was related to one sample for award NU2GGH002138. ?For AL# 93.067 and AL# 98.NoAL, BDO tested 120 payroll and non-payroll expenditures for each major program. Based on that testing, BDO identified instances in which the expenditures were reported within the incorrect period on an accrual basis. These expenditures were valid grant expenditures within the overall grant period. See Schedule of Findings and Questioned Costs for chart/table. Additionally, during our testing of the allowability of the expenses included within the pool of indirect costs, BDO identified one instance of 40 samples tested, where an employee took a business class flight, which was not the most basic least expensive unrestricted accommodations class offered by commercial airline. The cost of the airfare totaling $10,665 is unallowable. This overstatement of expenses affects all awards with period of performance end dates of 2022 or later included within the schedule of expenditures of federal awards because they are included in the pool of costs that are allocated across all Federal awards. BDO tested six donations of commodities as part of our allowable cost procedures in order to test the accuracy of the amounts reported on the schedule of expenditures of federal awards for AL# 93.067. For one of the six samples, PSI used an incorrect price per unit resulting in award NU2GGH001935 being undercharged in the amount of $2,955. Questioned Costs: The summation of the items above represent questioned costs totaling $872 for AL# 98.NoAL, $(1,848) for AL# 93.067, and $10,665 across all federal programs related to indirect costs. Context: This is a condition identified per review of PSI?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: PSI has documented expenditure policies and procedures regarding the timely processing and approval of expenditures incurred in accordance with accounting principles generally accepted in the United States. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is a repeat finding from the two previous years. This was reported as finding 2021-002 in the 2021 schedule of findings and questioned costs and 2020-002 in the 2020 schedule of findings and questioned costs. Recommendation: BDO recommends that PSI adhere to its documented policies and procedures regarding authorization and timely approval and recording of expenditures. Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide additional training to staff members to ensure compliance with established policies and procedures. PSI acknowledges the debarment check for the sample identified above was performed late; however, there were no issues noted in the results of the debarment and suspension check. Refer to management?s corrective action plan for additional information.

Corrective Action Plan

2022-002 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Contact: Chris Holmes Title: Controller Phone Number: 202-235-1938 Estimated Completion Date ? ongoing Corrective Action In late June 2023, PSI will offer its first in-person finance training since the onset of COVID. The common issues identified in this audit will be covered in that training, including: running suspension and debarment checks in a timely manner, retaining sufficient supporting documentation for expenses, following contract terms or modifying contract terms in writing as necessary, tracking VAT refunds appropriately, recording expenses in the proper period.

Categories

Allowable Costs / Cost Principles Procurement, Suspension & Debarment Reporting

Other Findings in this Audit

  • 39494 2022-005
    Significant Deficiency Repeat
  • 39495 2022-005
    Significant Deficiency Repeat
  • 39496 2022-005
    Significant Deficiency Repeat
  • 39497 2022-001
    Significant Deficiency Repeat
  • 39498 2022-005
    Significant Deficiency Repeat
  • 49947 2022-005
    Significant Deficiency Repeat
  • 49948 2022-002
    Significant Deficiency Repeat
  • 49949 2022-005
    Significant Deficiency Repeat
  • 49950 2022-002
    Significant Deficiency Repeat
  • 49951 2022-004
    Significant Deficiency
  • 49952 2022-005
    Significant Deficiency Repeat
  • 49953 2022-006
    Significant Deficiency Repeat
  • 49954 2022-002
    Significant Deficiency Repeat
  • 49955 2022-001
    Significant Deficiency Repeat
  • 49956 2022-003
    Significant Deficiency
  • 49957 2022-001
    Significant Deficiency Repeat
  • 49958 2022-004
    Significant Deficiency
  • 615936 2022-005
    Significant Deficiency Repeat
  • 615937 2022-005
    Significant Deficiency Repeat
  • 615938 2022-005
    Significant Deficiency Repeat
  • 615939 2022-001
    Significant Deficiency Repeat
  • 615940 2022-005
    Significant Deficiency Repeat
  • 626388 2022-002
    Significant Deficiency Repeat
  • 626389 2022-005
    Significant Deficiency Repeat
  • 626390 2022-002
    Significant Deficiency Repeat
  • 626391 2022-005
    Significant Deficiency Repeat
  • 626392 2022-002
    Significant Deficiency Repeat
  • 626393 2022-004
    Significant Deficiency
  • 626394 2022-005
    Significant Deficiency Repeat
  • 626395 2022-006
    Significant Deficiency Repeat
  • 626396 2022-002
    Significant Deficiency Repeat
  • 626397 2022-001
    Significant Deficiency Repeat
  • 626398 2022-003
    Significant Deficiency
  • 626399 2022-001
    Significant Deficiency Repeat
  • 626400 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
98.U00 Advancing Progress in Malaria Service Delivery $41.67M
98.001 Going the Last Mile for Hiv Control $20.40M
98.001 Momentum Targeted Mnch/fp/rh Technical Assistance to Private Providers $19.95M
98.001 Angola Health for All $11.66M
98.001 Improving Market Partnerships and Access to Commodities Together (impact) $10.87M
98.001 Donated Commodities $8.26M
98.U00 Donated Commodities $6.73M
93.067 Provision of Voluntary Medical Male Circumcision (vmmc) for Hiv Prevention in the Republic of South Africa Under the President's Emergency Plan for Aids Relief (pepfar) $6.70M
98.U00 Global Health Supply Chain (gshc) - Procurement and Supply Management (psm) $6.09M
98.001 Ethiopia Transform: Water, Sanitation and Hygiene $5.73M
98.001 Stop Djekoidjo $4.34M
98.001 Hiv Services for Key and Priority Populations $4.33M
98.001 Covid-19 - Angola Health for All $3.94M
98.001 Expanding Malawi Hiv-Aids Prevention with Local Organizations Working for An Effective Epidemic Response (empower) $3.82M
98.U00 Vector Control Indefinite Delivery Indefinite Quantity Contract (vc Idiq", Project") $3.53M
98.001 Cambodia Promoting Healthy Behaviors Activity $3.50M
98.001 Samagra: A Total Market for Comprehensive Consumer-Empowered Primary Health $3.16M
93.067 Scaling Up Targeted Hiv Testing Services and Linkage to Treatment $2.94M
98.001 Covid -19 - Going the Last Mile for Hiv Control $2.83M
12.350 Cdi Dhapp Faci Partnership for Sustainable Hiv Epidemic Control $2.66M
93.067 Improving Hiv/sti/tb Prevention, Treatment and Care Services for Mobile Populations $2.36M
93.067 Strategic Scale Up of Community Based Hiv Testing and Counseling $2.33M
12.350 Burundi National Defense Force (bndf) Partnership for Sustainable Hiv Epidemic Control $2.13M
98.001 Tubiteho $1.93M
98.001 Tb/hiv Agency, Information and Services $1.65M
98.001 Covid -19 - Meeting Targets and Maintaining Epidemic Control (epic) $1.56M
98.001 Enhancing Quality of Healthcare Activity $1.31M
98.001 Improved Family Planning Initiative $1.13M
98.001 Evaluation Innovative Technologies and Approaches to Addressing Cervical Cancer in the Republic of Mozambique $1.04M
98.001 Hiv Prevention for High Risk Individuals $1.04M
98.001 Madagascar's Accessible Continuum of Care and Essential Services Sustained (access) $902,728
98.001 Countywide Sanitation Activity (cwsa) $725,677
98.001 Myanmar Essential Health Services Program $706,979
98.001 Expanding Contraception $664,246
12.350 Lesotho-Military Specific Hiv/aids Prevention, Care, and Treatment Program for Pepfar Funded Countries $606,476
98.001 Tanzania Malaria Case Management Activity $578,095
98.001 Mozambique Small Town Sanitation Project $525,474
98.001 The Kampala Slum Maternal Newborn Project: Innovating for Better Systems Outcomes $441,658
12.350 Central America Regional Partnership for Sustainable Hiv Epidemic Control in the Guatemalan, Honduran and Salvadoran Militaries $423,396
98.U00 Usaid West Africa Municipal Wash (muniwash) $405,921
98.001 Research for Scalable Solutions (r4s) $381,148
93.067 Recent Infection Surveillance Consortium $341,069
98.001 Covid -19 - Path and the Digital Health Initiative - Accelerating the Cycle for Investment $332,189
98.U00 Usaid Western Kenya Sanitation Project (wksp) $310,541
98.001 Covid - 19 - Expanding Malawi Hiv-Aids Prevention with Local Organizations Working for An Effective Epidemic Response (empower) $290,891
98.001 Covid-19 - Samagra: A Total Market for Comprehensive Consumer-Empowered Primary Health $265,928
93.067 Donated Commodities $232,586
98.001 Covid - 19 - Hiv Services for Key and Priority Populations $228,607
98.U00 Covid -19 - Advancing Progress in Malaria Service Delivery $219,882
98.001 Unaids in Support of the Unified Budget and Workplace $198,671
98.001 Digital Health Initiative Accelerating the Cycle of Investment to Impact in Global Digital Health $197,669
98.001 Next Generation Products for Prevention of Hiv Infection in Women (nix Hiv) $148,796
98.001 Health and Hygiene Project $117,889
12.350 Advancing Multi-Country Hiv Support in Collaboration with Dhapp and Partner Militaries for Sustainable Hiv Epidemic Control (multi-Country) $114,693
98.001 Covid - 19 - American Rescue Plan Act (arpa) Covid-19 Support $71,062
93.318 Covid-19 Vaccination Program Support in Eswatini $70,386
98.001 Covid -19 - Ethiopia Transform: Water, Sanitation and Hygiene $52,331
98.001 Usaid Hiv Prevention, Testing and Treatment Services for Key Populations $48,592
98.001 Growth Through Nutrition $41,861
98.001 Bangladesh Marketing Innovations for Sustainable Health Development $41,091
93.067 Covid-19 - Improving Hiv/sti/tb Prevention, Treatment and Care Services for Mobile Populations $40,372
93.067 Covid - 19 - Strategic Scale Up of Community Based Hiv Testing and Counseling $32,282
98.001 Covid -19 - Research for Scalable Solutions (r4s) $7,738
98.001 High Impact Maternal, Newborn and Child Health (hi-Mnch) Activity $3,767
98.001 Family Planning Integrated Project $-5
12.350 Hiv/aids Prevention, Care and Treatment Support to the South African National Defense Force $-42
98.001 Meeting Targets and Maintaining Epidemic Control (epic) $-107
19.703 Costa Rica - Building Capacity to Prevent and Address Domestic Violence $-161
93.067 Covid -19 - Scaling Up Targeted Hiv Testing Services and Linkage to Treatment $-279
93.067 Programmatic Implementation and Technical Assistance (ta) for Hiv/aids $-702
98.001 Sustaining Health Outcomes Through the Private Sector Project Plus (shops Plus) $-874
93.067 Accelerating Epidemic Control in 7 Districts of Mubende Region in the Republic of Uganda Under the President's Emergency Plan for Aids Relief (pepfar) $-1,981
98.001 Zimbabwe Strengthening Private Sector Services Project $-962,286