Finding 518008 (2024-003)

Cash Management Grantor: Department of Health and Human Services Pass Through Entity: Advanced Regenerative Manufacturing Institute, Inc. Award Name: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Award Number: IDSEP22005-003 Assistance Listing Number: 93.817 Award Year: June 1, 2023-September 30, 2023 Criteria In accordance with 2 CFR 200.305 (b)(3), reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per 2 CFR 200.208, or when the non-Federal entity requests payment by reimbursement. In accordance with 2 CFR 200.334 (c) and (e), a subrecipient must liquidate all financial obligations incurred under a subaward no later than 90 calendar days after the conclusion of the period of performance of the subaward (or an earlier date as agreed upon by the pass-through entity and subrecipient). The subrecipient must promptly refund any unobligated funds that the pass-through entity paid and that are not authorized to be retained. Condition In testing the period of performance compliance requirement in accordance with the OMB Compliance Supplement, we requested support for the expenditures on the FY2024 Schedule of Federal Awards, as they were outside of the period of performance of the subaward, which ended September 30, 2023. The Company issued an invoice to Advanced Regenerative Manufacturing Institute, the Prime awardee, for $215,192 on September 14, 2023, but did not incur those expenses until after the period of performance of the subaward. Therefore, the Company requested and received the funds in advance of incurring the expenses. Further, the Company did not liquidate its obligations under the subaward within the required 90 calendar days after the conclusion of the performance of the subaward, as expenditures were recorded through August 2024. There were no terms in the award that allowed retention of unused funds. Cause The grant personnel were not aware of the invoicing requirements under the reimbursement method and invoiced the Prime awardee in advance of incurring the associated costs. Effect Federal funds were obtained in advance of incurring costs and outside of the period of performance of the subaward. Questioned Costs $215,192 Recommendation We recommend that the Company return the advance funds received to the Prime. Further, the Company should consider the need for clarifying and/or enhancing existing internal control procedures to ensure expenditures are paid in compliance with Federal reimbursement requirements and that requests for reimbursement are reviewed and validated against supporting documentation to identify any discrepancies prior to requesting reimbursement. Management’s Views and Corrective Action Plan Management’s Views and Corrective Action Plan are included at the end of this report after the summary schedule of prior audit findings and status.