Finding Text
Finding 2024-003: SEFA Preparation— Subrecipient vs. Subcontractor Determinations
Federal Program(s):
• Adv HIV & AIDS Epidemic Control (AHEC) Activity - ALN 98.U01
• ASAP & ASAP II – ALN 98.U02
• Zambia Local – ALN 98.U03
Criteria: The auditee must prepare the financial statements, including the schedule of expenditures of federal awards (SEFA) in accordance with 2 CFR 200.510 (2 CFR 200.508 (b)). The SEFA must include the total amount provided to subrecipients from each Federal program (2 CFR 200.510 (b)(4)).
Condition: Subcontractor amounts were improperly included in the Amounts Provided to Subrecipients column on the SEFA.
Cause: Ineffective design and implementation of internal controls around SEFA preparation.
Effect: There were approximately $2.6 million in subcontractor expenses incurred by IntraHealth that were improperly included in the Amounts to Subrecipients column on the SEFA as they did not represent payments to subrecipients.
Questioned costs: None
Context: Management made improper subrecipient vs. subcontractor determinations, resulting in inaccurate SEFA preparation. This resulted in $2.6 million being removed from the Amounts Provided to Subrecipients column in the original SEFA provided to the auditors by management.
Repeat finding: No
Recommendation: We recommend that management review internal controls in place around the SEFA preparation and ensure an independent review is being performed around amounts reported as Amounts to Subrecipients against 2 CFR 200.331, Subrecipient and subcontractor determinations.
Views of responsible officials: Management agrees with the finding. See corrective action plan.