FAC Explorer

Finding 575762 (2022-002)

-
Requirement
A
Questioned Costs
$1
Year
2022
Accepted
2025-09-05
Audit: 365730
Organization: Albuquerque Area Indian Health Board, Inc. (NM)
Auditor: Hinkle + Landers PC

AI Summary

  • Core Issue: Gift cards totaling $15,300 were improperly charged to a federal grant, violating cost principles.
  • Impacted Requirements: Costs must be necessary and allowable; gift cards are generally unallowable under federal regulations.
  • Recommended Follow-Up: Stop using federal funds for gift cards, ensure all employee compensation is processed through payroll, and consult the awarding agency if costs are deemed justifiable.

Finding Text

2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.

Corrective Action Plan

View of Responsible Officials and Corrective Action Plan We acknowledge that the purchase of gift cards was not an allowable expense under federal grant guidelines. During the COVID-19 pandemic, our staff were tasked with responding to urgent and overwhelming public health demands, particularly as the New Mexico Department of Health became overextended. To recognize staff who went above and beyond to ensure timely case reporting and investigations for tribal communities, gift cards were used as a form of appreciation. Corrective Action Plan Timeline Moving forward, we will ensure full compliance with federal grant requirements. Specifically: 1. We will adhere strictly to the cost principles and allowability guidance outlined in federal regulations and the terms of each Notice of Award. 2. In instances where the allowability of an expense is unclear, we will proactively seek guidance and written approval from our Federal Grant Management Officer before incurring the cost. 3. We will provide refresher training to program and fiscal staff on allowable costs under federal awards to prevent recurrence of similar findings. These corrective actions will ensure future expenditures are fully compliant with federal guidelines and that staff recognition practices remain appropriate, allowable, and consistent with award terms. Corrective Action Plan Timeline • Immediate (Already in Effect): Ceased use of gift cards and other unallowable incentives. • Within 30 Days: Finance and program leadership will review current grant guidance and distribute a written summary of allowable/unallowable costs to all program managers. • Within 60 Days: Refresher training on federal cost principles (2 CFR 200) and Notice of Award guidance will be provided to all program and fiscal staff. • Ongoing: When ambiguity exists regarding allowable costs, staff will consult with the Federal Grant Management Officer prior to obligating or expending funds. Designation of Employee Position Responsible for Meeting Deadline Program Managers/Directors, Finance Officer, and Accounting Manager.

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
93.479 Good Health and Wellness in Indian Country $1.05M
93.762 A Comprehensive Approach to Good Health and Wellness in Indian County – Financed Solely by Prevention and Public Health $646,007
93.772 Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement $562,231
93.495 Community Health Workers for Public Health Response and Resilient $521,850
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $451,401
93.353 21st Century Cures Act - Beau Biden Cancer Moonshot $339,116
93.933 Demonstration Projects for Indian Health $242,881
93.137 Community Programs to Improve Minority Health $242,707
93.399 Cancer Control $206,375
93.284 Injury Prevention Program for American Indians and Alaskan Natives Cooperative Agreements $167,718
93.859 Biomedical Research and Research Training $139,619
93.391 Activities to Support State, Tribal, Local and Territorial (stlt) Health Department Response to Public Health Or Healthcare Crises $111,285
93.307 Minority Health and Health Disparities Research $86,823
93.441 Indian Self-Determination $69,608
93.279 Drug Use and Addiction Research Programs $35,980
93.231 Epidemiology Program $6,856
93.516 Public Health Training Centers Program $4,479
93.185 Immunization Research, Demonstration, Public Information and Education Training and Clinical Skills Improvement Projects $1,022