Children's Hospital of Philadelphia

Finding 2025-001: Direct Costs – Compensation Grantor: Department of Health and Human Services Award Name: High Impact HIV Prevention and Surveillance Programs; Research and Development Assistance Listing Number: 93.940; 93.838 Assistance Listing Title: HIV Prevention Activities Health Department Based; Lung Diseases Research Award Year: 07/1/2024 – 06/30/2025 Award Number: CP4043 and CP5043 (2220536); OT2HL161847-01 Pass-through: Not applicable Criteria 2 CFR part 200.430 addresses compensation charges. The regulations note that compensation charges should be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and comply with the established accounting policies and practices of the nonFederal entity. Children’s Hospital of Philadelphia has implemented an employee time reporting system in which effort is reviewed to ensure the effort charged to the grant is accurate and is based on the actual effort devoted to the various functional and programmatic activities to which the salary and wage costs are charged. Additionally, in order to ensure the effort charged to grants is appropriate, the Hospital has a policy in place that defines the period by which the effort certification process should be complete. Per Hospital policy, the effort reports are required to be completed and certified within 90 days of the reporting period end date, which occurs every quarter. Condition Out of 39 effort reports selected for compensation testing, 3 effort reports were not certified within 90 days of the effort reporting period in accordance with Children’s Hospital of Philadelphia policy. Although the effort reports were not certified timely, there were no questioned costs related to the costs charged. Cause The delay in certification was primarily due to personnel not consistently adhering to the established effort reporting framework. There was a lack of awareness regarding deadlines. Questioned Costs There were no questioned costs related to this finding as payroll charges were allowable. Effect Effort reports may contain inaccuracies that remain uncorrected for a period of time if effort related to grants is not certified in a timely manner.. Repeat finding in the Prior Year No Recommendation We recommend the Hospital continue to enhance the execution of the effort reporting policy to ensure all effort reports are certified in a timely manner. As part of these enhancements, we recommend additional training for the individuals in the effort reporting process, including notifications of effort reporting deadlines.

Criteria: Under 2 CFR 200.320(c) vendors above a micro-purchase threshold require a competitive process that includes soliciting multiple bids/quotes to justify best value. The Uniform Guidance requires purchasing decisions to be documented, including sole source justification, as applicable. Condition: For two out of five procurement selections totaling $158,000, evidence of the procurement process (signed competitive bid or sole source documentation and the related approvals), was not retained in the procurement file. As such, we were unable to obtain the required documentation to support vendor selection and price justification. Cause: The buyers executing these transactions did not obtain and maintain the required documentation evidencing that these transactions were conducted in accordance with federal requirements. Effect: Failure to obtain and maintain complete procurement files may lead to non-compliance with required regulations. Questioned Costs: There are no questioned costs associated with this finding as procurements were made for allowable transactions. Recommendation: We recommend Management enhance their existing policies and procedures to ensure documentation is retained to justify the rationale for purchasing decisions consistent with the Uniform Guidance. This could include additional training in this area and providing readily available guidance as to what documentation is required prior to executing federal purchasing transactions. Additionally, we recommend that Management retroactively document vendor and price rationale for the two selections and retain this documentation within the procurement file.

Criteria: Per the AACO/PA Dept. of Health Ryan White Part A/B – Payer of Last Resort Client Certification Form Instructions, “The Health Resources and Services Administration (HRSA) standards require service providers who receive Ryan White funding to screen clients and collect supporting documentation to certify their eligibility for Ryan White-funded services based on HIV positive diagnosis, identity, residence, insurance status, and income. The standards further require Ryan White recipients and subrecipients to “conduct timely eligibility confirmations, in accordance with their policies and procedures, to assess if the client’s income and/or residency status has changed.” Additionally, the form states that copy of all documentation are to be retained by the provider. The City of Philadelphia Subrecipient Audit Guide Section 6130.04 provides a list of documents to be maintained and states “case management service providers are required to keep a file on each client served.” Further, per the Universal Monitoring Standards set forth by HRSA, the Ryan White HIV/AIDS Program Part A and B Monitoring Standards require service providers who receive Ryan White funding to screen to certify eligibility for Ryan White-funded services. The guidance states that documentation of eligibility determination is required in client records, as evidenced by copies of documents. Condition: For 2 of the 25 patient files selected for testing, while there was initial intake documentation in the file to support the eligibility of the patient, the required recertification had not been performed timely. However, for both program participants, CHOP provided records to support that the program participant met the eligibility requirements. Cause: Both patients were originally certified as eligible based on the Ryan White criteria noted above. However, at subsequent patient visits, grant staff did not check for changes in status that could deem the patients as ineligible. For both patients, recertification did not occur for a period greater than one year from initial certification (patients were last certified in April 2023). Effect: Changes in patients’ eligibility residence status could be overlooked and services could be provided to ineligible patients. Questioned Costs: There were no questioned costs related to this finding, as the patients were eligible to receive care under this grant per the patient eligibility requirements. Recommendation: We recommend that Management formalize its policy for recertification of patient eligibility and that Management ensures all grant staff are made aware of, and adhere to, the policy requirements. We recommend the recertification process occurs on an annual basis, at minimum, and proper documentation of certification is retained within the file to evidence the patient’s continued eligibility.

Award Year: January 1, 2020 to December 31, 2021 Pass-through: Not applicable Criteria Step Four of the Steps on Reporting on Use of Funds section of the June 11, 2021 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF) General and Targeted Distribution Post-Payment Notice of Reporting Requirements requires recipients to report on expenses paid for which payments were received through the General and Targeted Distribution payments. Reporting Entities that received $500,000 or more in aggregated PRF payments during each Payment Received Period are required to report on the use of the General and Other Targeted PRF payments in detailed categories of General and Administrative Expenses and Health Care-Related Expenses, by indicating the quarterly expenses reimbursed with the PRF payments. Condition The Company reported total Health Care-Related Expenses of $2,355,345 (for calendar quarters Q1 2020 and Q2 2020) in the PRF Reporting Portal Submission for Period 1 for The Children?s Hospital of Philadelphia. The Company duplicated the reporting of these expenses (for calendar quarters Q1 2020 and Q2 2020) in the PRF Reporting Portal Submission for Period 2 for the same entity. Cause The Company did not interpret the HRSA PRF Reporting instructions correctly, thereby duplicating the reporting of the Other PRF Expenses of $2,355,345 in both the Period 1 and Period 2 PRF Reporting Portal Submissions. Effect The duplicate reporting of expenses in the PRF Portal Submission for Period 1 and Period 2 resulted in an incorrect calculation of the Total Reportable Other PRF remaining to be applied to Lost Revenues amount in the PRF Financial Summary section of the PRF Portal Submission for Period 2. The calculated amount of PRF Remaining to be applied to Lost Revenues in the PRF Portal Submission for Period 2 was calculated as $102,826,364 whereas the amount would have been $105,181,709 if the expenses had not been duplicated in the Period 2 PRF Portal Submission Reporting. The total amount of PRF payments utilized in the period did not change, however, the amounts reported as Health Care-Related Expenses and PRF applied to Lost Revenues for the period were overstated and understated, respectively, by the $2,355,345 noted above. Questioned Costs None noted as the Company had sufficient lost revenue to apply against the provider relief funding received. Recommendation We recommend the Company contact the Health Resources and Services Administration to determine any required corrective actions related to the incorrect reporting.Management?s Views and Corrective Action Plan Management?s views and corrective action plan is included at the end of this report after the summary schedule of prior audit findings and status.

2021-001 Completeness of funding on the schedule of expenditures of federal awards Federal Granting Agency: Center for Disease Control and Prevention Award Name: COVID-19 Community Testing Assistance Listing Number: 93.354 Assistance Listing Title: Public Health Crisis Response Awards Award Year: 9/10/2020 – 6/30/2021 Pass-through Entity: City of Philadelphia Department of Public Health Criteria Per OMB Guidance, nonfederal entities must record expenditures on the Schedule of Expenditures of Federal Awards (SEFA) when the nonfederal entity has incurred the eligible expenditures. Federal awards expended in subsequent fiscal years are to be recorded on the nonfederal entity’s SEFA in those subsequent years. Condition During the 2023 Uniform Guidance audit, we noted that there were $2.3 million of funds from this program that were not appropriately recorded in the 2021 SEFA. On the 2021 SEFA, management did not record any eligible expenditures for this program as management was unaware that the pass-through funding originated from federal sources. In addition, effort certification was also not performed timely for workers assigned on this grant, as this is a federal requirement and CHOP’s policy. Once management identified that this program was federally funded, effort was certified retroactively. Cause The cause of this finding was due to the omission of key data points within the contract identifying the funding source as federal and lack of follow-up with the Sponsor for clarification specific to the contract’s subrecipient requirements. Effect Federal funds related to program 93.354 of $2.3 million were incorrectly excluded from the 2021 SEFA. Had this been recorded correctly, this program would have been tested as a major program in 2021 for the City of Philadelphia. As such, when the significant deficiency over compliance was identified, testing was performed for this program in 2023 and the 2021 SEFA was updated. This required the reports for the 2021 Report of Independent Auditors on Compliance for Each Major Program and the Internal Control Over Compliance Required by Uniform Guidance to be revised. Subsequently, the 2021 reporting package was re-submitted to the Federal Audit Clearinghouse. Additionally, CHOP utilizes a worker time and effort reporting system where reports are generated quarterly to review salary allocations to the grant for accuracy based on the effort devoted to the functional and programmatic activities. For 17 of the 25 effort reports selected for compensation testing in FY 2023, the effort reports were not certified within 90 days of management’s notification of the federally sourced funding, in accordance with CHOP policy. The impact of untimely effort report review could lead to incorrect expenses charged to a grant. Questioned Costs None. Recommendation Management should enhance the controls in place to ensure contracts are complete and contain appropriate data elements related to funding sources for transparency and accurate reporting requirements related to all pass-through programs, to ensure expenditures are reported on the SEFA and are reported in the appropriate period and to allow for timely effort reporting.