HIPSNon-Profit

Finding 2025-002: Time Allocations Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: As part of our audit procedures around payroll, we noted instances of payroll allocations prior to December 2024 to programs which did not accurately represent the time worked. While misallocations were not significant in their amounts, the errors themselves suggest the need for more detailed review of the payroll allocation approval and entry process. Cause: The review of the payroll allocation entry and process was not sufficient to catch errors or differences from the timesheets completed by staff. Effect or Potential Effect: HIPS could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None. Context: Although the majority of payroll allocations were supported by appropriate documentation, these six exceptions suggest a need for improved controls over time and effort reporting to prevent isolated errors from becoming more systemic issues. We did note that new procedures implemented by management after December 2024 resulted in no payroll allocation variances after that period. Identification as a Repeat Finding, if Applicable: Yes (2024-004) Recommendation: We recommend that the finance department perform a more detailed review of the monthly program allocations to ensure complete and accurate entry of payroll allocations.

Finding 2025-003: Financial Reporting Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: HIPS is required to comply with applicable statutes, regulations, and the terms and conditions of the Federal awards pertaining to financial reporting requirements. Condition: We noted certain financial reports did not have timely submissions of required reports on the awards under audit.Cause: Reporting deadlines proved challenging to meet due to the turnover of key staff and the administrative burdens associated with gathering the data necessary to complete the reports. Report submissions for certain awards did not have supporting documentation for the date of submission due to the information not being available in the system that the reports are submitted to. Effect or Potential Effect: Noncompliance with financial reporting requirements could potentially result in the withholding of future payments, award suspension or termination, and ineligibility of future awards. Questioned Costs: None. Context: The exceptions noted during the audit pertained to all Department of Human and Health Services (HHS) awards under audit for the year ended September 30, 2025. Identification as a Repeat Finding, if Applicable: Yes (2024-005) Recommendation: HIPS should implement a system to track and ensure the timely submission of all financial reports as required by the award agreements. This includes reviewing the terms and conditions of each award to identify mandatory reporting requirements, and establishing internal controls to ensure accurate and timely reporting. Submission of reports should be retained internally for documentation purposes.

Finding 2024-003: Schedule of Expenditures of Federal Awards Information on the Federal Program: All programs in the 2024 SEFA. See Finding 2024-002 Questioned Costs: None. Context: The exception noted during the audit pertained to all programs under the SEFA for the year ended September 30, 2024. Identification as a Repeat Finding, if Applicable: Yes (2023-004)

Finding 2024-004: Time Allocation and Personnel Documentation Retention Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: As part of our audit procedures around payroll, we noted instances of payroll allocations to programs which did not accurately represent the time worked and/or salary rate of the employee. While misallocations were not significant in their amounts, the errors themselves suggest the need for more detailed review of the payroll allocation approval and entry process. In addition, we noted that HIPS does not maintain documentation for cost of living increases awarded to employees subsequent to their annual agreed upon rate of pay, which resulted in multiple instances where the employees current rate of pay noted could not be substantiated. Cause: The review of the payroll allocation entry and process was not sufficient to catch errors or differences from the timesheets completed by staff. HIPS does not maintain adequate documentation of staff changes in salary rate from year to year. Effect or Potential Effect: HIPS could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None. Context: Although the majority of payroll allocations were supported by appropriate documentation, these two exceptions suggest a need for improved controls over time and effort reporting to prevent isolated errors from becoming more systemic issues. In addition, we noted the majority of the employees reviewed during testwork did not have documentation to support the salary as of the pay period selected for testing. Identification as a Repeat Finding, if Applicable: Yes (2023-005) Recommendation: We recommend that the finance department perform a more detailed review of the monthly program allocations to ensure complete and accurate entry of payroll allocations. We also recommend that documentation for changes in rate of pay for all staff be maintained internally over the course of each employee's respective employment with HIPS.

Finding 2024-005: Financial and Programmatic Reporting Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: HIPS is required to comply with applicable statutes, regulations, and the terms and conditions of the Federal awards pertaining to financial and programmatic reporting requirements. Condition: We noted certain financial and programmatic reports did not have sufficient documentation to support timely submission of required reports on the awards under audit. Cause: Reporting deadlines proved challenging to meet due to the turnover of key staff and the administrative burdens associated with gathering the data necessary to complete the reports. Reports submissions for certain awards did not have supporting documentation for the date of submission due to the information not being available in the system that the reports are submit to. Effect or Potential Effect: Noncompliance with financial and programmatic reporting requirements could potentially result in the withholding of future payments, award suspension or termination, and ineligibility of future awards. Questioned Costs: None. Context: The exceptions noted during the audit pertained to all Department of Human and Health Services (HHS) awards under audit for the year ended September 30, 2024. Identification as a Repeat Finding, if Applicable: Yes (2023-006) Recommendation: HIPS should implement a system to track and ensure the timely submission of all financial and programmatic reports as required by the award agreements. This includes reviewing the terms and conditions of each award to identify mandatory reporting requirements, and establishing internal controls or to ensure accurate and timely reporting. Submission of reports should be retained internally for documentation purposes.

Finding 2003-04: Schedule of Expenditures of Federal Awards Information on the Federal Program: All programs in the 2023 SEFA. See Finding 2023-003 Questioned Costs: None. Context: The exception noted during the audit pertained to all programs under the SEFA for the year ended September 30, 2023. Identification as a Repeat Finding, if Applicable: Not applicable. Criteria or Specific Requirement: In accordance with 2 CFR Section 200.508 (b), HIPS is required to prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA). Condition: During the audit, we noted that HIPS experienced difficulty in preparing and ensuring that all Federal expenditures were properly included in the Schedule of Expenditures of Federal Awards. As a result, a significant amount of time was spent by management during the audit process reconciling the schedule, resulting in an audit delay. Cause: HIPS experienced turnover during the last fiscal year, specifically related to employees responsible for financial reporting and tracking of Federal award expenditures. Effect or Potential Effect: HIPS experienced difficulty in preparing an accurate SEFA. Recommendation: We recommend that each Federal program should have a distinct code set up in the accounting system in order to track the direct costs attributable to that program. We also recommend that management properly reconcile Federal expenditures during year on a consistent basis in order to prepare the Schedule of Expenditures of Federal Awards on a timely basis.

Finding 2003-005: Time Allocation and Personnel Documentation Retention Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: As part of our audit procedures around payroll, we noted instances of payroll allocations to programs which did not accurately represent the time worked and/or salary rate of the employee. While misallocations were not significant in their amounts, the errors themselves suggest the need for more detailed review of the payroll allocation approval and entry process.In addition, we noted that HIPS does not maintain documentation for cost of living increases awarded to employees subsequent to their annual agreed upon rate of pay, which resulted in multiple instances where the employees current rate of pay noted could not be substantiated. Cause: The review of the payroll allocation entry and process was not sufficient to catch errors or differences from the timesheets completed by staff. HIPS does not maintain adequate documentation of staff changes in salary rate from year to year. Effect or Potential Effect: HIPS could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: Undetermined Context: The misallocations identified represent 12.5% of the sampled payroll transactions (5 out of 40). Although the majority of payroll allocations were supported by appropriate documentation, these two exceptions suggest a need for improved controls over time and effort reporting to prevent isolated errors from becoming more systemic issues. In addition, we noted the majority of the employees reviewed during testwork did not have documentation to support the salary as of the pay period selected for testing. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that the finance department perform a more detailed review of the monthly program allocations to ensure complete and accurate entry of payroll allocations. We also recommend that documentation for changes in rate of pay for all staff be maintained internally over the course of each employee's respective employment with HIPS.

Finding 2023-006: Financial and Programmatic Reporting Information on the Federal Program: Assistance Listing Number 93.788 Criteria or Specific Requirement: HIPS is required to comply with applicable statutes, regulations, and the terms and conditions of the Federal awards pertaining to financial and programmatic reporting requirements. Condition: HIPS incorrectly calculated the de minimis indirect rate on financial reports submitted during the year. We also noted certain financial programmatic reports did not have sufficient documentation to support timely submission of required reports on the awards under audit. Cause: The de minimis rates on financial reports reviewed were not correct due to formula errors on the modified direct cost base used for the calculation on reports submit. Reporting deadlines for proved challenging to meet due to the turnover of key staff and the administrative burdens associated with gathering the data necessary to complete the reports. Reports submissions for certain awards did not have supporting documentation for the date of submission due to the information not being available in the system that the reports are submit to. Lastly, we noted certain awards were approved prior to the end of the reporting period due to administrative limitations on review and approval of reports. Effect or Potential Effect: Noncompliance with financial and programmatic reporting requirements could potentially result in the withholding of future payments, award suspension or termination, and ineligibility of future awards. Questioned Costs: None Context: The exceptions noted during the audit pertained to all Department of Human and Health Services (HHS) awards under audit for the year ended September 30, 2023. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: HIPS should recalculate the de minimis indirect rate in accordance with the applicable cost principles as outlined in 2 CFR 200.414 (if applicable) or other relevant guidance based on the award agreements. HIPS should ensure that any miscalculations are promptly corrected, and any indirect costs calculation formulas are adjusted on future reports. Furthermore, HIPS should implement internal controls to regularly verify the correct application of the de minimis rate to avoid similar errors in the future. HIPS should implement a system to track and ensure the timely submission of all financial and programmatic reports as required by the award agreements. This includes reviewing the terms and conditions of each award to identify mandatory reporting requirements, and establishing internal controls or to ensure accurate and timely reporting. Submission of reports should be retained internally for documentation purposes.

The terms of the Notice of Grant Award state that the YR1 Federal Financial Report (FFR) is to be submitted on February 28, 2020. During our audit, we noted that HIPS Payment Management System account was placed on Restricted Status from the Grantor due to the Organization not filing the YR1 FFR by the due date of February 28, 2020. The actual submission date was June 25, 2021.

The terms of the Notice of Grant Award state that the YR2 Federal Financial Report (FFR) is to be submitted by February 28, 2021. During our audit, we noted that HIPS Payment Management System account was placed on Restricted Status from the Grantor due to the Organization not filing the YR2 FFR by the due date of February 28, 2021. The actual submission date was February 23, 2022.

The terms of the Notice of Grant Award state that the YR2 Annual Programmatic Progress Report (APPR) is to be submitted by February 28, 2021. During our audit, we noted that HIPS failed to file the YR2 APPR by the due date of February 28, 2021. The actual submission date was February 28, 2022.