INTRAHEALTH INTERNATIONAL, INC.Non-Profit

Finding 2025-002: Allowable Costs/Cost Principles – Compensation for Personal Services (Significant Deficiency) Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Effective internal controls over payroll include documented supervisory review and approval of employee timesheets to ensure that time charged to Federal programs is complete, accurate, and properly authorized. Condition: During our testing of payroll expenditures at the headquarters level, we identified two instances in which employee timesheets lacked documented evidence of supervisory review and approval. Cause: The condition appears to be a result of termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Without documented supervisory review and approval of timesheets, IntraHealth lacks sufficient evidence that payroll costs charged to Federal awards are accurate, properly allocated, and allowable. This increases the risk that unallowable or inaccurately allocated payroll costs could be charged to Federal programs and may result in noncompliance with Federal cost principles. Questioned Costs: N/A, as no misallocations were noted according to the timesheet. Context: The exceptions were identified through our testing of payroll transactions charged to Federal awards across multiple locations and were not isolated to a single location or individual. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over payroll processing by requiring timely documented supervisory review and approval of all employee timesheets prior to processing payroll charges to Federal awards. Management should implement procedures to ensure approvals are retained and periodically monitored for compliance. Reinforcing this control will provide reasonable assurance that payroll costs charged to Federal programs are accurate, properly supported, and compliant with 2 CFR §200.430.

Finding 2025-003: Conflict of Interest Attestations Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Under 2 CFR §200.112, non-Federal entities must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity. Additionally, 2 CFR §200.318(c)(1) requires organizations to maintain written standards of conduct governing the performance of employees engaged in the administration of Federal awards. Effective internal controls require employees to periodically acknowledge and attest to compliance with IntraHealth’s conflict of interest policy to ensure transparency, accountability, and compliance with Federal regulations. Condition: During our testing of payroll and employee personnel files at both headquarters and the field office level, we noted instances in which employee-signed conflict of interest attestation forms were not available for our review. For various employees included in our sample, there was no documentation evidencing that the employee had acknowledged or certified compliance with IntraHealth’s conflict of interest policy. Cause: Based on discussions with management, the condition appears to be the result of employees which were terminated prior to the fiscal year 2025 attestation date. However, we were unable to verify that the employees had signed the conflict of interest forms for the immediately preceding period (which their sampled pay periods pertained to). This limitation was due to the inability to access systems which were discontinued, as well as the termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Failure to obtain and retain signed conflict of interest attestations increases the risk that potential or actual conflicts may not be identified, disclosed, or appropriately managed. This weakens IntraHealth’s internal control environment and increases the risk of noncompliance with Federal conflict of interest requirements. Without documented attestations, IntraHealth cannot demonstrate that employees involved in the administration of Federal awards are aware of and complying with established standards of conduct. Questioned Costs: N/A, as the condition does not lead to unallowable costs. Context: The exceptions were identified across multiple locations and arose from our testing of internal controls around the payroll cycle. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over its conflict of interest compliance process by implementing procedures to ensure all employees complete and sign conflict of interest attestations upon hire and on a periodic basis thereafter. Management should establish a centralized tracking mechanism and perform periodic monitoring to ensure documentation is complete and retained in personnel files. Strengthening this process will enhance transparency, promote ethical conduct, and provide reasonable assurance of compliance with Federal conflict of interest requirements.

Finding 2024-002: Subrecipient Monitoring Federal Program: Adv HIV & AIDS Epidemic Control (AHEC) Activity - ALN 98.U01 Criteria: Recipients of federal funding who pass-through federal funds to subrecipients must evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring (2 CFR 200.332 (e)). In monitoring a subrecipient, a pass-through entity must review financial and performance reports (2 CFR 200.332 (e)). A pass-through must consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records. (2 CFR 200.332 (h)). Condition: Insufficient monitoring was performed over fixed amount subawards. Cause: Improper controls over subrecipient monitoring compliance requirement. Effect: Controls in place did not allow for sufficient monitoring over subrecipients. Questioned costs: None Context: Fixed amount subawards did not have documented subrecipient monitoring plans based on subrecipient’s risk assessment evaluations. Monitoring of fixed amount subawards was limited to reviewing milestone certification forms against milestone tables included in the subrecipient agreements. Financial audits or reports were not requested for non-U.S. based subrecipients as part of monitoring procedures. Repeat finding: No Recommendation: We recommend that management review subrecipient monitoring policies and procedures required over fixed amount subawards to ensure there are documented subrecipient monitoring plans based on the subrecipient’s assessed level of risk and to ensure that financial reports or audits of the subrecipients are requested for non-U.S. based subrecipients. Views of responsible officials: Management agrees with the finding. See corrective action plan.

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.

Finding 2022-002: Financial Reporting Significant deficiency Federal Program: All federal awards Criteria: The data collection form is required to be submitted to the Federal Audit Clearinghouse website within nine months after the fiscal year-end. Condition: The data collection form for the year ended June 30, 2022, was not filed within nine months of year-end. Cause: Timing of audit and audit adjustments identified prevented the finalization of the audit within nine months of year-end. Effect: The data collection form was not filed timely. Questioned costs: None noted Context: Due to the timing of the audit and audit adjustments identified, the data collection form for the year ended June 30, 2022, was not filed within nine months of year-end as required by Uniform Guidance. Repeat Finding: No Recommendation: The Organization should avoid late submissions whenever possible. Views of responsible officials: Management agrees with the finding. See corrective action plan.

Finding 2019-002: Procurement (Tajikistan) Federal Program: CFDA 98.001 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 ?General procurement standards? states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 ?Competition? states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: The audit work performed at IntraHealth?s Tajikistan field office disclosed that the vender on procurement of furniture and office equipment was not announced and the selected vendor was chosen from the previous vender. Cause: IntraHealth?s Tajikistan field office did not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that IntraHealth will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of federal expenditures based on lack of fair competition. Recommendation: Our recommendation is that the importance of the procurement policy be clearly communicated to all field office personnel and that management properly enforce compliance with the policy.

Finding 2019-003: Compliance with "Marking and Branding" Provision (Tajikistan) Federal Program: CFDA 98.001 Criteria: USAID requires that all USAID-funded foreign assistance must be communicated, promoted, and marked as coming from the American people through USAID. Condition: The audit work performed at IntraHealth?s Tajikistan field office disclosed multiple USAID funded inventory that were missing USAID logo stickers. Cause: IntraHealth?s Tajikistan field office did not adhere to the marking and branding provision in its agreement with USAID. Effect or Potential Effect: The purpose of the branding and marking provision is to make USAID's efforts more visible and better known in countries that are receiving aid. If inventory is not properly marked, beneficiaries of U.S. aid could have no awareness the assistance is provided by the American people. Recommendation: Our recommendation is that all USAID funded inventory and equipment be marked with USAID logo to be in compliance with the terms of the grant agreement. Inventory should be reviewed to ensure appropriate USAID branding is present.

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