Tennessee Pharmacist Research and Education FoundationNon-Profit

Criteria: Management is responsible for only changing allowable costs to the federal award. In accordance with cash management requirements for cost-reimbursed contracts, the Foundation is required to request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Condition: We selected a sample of expenditures requested for reimbursement. In our testing of the sample, we noted expenditures between $7,429 and $807,372 (average expenditure of $168,903) that were incurred and requested for reimbursement; however, the payment for the expenditure was not made until 47-135 days after reimbursement (average delay in payment of 97 days). Cause: The Foundation waited for reimbursement funds to be received to pay the expenditure for cash flow purposes. Effect or potential effect: Since the federal award is a cost-reimbursement contract, the request for reimbursement was not in compliance with the cash management requirements of the federal award. Recommendation: We recommend that management limit the time between requests to the federal government for reimbursement and payment of the expense to 30 days or less. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

Criteria: In accordance with 2 CFR Section 200.512(a), the audit must be complete, and the data collection form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period, adjusted for any extension permitted by the Office of Management and Budget. The Foundation failed to meet the nine-month deadline. Condition: The audit, reporting package and data collection form for the year ended December 31, 2023, was not filed by the deadline of September 30, 2024, to the Federal Audit Clearinghouse. Cause: Turnover in key accounting personnel in December 2023 caused key accounts to not be reconciled timely and information requested for the audit difficult to find in a timely manner. Effect or potential effect: Delays in submission of audit reports, reporting packages and data collection forms raise concerns about the Foundation’s reliability in adhering to accounting and compliance requirements in a timely manner, potentially jeopardizing its ability to secure funding. Recommendation: We recommend that Foundation maintain competent accounting personnel which has the time and resources needed to ensure compliance with its reporting deadlines. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

Criteria: Management is responsible for only changing allowable costs to the federal award. In accordance with cash management requirements for cost-reimbursed contracts, the Foundation is required to request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Condition: In June 2023, the Foundation expensed and requested reimbursement of $350,000 for marketing services. However, as of December 31, 2023, only $256,479 of marketing services had been provided. The remaining $93,521 in marketing services were provided in January and February of 2024. In accordance with GAAP, expenses should be recorded when incurred. Since services were not provided until 2024, there was a $93,521 audit adjustment to reduce expenditures for the services along with $5,250 to reduce the 10% de minims indirect charge to the grant. An audit adjustment was recorded to record this as a prepaid expense and deferred grant revenue. This expenditure is not included in the schedule of federal awards for the year ended December 31, 2023. Total questioned costs amounted to $98,771. Cause: The Foundation is using a contractor to complete the marketing services. The vendor billed for the entire contract upfront. Management is maintaining a tracker of marketing services billed compared to marketing services completed. However, the expenditure was recorded based on marketing services billed. Effect or potential effect: The financial statements required a material adjustment to be in accordance with GAAP. The federal award was charged $98,771 in advance of when the expense was incurred. Recommendation: We recommend that management record the cost of marketing services in the period the marketing services are completed, as documented in the tracker of marketing services. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

Criteria: Cost-reimbursement contracts under the federal acquisition regulation require that the non-federal entity request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Ordinary course of business would be in accordance with the terms and conditions of a subcontract or invoice and ordinarily within 30 days of the request to the federal government for reimbursement. Condition: We selected a sample of expenditures requested for reimbursement. In our testing of the sample, we noted expenditures between $500 and $777,671 (average expenditure of $260,867) that were incurred and requested for reimbursement; however, the payment for the expenditure was not made until 37-103 days after reimbursement (average delay in payment of 66 days). Cause: The Foundation waited for reimbursement funds to be received to pay the expenditure for cash flow purposes. Effect or potential effect: Since the federal award is a cost-reimbursement contract, the request for reimbursement was not in compliance with the cash management requirements of the federal award. Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2022-003. Recommendation: We recommend that management limit the time between requests to the federal government for reimbursement and payment of the expense to 30 days or less. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

Criteria: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting purposes, provided that:  The system for establishing the estimates produces reasonable approximations of the activity actually performed;  Significant changes in the corresponding work activity (as defined by the non-federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and  The non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Cause: During 2023, the Foundation allocated salaries and benefits to the federal award based on the approved grant budget. Some personnel working on the federal award were not required to keep timesheets for time studies, further, some personnel were required to keep timesheets for time studies, but the amounts charged to the grant did not agree to the timesheets and were not adjusted based on an after-the-fact review of charges to the Federal award. Our audit found that for 12 of 38 timesheets tested for proper allocation of salaries and benefits the timesheet was not kept or the allocation of salaries did not agree to the timesheet. The extrapolated questioned costs related to this finding is $71,567. Effect or potential effect: Budget estimates alone do not qualify as support for charges to Federal awards. Charges for actual time worked could vary, resulting in an incorrect amount charged to the federal award for salaries, benefits, and rent expenses. Additionally, since the Foundation is using budgets and time studies without an after-the-fact review of charges, the Foundation is not complying with the cost principles. Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2022-004. Recommendation: We recommend that personnel who work on the federal award maintain a timesheet that is reviewed and approved by the appropriate supervising personnel. We recommend that the Foundation perform an after-the-fact review of charges made to the federal award compared to the timesheets for the work performed and make any adjustments necessary. This after-the-fact review should be performed quarterly, at a minimum. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

Criteria: Management is responsible for only changing allowable costs to the federal award under Uniform Guidance cost principles. All costs charged to the grant must be reasonable. A cost is considered reasonable if, in its nature and amount, it does not exceed what a prudent person would incur under the circumstances prevailing at the time the decision was made to incur the cost. Condition: 1. During June 2023, the Foundation paid for certain catering and audio-visual expenses from Tennessee Pharmacists Association’s annual conference since the conference included continuing education for pharmacists. The Foundation passed these expenses to the grant in the amount of $61,588. The conference included two hours of continuing education relating to vaccines, which is a priority of the grant. We question if the amount charged is reasonable. 2. During the audit, it was observed that 100% of certain information technology costs were charged to the grant. However, these expenses should have been allocated to the grant based on Uniform Guidance Costs principles. The total questioned costs amount to $10,000. 3. The Foundation charged the grant expenses related to an affiliate’s membership database subscription which are not allowable expenses of the grant. The total questioned costs amount to $7,266. 4. The Foundation charged the grant expenses related to membership platform used by an affiliate which are not allowable expenses of the grant. Further, these charges were for expenses related to 2024. The total questioned costs amount to $10,300. 5. The Foundation charged the grant twice for expenses related to professional fees of $15,098. Additionally, the Foundation charged the grant $1,544 which has not been paid and is a duplicate cost. Total questioned costs amounted to $16,642. Cause: The primary cause of this issue is management’s inexperience with federal grants and the cost principles. This has led to the approval of expenditures that are not reasonable, necessary, or allocable to the grant. Effect or potential effect: The Foundation was not in compliance with activities allowed, cost principles and period of performance under the grant. Recommendation: We recommended that all management and staff involved in grant administration undergo mandatory training on federal grant management and cost principles. This training should cover allowable and unallowable costs, methods for determining the reasonableness of costs, and documentation requirements. Enhanced oversight measures should be implemented, including detailed review of grant expenditures before requesting reimbursement from the grantor. Additionally, the Foundation should also work with their grantor to determine if any amounts should be returned. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.

U.S. Department of Health and Human Services, pass-through State of Tennessee Department of Health - Immunization Cooperative Agreements (ALN COVID-93.268) Federal Award Identification Number Year 34349-31823 2022 Criteria: Management is responsible for establishing and maintaining effective internal control over financial reporting so that financial statements are complete, accurate, and presented in accordance with accounting principles generally accepted in the United States of America (?GAAP?). Management is responsible for only charging allowable costs to the federal award. In accordance with cash management requirements for cost-reimbursed contracts, the Foundation is required to request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Condition: In December 2022, the Foundation expensed and requested reimbursement for $216,667 for 5,000 assessments completed. However, as of December 31, 2022, only 696 assessments were completed. The other 4,304 assessments were completed in January 2023 and February 2023. In accordance with GAAP, expenses should be recorded when incurred. Since these assessments weren?t completed until 2023, there was a $186,492 audit adjustment to reduce expenditures for the assessments along with $18,649 in related indirect costs. This expenditure is not included in the schedule of federal and state awards for the year ended December 31, 2022. Cause: The Foundation is using a contractor to complete the assessments. The vendor billed for the assessments in December 2022. Management is maintaining a tracker of assessments billed compared to assessments completed. However, the expenditure was recorded based on assessments billed. Effect or potential effect: The financial statements required a material adjustment to be in accordance with GAAP. The federal award was charged $186,492 in advance of when the expense was incurred. Recommendation: We recommend that management record the cost of the assessments in the period the assessment is completed, as documented in the tracker of assessments. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management?s corrective action plan in appendix A.

U.S. Department of Health and Human Services, pass-through State of Tennessee Department of Health - Immunization Cooperative Agreements (ALN COVID-93.268) Federal Award Identification Number Year 34349-31823 2022 Criteria: Cost-reimbursement contracts under the federal acquisition regulation require that the non-federal entity request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Ordinary course of business would be in accordance with the terms and conditions of a subcontract or invoice and ordinarily within 30 days of the request to the federal government for reimbursement. Condition: We selected a sample of expenditures requested for reimbursement. In our testing of the sample, we noted: $186,736 in expenditures that were incurred and requested for reimbursement in December 2022; however, the payment for the expenditure was not made until May 2023. Cause: The Foundation waited for reimbursement funds to be received to pay the expenditure for cash flow purposes. Effect or potential effect: Since the federal award is a cost-reimbursement contract, the request for reimbursement was not in compliance with the cash management requirements of the federal award. Recommendation: We recommend that management limit the time between requests to the federal government for reimbursement and payment of the expense to 30 days or less. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management?s corrective action plan in appendix A.

U.S. Department of Health and Human Services, pass-through State of Tennessee Department of Health - Immunization Cooperative Agreements (ALN COVID-93.268) Federal Award Identification Number Year 34349-31823 2022 Criteria: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards but may be used for interim accounting purposes, provided that: ? The system for establishing the estimates produces reasonable approximations of the activity actually performed; ? Significant changes in the corresponding work activity (as defined by the non-federal entity?s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and ? The non-federal entity?s system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Cause: During the period July 1, 2022, through December 31, 2022, the Foundation allocated salaries and benefits to the federal award based on the approved grant budget. Personnel working on the federal award are not required to keep timesheets, and internal controls have not been established for an after-the-fact review of charges to the Federal award based on budget estimates. Rent expenses to the federal award were allocated based on budgeted time spent on the program instead of actual. Effect or potential effect: Budget estimates alone do not qualify as support for charges to Federal award. Charges for actual time worked could vary, resulting in an incorrect amount charged to the federal award for salaries, benefits, and rent expenses. Additionally, since the Foundation is using budgets without an after-the-fact review of charges, the Foundation is not complying with the cost principles. Recommendation: We recommend that personnel who work on the federal award maintain a weekly timesheet that is reviewed and approved by the appropriate supervising personnel. We recommend that the Foundation perform an after-the-fact review of charges made to the federal award compared to the timesheets for the work performed and make any adjustments necessary. This after-the-fact review should be performed quarterly, at a minimum. Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management?s corrective action plan in appendix A.