AIDS Outreach Center, Inc.Non-Profit

Finding No. 2025‐002: Allowable costs – Material weakness in internal control over compliance and compliance finding 93.917 HIV Care Formula Grant (Ryan White Part B) Criteria: In accordance with Section 200.430 of the Uniform Guidance, charges for personnel expenses using federal awards must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During our review of personnel expenses, we noted that 13 out of 14 sampled personnel costs did not recalculate based on the employee’s pay rate and hours spent on the grant per timesheet. Per our review, 100% of their time was charged to Ryan White Part B when the timesheets documented less than 100% of total time charged. Cause: The Organization experienced turnover in accounting management at the beginning of 2025. The new interim management did not ensure personnel costs charged to the grant were supported by timesheets. Effect: The Organization’s reporting of grant expenditures per employee time and effort is not fully documented, in accordance with the Uniform Guidance requirements. Questioned costs: $7,963. Questioned costs were determined by multiplying the non Ryan White Part B percentage by the total employee’s costs charged for the respective pay period. Recommendation: Management should review the current procedures and the requirements of Section 200.430 and implement changes where necessary to ensure personnel costs are charged in accordance with Section 200.430 and that the expenses are supported by properly approved employee timesheets. Management’s Response: See corrective action plan.

Finding No. 2025‐003: Allowable costs – Material weakness in internal control over compliance and compliance finding 93.917 HIV Care Formula Grant (Ryan White Part B) Criteria: In accordance with Section 200.430 of the Uniform Guidance, costs must be adequately documented and must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During our review of expenses charged, we noted that for 4 of 21 sampled charges AOC was not able to provide support for the expenditure. Cause: Per AOC management, they were not able to find the support as the person who was responsible for maintaining the supporting documents were no longer with AOC. Effect: The lack of proper supporting documentation for expenditures charged to the grant are subject to disallowance. Questioned costs: $5,907. Recommendation: Management should review the current procedures and the requirements of Section 200.430 and implement changes where necessary to ensure that proper supporting documentation is maintained for all charges to the grant. Management’s Response: See corrective action plan.

Finding No. 2025‐004: Reporting – Material weakness in internal control over compliance and compliance finding 93.917 HIV Care Formula Grant (Ryan White Part B) Criteria: In accordance with 45 CFR 75 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, Subrecipient will develop, implement and maintain financial management and control systems, which include at a minimum accurate payroll, accounting and financial reporting records, cost source documentation, effective internal and budgetary controls, and determination of reasonableness, allowability and allocability of costs, and timely and appropriate audits and resolution findings. Condition: For 4 of 6 requests for reimbursements (RFRs), we were unable to reconcile the reimbursement amounts per the RFR totals to the grant general ledger. In total, the net of the four RFRs, the expenses per the grant RFRs were less than expenses per the grant general ledger. Cause: The Organization experienced turnover in accounting management at the beginning of 2025 responsible for the preparation and submission of the RFRs. Effect: The Organization’s controls over the grant RFR process were not sufficiently implemented to avoid the risk of noncompliance related to proper recordkeeping for reporting documentation. Questioned costs: None Recommendation: The Organization should maintain documentation of all allowable costs included on the grant RFRs in the grant general ledger. Management’s Response: See corrective action plan.

Finding No. 2025‐005: Allowable costs – Control deficiency in internal control over compliance. 93.940 HIV Prevention Activities Health Department Based Criteria: In accordance with Section 200.430 of the Uniform Guidance, charges for personnel expenses using federal awards must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During our review of personnel expenses, we noted that for 4 out of 8 sampled personnel costs, we were unable to obtain a signed and properly approved employee timesheet. Cause: The Organization failed to ensure that employee timesheets were properly reviewed and approved. Effect: Lack of properly reviewed and approved timesheets could result in improper costs being charged and allocated to the grant. Questioned costs: None. Recommendation: Management should review the current procedures and the requirements of Section 200.430 and implement changes where necessary to ensure personnel costs are charged in accordance with Section 200.430 and that the expenses are supported by properly approved employee timesheets. Management’s Response: See corrective action plan.

Finding No. 2025‐006: Allowable costs – Control deficiency in internal control over compliance. 93.940 HIV Prevention Activities Health Department Based Criteria: In accordance with 45 CFR 75 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, Subrecipient will develop, implement and maintain financial management and control systems, which include at a minimum accurate payroll, accounting and financial reporting records, cost source documentation, effective internal and budgetary controls, and determination of reasonableness, allowability and allocability of costs, and timely and appropriate audits and resolution findings. Condition: During our review, we noted that for 2 out of 8 sampled costs we were incorrectly coded and charged to the grant. Cause: The Organization failed to ensure that all costs charged to the grant were reasonable, allowable, and allocable to the grant. Effect: Improperly coded and charged costs could result in unallowable costs. Questioned costs: $2,932. Recommendation: Management should review the current procedures and the requirements of Section 200.430 and implement changes where necessary to ensure that costs are charged in accordance with Section 200.430. Management’s Response: See corrective action plan.

Criteria: All requests for reimbursements (RFRs) should be supported by expenditures in the general ledger. Condition: Auditors were unable to reconcile grant RFR totals to the grant general ledger. In total, expenses per the grant RFRs were less than expenses per the grant general ledger. Cause: The Organization experienced turnover in accounting management at the end of 2020 and throughout 2021. At that time, the interim management did not have the background with the grant RFR submitted necessary to reconcile to the grant general ledger. Further, the interim management did not and would not have had time to implement the corrective action plan as the prior audit was completed in September 2022. Effect: The Organization’s controls over the grant RFR process were not sufficiently implemented to avoid the risk of noncompliance related to proper recordkeeping for reporting documentation. Questioned costs: None Recommendation: The Organization should maintain documentation of all allowable costs included on the grant RFRs in the grant general ledger.

Criteria: In accordance with Section 200.430 of the Uniform Guidance, charges for personnel expenses using federal awards must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During review of personnel expenses, we noted that 14 out of 40 sampled personnel costs did not recalculate based on the employee’s pay rate and hours spent on the grant per timesheet. Further, we noted that 7 of 40 employee timesheets were not approved by supervisor and/or timesheet not signed by employee. Cause: The Organization experienced turnover in accounting management at the end of 2020 and throughout 2021. The interim management did not ensure personnel costs charged to grant were supported by timesheets. Further, the interim management did not and would not have had time to implement the corrective action plan as the prior audit was completed in September 2022. Effect: The Organization’s reporting of grant time and effort is not fully documented, in accordance with the Uniform Guidance requirements. Questioned costs: $2,438.05. Recommendation: RFRs should be reviewed in detail to ensure personnel expenses are supported by timesheets.

Criteria: In accordance with Section 200.430 of the Uniform Guidance, charges for personnel expenses using federal awards must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During review of personnel expenses, we noted that 5 out of 40 sampled personnel costs did not recalculate based on the employee’s pay rate and hours spent on the grant per timesheet. Cause: The Organization experienced turnover in accounting management at the end of 2020 and throughout 2021. The interim management did not ensure personnel costs charged to grant were supported by timesheets. Further, the interim management did not and would not have had time to implement the corrective action plan as the prior audit was completed in September 2022. Effect: The Organization’s reporting of grant time and effort is not fully documented, in accordance with the Uniform Guidance requirements. Questioned costs: $1,120.41. Recommendation: RFRs should be reviewed in detail to ensure personnel expenses are supported by timesheets.

Criteria: All requests for reimbursements (RFRs) should be supported by expenditures in the general ledger. Condition: Auditors were unable to reconcile grant RFR totals to the grant general ledger. In total, expenses per the grant RFRs were less than expenses per the grant general ledger. Cause: The Organization experienced turnover in accounting management at the end of 2020 and throughout 2021. The interim management did not have the background with the grant RFR submitted necessary to reconcile to the grant general ledger. Effect: The Organization?s controls over the grant RFR process were not sufficiently implemented to avoid the risk of noncompliance related to proper recordkeeping for reporting documentation. Questioned costs: None Recommendation: The Organization should maintain documentation of all allowable costs included on the grant RFRs in the grant general ledger Management?s Response: See corrective action plan.

Criteria: Costs charged to grant must be compliant with the costs allowable under the grant. Condition: Auditors noted 1 out of 25 tested items was not compliant with the allowable costs of the grant. Cause: The expense was miscoded in the accounting software to the grant. The miscode was not discovered during review of the request for reimbursement and was included in the request for reimbursement. Effect: The Organization?s controls over allowable costs were not sufficiently implemented to avoid the risk of noncompliance related to charging only allowable costs to the grant. The Organization was not compliant with allowable cost principles. Questioned costs: None Recommendation: Requests for reimbursement should be reviewed in detail before submitting to ensure only allowable costs are charged to the grant. Management?s Response: See corrective action plan.

Criteria: In accordance with Section 200.430 of the Uniform Guidance, charges for personnel expenses using federal awards must be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable and properly allocated. Condition: During review of personnel expenses, we noted that 15 out of 25 sampled personnel costs did not recalculate based on the employee?s payrate and hours spent on the grant per timesheet. Cause: The Organization experienced turnover in accounting management at the end of 2020 and throughout 2021. The interim management did not ensure personnel costs charged to grant were supported by timesheets. Effect: The Organization?s reporting of grant time and effort is not fully documented, in accordance with the Uniform Guidance requirements. Questioned costs: None. In total, the amount requested for reimbursement was less than hours worked on the grant per timesheets.Recommendation: RFRs should be reviewed in detail to ensure personnel expenses are supported by timesheets. Management?s response: See corrective action plan.

Criteria: The Organization?s internal control procedures over compliance specify that all employees maintain timesheets that are reviewed and approved, as indicated by supervisor signature. Condition: Auditors noted that 1 out of 25 timesheets tested did not contain supervisor signature. Cause: The timesheet that was missing supervisor signature was the timesheet for the program supervisor. Effect: The Organization?s reporting of grant time and effort is not fully documented, in accordance with internal control over compliance procedures. Recommendation: Management should ensure all timesheets are completed and signed by a supervisor before reimbursement requests for the period are initiated. Program supervisor timesheets should be signed by a member of upper management. Management?s Response: See corrective action plan.

Criteria: All requests for reimbursements (RFRs) should be supported by expenditures in the general ledger. Condition: Auditors were unable to reconcile grant RFR totals to the grant general ledger. In total, expenses per the grant RFRs were less than expenses per the grant general ledger. Cause: The Organization experienced turnover in accounting management at the end of 2020. The new management did not have the background with the grant RFR submitted necessary to reconcile to the grant general ledger. Effect: The Organization?s controls over the grant RFR process were not sufficiently implemented to avoid the risk of noncompliance related to proper recordkeeping for reporting documentation. Questioned costs: None Recommendation: The Organization should maintain documentation of all allowable costs included on the grant RFRs in the grant general ledger. Management?s Response: See corrective action plan.