Prisma Community Care

Item: 2024-001 Assistance Listing Number: 93.914 Program: HIV Emergency Relief Project Grants Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Department of Public Health Services Pass-Through Grantor Identifying Number: A23MHSSWC, A24MHSSWC, A23MNSSWC, A24MNSSWC, A23MCMSWC, A24MCMSWC, A23NMCSWC, A24NMCSWC, A23FBMSWC, A24FBMSWC, A24SASSWC Award Year: March 1, 2023 - February 28, 2024; March 1, 2024 - February 28, 2025 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: $865 Context: During testing of non-payroll costs charged to the program, we received a report from the organization showing the variances between expenses allocated for reimbursement to the program using an incorrect allocation methodology, and the correct amounts that should have been allocated. The variance between the amounts charged and the amounts incurred by the tested program, $10,869 and $10,004, respectively, was $865, which is trivial in nature. However, this is a repeat finding and is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Additionally, issue not discovered until prior year audit discovery in August 2024. Identification as a Repeat Finding: Repeat finding – prior year 2023-002 Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2024-002 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034 Award Year: August 1, 2023 – April 30, 2024; January 1, 2024 – May 31, 2025; May 1, 2024 – April 30, 2025 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: $1,835 Context: In a population of over 109 non-payroll costs charged to the program, we conducted a non-statistical sample of 11 non-payroll costs charged to the program. In our sample of 11, we noted that 1 selection was charged to the program based on an allocation methodology that was not properly updated for the current period. The variance between the amounts charged and the amounts supported, $3,260 and $1,425, respectively, was $1,835, which is trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Additionally, issue not discovered until prior year audit discovery in August 2024. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2024-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034 Award Year: August 1, 2023 – April 30, 2024; January 1, 2024 – May 31, 2025; May 1, 2024 – April 30, 2025 Compliance Requirement: Reporting Criteria: Per the grant agreements, award recipients are required to submit monthly reimbursement report within a set number of days after month end. Condition: Financial reimbursement reports were submitted after the required due date. Questioned Costs: n/a Context: In a population of 56 required reports, we conducted a non-statistical sample of four programmatic and three financial reimbursement reports. In our sample of seven, we noted the three required financial reimbursement reports were not submitted to the granting agency timely. This is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Weak communication with the grantor resulted in unclear deliverable and due date requirements. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that deliverables are submitted in the time frames laid out by the grant agreements.

Item: 2023-002 Assistance Listing Number: 93.914 Program: HIV Emergency Relief Project Grants Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Pass-Through Grantor Identifying Number: A22MHSSWC, A23MHSSWC, A22MNSSWC, A23MNSSW, A22MCMSWC, A23MCMSWC, A22NMCMSWC, A23NMCMSWC, A22FBMSWC, A23FBMSWC Award Year: March 1, 2022 - February 28, 2023; March 1, 2023 - February 28, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 1 selection was charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amount charged and the amount supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2023-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.405 – Allocable Costs - (d) If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: Costs charged to the federal program were based on an allocation methodology that was not properly updated for the current period. Questioned Costs: n/a Context: In a population of over 250 non-payroll costs charged to the program, we conducted a non-statistical sample of 40 non-payroll costs charged to the program. In our sample of 40, we noted that 5 selections were charged to the program based on an allocation methodology that was not properly updated for the current period. The variances between the amounts charged and the amounts supported, as well as the projected impact to the entire population, was trivial in nature. However, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that cost allocation methodologies utilized to bill federal awards are properly updated each reporting period as deemed necessary to accurately reflect the proportional benefit. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2023-004 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: Incorrect allocation of employee hours were charged to the federal program. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 1 selection in which the employee was paid at an outdated pay rate and paid overtime that was not supported by the employee timesheet. The variances between the amount charged and the amount supported, as well as the projected impact to the entire population, was trivial in nature. This is deemed to be a significant deficiency in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: The entity’s system of internal controls did detect, or document the rationale for, instances in which the amounts charged to a federal program did not agree to the underlying supporting documentation maintained by the Organization. Identification as a Repeat Finding: Repeat finding – prior year 2022-004 Recommendation: The Organization should enhance its processes and controls to ensure that expenses are appropriately reviewed before submission of billing. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2023-005 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Reporting Criteria: Per grant agreements the organization was required to submit multiple reports at various dates during the grant period. Condition: Required reports not submitted to granting agency and incomplete record retention to evidence the timely submission of reports to granting agencies. Questioned Costs: n/a Context: In a population of 52 required reports, we conducted a non-statistical sample of seven reports. In our sample of seven, we noted two required reports were not submitted to the granting agency. Additionally, management did not have contemporaneous documentation to evidence the timely submission of reports to certain granting agencies. This is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that required reports are submitted to granting agencies and to retain evidence of timely submission within the Organization's records. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2022-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034/152035 Award Year: January 1, 2022 to December 31, 2022; April 1, 2021 to July 15, 2022; August 1, 2022 to July 31, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: The entity’s system of internal controls did not retain contemporaneous documentation of supervisory review over payroll allocations charged to the federal programs. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 23 selections were charged to the program based on an allocation process. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred. Recordkeeping regarding the supervisory review of the allocations was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Repeat finding Recommendation: The Organization should enhance it processes and controls to ensure that supervisory review of the payroll allocations is evidenced within the Organization’s books and records. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2022-004 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034/152035 Award Year: January 1, 2022 to December 31, 2022; April 1, 2021 to July 15, 2022; August 1, 2022 to July 31, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: The entity’s system of internal controls did detect, or document the rationale for, instances in which the amounts charged to a federal program did not agree to the underlying supporting documentation maintained by the Organization. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 2 selections were charged to the program for amounts that did not agree to the underlying supporting documentation maintained by the Organization. The variances between the amounts charged and the amounts supported, as well as the projected impact to the entire population, were trivial in nature. However, the deviation rate in the control objective resulted in the conclusion that this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that differences between the amounts billed to federal awards and the underlying supporting documentation are thoroughly investigated. If the differences are justifiable, the justification should be documented and retained. If the differences are in error, the billing should be corrected prior to submission. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.

Item: 2021-002 Assistance Listing Number: 93.914 Programs: HIV Emergency Relief Project Grant Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Ryan White Program Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ?200.430 Compensation?personal services, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges were accurate, allowable, and properly allocated and budget estimates must produce reasonable approximation of the activity performed. Condition: In 2021, the Organization did not have an adequate process to document review and approval of an employee's allocation of payroll costs to federal awards. Due to the pervasiveness of the matter, this is considered a material weakness in internal control over compliance. Questioned Costs: Unknown Effect: As a result of noncompliance with the grant agreement, Southwest Center for HIV/AIDS, Inc. can be charging the incorrect amount to the program. Cause: The Organization did not controls implemented to properly measure and record the time and effort incurred by employees related to the grant agreement. These errors are a result of omitted controls over direct costs. Identification as a Repeat Finding: No Recommendation: The Organization should implement controls to adequately monitor employees charged with reporting to ensure there are personnel records to support the payroll costs charged to the program in accordance with the contract. Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2021-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities ? Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Arizona Department of Health Services; Centers for Disease Control and Prevention Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR ?200.430 Compensation?personal services, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges were accurate, allowable, and properly allocated and budget estimates must produce reasonable approximation of the activity performed. Condition: In 2021, the Organization did not have an adequate process to document review and approval of an employee's allocation of payroll costs to federal awards. Due to the pervasiveness of the matter, this is considered a material weakness in internal control over compliance. Questioned Costs: Unknown Effect: As a result of noncompliance with the grant agreement, Southwest Center for HIV/AIDS, Inc. can be charging the incorrect amount to the program. Cause: The Organization did not controls implemented to properly measure and record the time and effort incurred by employees related to the grant agreement. These errors are a result of omitted controls over direct costs. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should implement controls to adequately monitor employees charged with reporting to ensure there are personnel records to support the payroll costs charged to the program in accordance with the contract. Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-002 Assistance Listing Number: 93.914 Programs: HIV Emergency Relief Project Grant Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Maricopa County Ryan White Program Compliance Requirement: Allowable activities and costs Criteria: In accordance with 2 CFR ?200.430 Compensation?personal services, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges were accurate, allowable, and properly allocated and budget estimates must produce reasonable approximation of the activity performed. Condition: In 2020, the Organization did not have an adequate process in place to transfer information from an employee's timecard and payroll register to the request for reimbursement. A non-statistical sample of 1 out of 18 employee pay periods had an error due to inadequate review of timecard data requested for reimbursement for two contracts under the program. Additionally, for employees that allocate 100% of their time to a major program, the Organization did not have records to support that at least 50% of their time was supported by billed client units as required by the contract. Due to the pervasiveness of the matter, this is considered a material weakness in internal control over compliance Questioned Costs: Unknown Effect: As a result of noncompliance with the grant agreement, Southwest Center for HIV/AIDS, Inc. can be charging the incorrect amount to the program. Cause: The Organization did not controls implemented to properly measure and record the time and effort incurred by employees related to the grant agreement. These errors are a result of omitted controls over direct costs. Identification as a Repeat Finding: 2019-003 Recommendation: The Organization should implement controls to adequately monitor employees charged with reporting to ensure there are personnel records to support the payroll costs charged to the program in accordance with the contract Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-003 Assistance Listing Number: 93.914 Programs: HIV Emergency Relief Project Grant Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Maricopa County Ryan White Program Compliance Requirement: Procurement, Suspension, and Debarment Criteria: In accordance with 2 CFR ? 200.318 - General procurement standards, the entity must have and use documented procurement procedures, consistent with State and local laws and regulations and the standards of this section, for the acquisition of property or services required under the federal award. The entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Additionally, the Organization must distribute micro-purchase equitable among qualified suppliers. Condition: The Organization does not have a formal procurement policy in place during 2020, nor a policy to perform a review of pricing among qualified suppliers. While the Organization does not typically have purchases that exceed the micro-purchases threshold, the matter is considered a significant deficiency in internal control over compliance. Questioned Costs: None Effect: As a result of noncompliance with the grant agreement, the granting agencies could request return of the grant funds. Cause: The Organization did not have a procurement policy process in place that includes internal controls designed and implemented to properly monitor granting requirements and compliance. Identification as a Repeat Finding: 2019-006 Recommendation: The Organization should formalize a procurement policy that meets the requirements of the Uniform Grant Guidance, and implement internal controls to monitor compliance with the policy. Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-004 Assistance Listing Number: 93.914 Program: HIV Emergency Relief Project Grant Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Maricopa County Ryan White Program Compliance Requirement: Eligibility Criteria: In accordance with 2 CFR ?200.62 Internal control over compliance requirements for Federal awards, internal control over compliance requirements for federal awards means a process implemented by a non-Federal entity is designed to provide reasonable assurance regarding the achievement of the objective to demonstrate compliance with Federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of a non-statistical sample, we noted that for 2 out of 40 selections, documentation of the participant's eligibility was not retained in the participant's file. However, upon further research in the Maricopa County database, we noted that the participants were eligible to receive services under the program, therefore there was not a matter of non-compliance. This issue was identified as a material weakness in internal control over compliance in the prior year, given the level of exceptions and pervasiveness of the issue. This is considered a material weakness in internal control over compliance in the current year as well. Questioned Costs: None Effect: As a result of noncompliance with the grant agreement, the granting agencies could request return of the grant funds. Cause: The Organization did not implement internal controls designed to monitor participant files for proper documentation of eligibility. Identification as a Repeat Finding: 2019-005 Recommendation: The Organization should review participant files for adequate documentation of a participant's eligibility prior to billing services provided to the grant. Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-005 Assistance Listing Number: 93.914 Programs: HIV Emergency Relief Project Grant Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Maricopa County Ryan White Program Compliance Requirement: Reporting Criteria: In accordance with 2 CFR 200.201, Amounts submitted for reimbursement agree (or are less than) amounts reported in the accounting records that support the audited financial statements and the Schedule of Expenditures of Federal Awards. Note that amounts in accounting records would be greater than amounts billed when actual expenditures exceed budget and organization has not obtained approval for additional billings. Condition: During testing of a non-statistical sample of 4 months of reporting during 2020, MHM noted that there is not a control implemented to perform a reconciliation or review over the amounts billed to the programs compared to the amounts accepted and received and as a result individual costs do not agree to the some or all of the individual cost in the Billings summary workbooks. Additionally, there is not a control in place to ensure that billed expenditures are not in excess of the contract budget in a timely manner. Per review of all contract billings for the major programs compared to all cash receipts, the following errors were identified: missing month of billing for $39,800, billing exceeding budget resulting in return of funds of $28,240, unsupported cash reimbursement of $3,977. The missing month of billing and over budget billing was corrected within the reporting period. This is considered a deficiency in internal control over compliance. Questioned Costs: Unknown Effect: As a result of noncompliance with the grant agreement, the granting agencies could request return of the grant funds. Cause: The Organization did not have controls in place to properly reconcile and review the monthly billing request to ensure they were supported by accounting records and not in excess of the contract budgets. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should implement controls to adequately review and approve monthly billing reports and compare expenditures to contract budgets. Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-006 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities ? Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Arizona Department of Health Services Centers for Disease Control and Prevention Compliance Requirement: Procurement, Suspension, and Debarment Criteria: In accordance with 2 CFR ? 200.318 - General procurement standards, the entity must have and use documented procurement procedures, consistent with State and local laws and regulations and the standards of this section, for the acquisition of property or services required under the federal award. The entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Additionally, the Organization must distribute micro-purchase equitable among qualified suppliers. Condition: The Organization does not have a formal procurement policy in place during 2020, nor a policy to perform a review of pricing among qualified suppliers. While the Organization does not typically have purchases that exceed the micro-purchases threshold, the matter is considered a significant deficiency in internal control over compliance. Questioned Costs: None Effect: As a result of noncompliance with the grant agreement, the granting agencies could request return of the grant funds. Cause: The Organization did not have a procurement policy process in place that includes internal controls designed and implemented to properly monitor the acquisition of property and services required under federal awards and perform a review of pricing among qualified suppliers. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should formalize a procurement policy that meets the requirements of the Uniform Grant Guidance and design and implement internal controls to monitor compliance with the provisions of the policy Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

Item: 2020-007 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities ? Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Arizona Department of Health Services Centers for Disease Control and Prevention Compliance Requirement: Reporting Criteria: In accordance with 2 CFR 200.201, Amounts submitted for reimbursement agree (or are less than) amounts reported in the accounting records that support the audited financial statements and the Schedule of Expenditures of Federal Awards. Note that amounts in accounting records would be greater than amounts billed when actual expenditures exceed budget and organization has not obtained approval for additional billings. Condition: During testing of a non-statistical sample of 4 months of reporting during 2020, MHM noted that there is not a control implemented to perform a reconciliation or review over the amounts billed to the programs compared to the amounts accepted and received and as a result individual costs do not agree to the some or all of the individual cost in the Billings summary workbooks. Additionally, there is not a control in place to ensure that billed expenditures are not in excess of the contract budget in a timely manner. Per review of all contract billings for the major programs compared to all cash receipts, the following errors were identified: unsupported cash reimbursement of $1,427. This is considered a deficiency in internal control over compliance. Questioned Costs: Unknown Effect: As a result of noncompliance with the grant agreement, the granting agencies could request return of the grant funds. Cause: The Organization did not have controls in place to properly reconcile and review the monthly billing request to ensure they were supported by accounting records and not in excess of the contract budgets. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should implement controls to adequately review and approve monthly billing reports Views of Responsible Officials: Management of Southwest Center for HIV/AIDS, Inc. concurs with the finding. See Corrective Action Plan.

From January to May 2019, the Organization used budgeted estimates alone to support charges to the major program for employees that charged less than 100% of their time to the major program and did not have a process in place to compare the approximations of activity to the level of activity actually performed as required. Additionally, for employees that allocate 100% of their time to a major program, the Organization did not have records to support that at least 50% of their time was supported by billed client units as required by the contract. From June 2019 to December 2019, the Organization changed their practice from reporting budgeted estimates to hours reported on timecards, however, did not have an adequate process in place to transfer information from an employee's timecard and payroll register to the request for reimbursement. A non-statistical sample of 3 out of 20 employee payroll periods were selected for total payroll costs of $52,086 and an error rate of 0.13%. Due to the pervasiveness of these matters, this is considered a material weakness in internal control over compliance.

During our testing, we noted that (1) indirect costs associated with employee benefits of employees with indirect salaries were incorrectly included in direct costs resulting in a higher calculation of indirect costs using the 10% rate, and (2) the basis for calculating 10% of indirect costs were based on budgeted rather than actual direct costs for the period from January 2019 to May 2019, resulting in an inaccurate calculation of indirect costs for that period. Due to the pervasiveness of the issue, this is considered a material weakness in internal control over compliance.

During testing of a nonstatistical sample, we noted that for 3 out of 40 selections, documentation of the participant's eligibility was not retained in the participant's file. However, upon further research, we noted that the participants were eligible for to receive services under the program. Given the level of exceptions and pervasiveness of the issue, this is considered a material weakness in internal control over compliance.

The Organization does not have a formal procurement policy in place. While the Organization does not typically have purchases that exceed the micro-purchases threshold, the matter is considered a significant deficiency in internal control over compliance.

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