PLANNED PARENTHOOD GREAT NORTHWEST, HAWAI'I, ALASKA, INDIANA, AND KENTUCKYNon-Profit

Finding 2025-001 – Allowable Cost Principles – Payroll Evidence of Review (Significant Deficiency in Internal Control over Compliance) Criteria – In accordance with the Uniform Guidance 2 CFR 200.303 regarding internal controls, the Agency must establish and maintain effective internal control over the federal award that provides reasonable assurance that the Agency is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, per 2 CFR 200.430(i) “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed… These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition/context – Out of the total population of payroll transactions charged to this program, we selected a sample of forty (40) transactions using a random sampling methodology and noted three (3) instances where employee timecards did not have evidence of review or approval by the appropriate director or supervisor of the program in the system. We understand that the payroll process is designed to move forward even if approval is not documented in the system. Effect – Without proper internal controls over timecards, there is an increased likelihood that payroll costs charged to the federal program are incorrect. While timecard review/approval was not documented for 3 samples, based on testing performed, the related payroll was allowable per the grant. Cause – There appears to be inadequate internal controls and/or documentation of controls over review and approval of timecards, to ensure time is accurately reported and ultimately payroll costs are properly charged to the program. Repeat finding – This is not a repeat finding. Recommendation – The Agency should reexamine its processes and controls over payroll. This may also include providing additional training on the importance and relevance of accurate timecards and their impact with compliance requirements. Views of responsible officials – The responsible officials acknowledge the finding, concur with the recommendation and are actively working with the Human Resource Department to implement the program identified within the associated corrective action plan.

Finding 2024-001 – Reporting (Significant Deficiency in Internal Control Over Compliance and Instance of Noncompliance)(See table in section III of the pdf) Criteria – In accordance with the Uniform Guidance (2 CFR Part 200) and applicable federal regulations, recipients of federal awards are mandated to submit required financial reports within specified deadlines. Furthermore, recipients are required to maintain adequate documentation that serves as verifiable proof of submission for all required reports, as outlined in the compliance supplement. In accordance with Uniform Guidance, the Agency is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/context – The population consisted of all quarterly and monthly reporting by location. For the reports selected for testing, the Agency did not consistently retain verifiable documentation evidencing the timely submission of required financial reports. Effect – With respect to federal award reporting it appears that not all reports were filed timely and certain program reporting was incorrect. In one instance, we tested the program reporting and related reimbursement request and they were not correct, however, the amount paid to the Agency was correct based on the allowable costs and the terms of the award. As such there were no questioned costs. In addition, the Agency was initially unable to provide the underlining population for the Q2 Idaho submission of $122,363. However, the Agency was able to reproduce a population for Q2 Idaho which resulted in allowable costs in excess of the original request. Cause – The primary cause of this finding is attributed to turnover, which resulted in a breakdown of established processes, oversight and communication protocols related to the timely submission, preparation and review of required grant compliance reports. Repeat finding – This is a repeat and modified finding of 2023-001. Recommendation – We recommend that the Agency establish and implement a comprehensive documentation, tracking, and review system for all required grant compliance reports. This system should include a checklist of reporting requirements, corresponding deadlines, appropriate review, and a mechanism for retaining verifiable proof of submission. Views of responsible officials – The responsible officials acknowledge the finding, concur with the recommendation and noted that while related corrective action has been taken, given the timing of the audits, the effective date of that action was subsequent to the period under audit.

Finding 2023-001 – Reporting (Significant Deficiency in Internal Control Over Compliance and Instance of Noncompliance) - (See chart on section III of audit findings page) Criteria – In accordance with the Uniform Guidance (2 CFR Part 200) and applicable federal regulations, recipients of federal awards are mandated to submit required financial reports within specified deadlines. Furthermore, recipients are required to maintain adequate documentation that serves as verifiable proof of submission for all required reports, as outlined in the compliance supplement. In accordance with Uniform Guidance, the Agency is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context – For the reports selected for testing, the Agency did not consistently retain verifiable documentation evidencing the timely submission of required financial reports. Additionally, the Agency did not have an effective review process for federal award reporting for the related program and the overall expenditures presented on the preliminary Schedule of Federal Expenditures (SEFA) which led to some inconsistencies between what was reported by the Agency and what was ultimately paid. Lastly, the single audit was conducted after the data collection form deadline. Effect – With respect to federal award reporting it appears that not all reports were filed timely, certain program reporting was incorrect, the related portions of the preliminary SEFA were not correct, and the data collection form is late. In all instances tested in which the program reporting and related reimbursement request were not correct, the amount paid to the Agency was correct based on the allowable costs and the terms of the award. As such there were no questioned costs. In addition, once the correct program reporting amounts were identified the final SEFA was corrected. Cause – The primary cause of this finding is attributed to turnover, which resulted in a breakdown of established processes, oversight and communication protocols related to the timely submission, preparation and review of required grant compliance reports. Repeat Finding – This is a repeat and modified finding of 2022-002. Recommendation – We recommend that the Agency establish and implement a comprehensive documentation, tracking, and review system for all required grant compliance reports. This system should include a checklist of reporting requirements, corresponding deadlines, appropriate review, and a mechanism for retaining verifiable proof of submission. Views of Responsible Officials – The responsible officials acknowledge the finding, concur with the recommendation and noted that while related corrective action has been taken, given the timing of the audits, the effective date of that action was subsequent to the period under audit.

Finding 2022-002 – Reporting (Significant Deficiency in Internal Control Over Compliance) - (See chart on section III of audit findings page) Criteria – In accordance with the Uniform Guidance (2 CFR Part 200) and applicable federal regulations, recipients of federal awards are mandated to submit required financial reports within specified deadlines. Furthermore, recipients are required to maintain adequate documentation that serves as verifiable proof of submission for all required reports, as outlined in the compliance supplement. In accordance with Uniform Guidance, the Agency is required to maintain a structure of internal control to ensure compliance with applicable reporting requirements. Condition/Context – For the reports selected for testing, the Agency did not retain verifiable documentation evidencing the timely submission of required financial reports. Additionally, the single audit was conducted after the established data collection form reporting deadline. Effect – It appears that not all reports were filed timely and the related data collection form is late. Cause – The primary cause of this finding is attributed to turnover, which resulted in a breakdown of established processes, oversight and communication protocols related to the timely submission of required grant compliance reports. Repeat Finding – This is not a repeat finding. Recommendation – We recommend that the Agency establish and implement a comprehensive documentation and tracking system for all required grant compliance reports. This system should include a checklist of reporting requirements, corresponding deadlines, and a mechanism for retaining verifiable proof of submission. Views of Responsible Officials – The responsible officials acknowledge the finding and concur with the recommendation.

Section III - Federal Award Findings and Questioned Costs 2020-001 - Procurement - Noncompliance and Significant Deficiency in Internal Control over Compliance Agency: U.S. Department of Health and Human Services Program: Teenage Pregnancy Prevention Program CFDA No: 93.297 Award No.: TP2AH000030, TP1AH000112, TP2AH000026, and TP1AH000130 Year: 2020 and 2019 Criteria: In accordance with 2 CFR 200 and the Compliance Supplement, the Organization must follow its own procurement policy which conforms to the Uniform Guidance standards. This requires the Organization to among other things ensure that it maintains procurement requisitions and supporting documents reviewed and approved by the appropriate authority depending on the amount. Condition: The Organization was unable to provide supporting documentation for seven contracts over the micro purchase threshold supporting the Organization?s procurement policy. Three of these contracts were renewed during 2020 with vendors that have served the Organization for many years. The other four contracts did not have adequate documentation of researching other vendor options. The Organization should research other vendor options and document its conclusion as to why they selected each vendor when contracts renew following the Organization?s procurement policy. Cause: The controls and processes established for procurement transactions have not been implemented on all qualifying items noted. Therefore, the Organization did not comply with its own procurement policy which is a violation of grant compliance. Effect or potential effect: There was no evidence to support that the procurement rules and procedures were followed for seven contracts. Questioned costs: $170,800 Context: In accordance with AICPA GAS/SA sampling guidance, the auditor tested ten procurement applicable transactions, seven of these contracts did not have adequate support to confirm that procurement procedures were adhered to. These contracts were in excess of the $3,000 micro-purchase threshold set by the Organization?s policy but were below the $150,000 threshold where competitive bids would have been required according to the Organization?s policy. Repeat Finding: This is a repeat finding from a prior year. This was reported as finding 2019-002 in the 2019 report. Recommendation: We recommend that the controls and processes that have been established be implemented and ensure the Organization is following its procurement policy and meeting the Uniform Guidance compliance requirements. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding noting it is a matter of documentation. Management will ensure proper documentation for contracts under federal awards going forward. Refer to the corrective action plan.

Section II - Financial Statement Findings 2019-001 ? Capitalization and depreciation of assets placed into service ? (Significant Deficiency) In Internal Control Over Financial Reporting Criteria: In accordance with GAAP, when an asset in construction is placed into service at that time, it should be transferred to be a depreciable asset and depreciation should commence over its useful life. Condition: During the audit work performed over fixed assets, the audit team identified that a building under construction had been completed in February 2019; however, the building and related fixed assets remained in construction-in-process at December 31, 2019. The building and related assets should have been placed into service at the time the building was ready to be opened, which occurred in February 2019. Cause: This was an unusual situation unlike other construction-in-progress or fixed asset activity for PPGHNI and thus it was an oversight that it was not transferred out of construction-in-progress when it was placed into service. Effect or Potential Effect: We were able to observe and conclude that the Agency did not properly transfer such assets from construction-in-progress to building and related fixed assets in order to be depreciated starting when it was placed into service. As a result, depreciation was not recorded for these assets placed into service. The correcting adjustment was recorded to place those assets into service and record the related depreciation expense for the period of the year that the building was in-service. Recommendation: As part of each monthly closing process, a review all construction in progress assets should take place against any operational information on such assets being complete and being placed into service. As part of this, the Agency should include a process that when such assets are to be placed into service, that there is approval that is provided for such action and that this information is then required to be provided to the accounting/finance group for recording. Views of Responsible Officials and Management's Corrective Action Plan: Management agrees this was an unusual situation unlike other construction-in-progress activity for PPGNHI. This project was significantly more complicated than past projects in the organization and there were several factors that led to the delay in the asset being moved out of construction-in progress. As a part of the completion of the merger between PPGNHI and PPINK, we are reviewing and aligning all accounting policies and practices. Related to this finding and fixed asset accounting, we are reviewing any opportunities to strengthen both our policies and our monthly processes in this area. This work will be complete by April 1, 2021. Scott Boyd, CFO, is responsible for the completion of this work and plan.

Section III - Federal Award Findings and Questioned Costs 2019-002 - Procurement - Noncompliance and Significant Deficiency in Internal Control over Compliance Agency: U.S. Department of Health and Human Services Program: Teenage Pregnancy Prevention Program CFDA No: 93.297 Award No.: TP2AH000030, TP1AH000112, TP2AH000026, and TP1AH000130 Year: 2019 Criteria: In accordance with 2 CFR 200 and the Compliance Supplement, the Organization must follow its own procurement policy which conforms to the Uniform Guidance standards. This requires the Organization to among other things ensure that it maintains procurement requisitions and supporting documents reviewed and approved by the appropriate authority depending on the amount. Condition: The Organization was unable to provide for two contracts over the micro purchase threshold documentation supporting the Organization?s procurement policy. These contracts were both renewed in 2019 with vendors that have served the Organization for many years. The Organization should research other vendor options and document its conclusion as to why they selected each vendor when contracts renew following the Organization?s procurement policy. Cause: The controls and processes established for procurement transactions have not been implemented on all qualifying items noted. Therefore, the Organization did not comply with its own procurement policy which is a violation of grant compliance. Effect or potential effect: There was no evidence to support that the procurement rules and procedures were followed for two contracts. Questioned costs: $65,000 Context: In accordance with AICPA GAS/SA sampling guidance, the auditor tested four procurement applicable transactions, two of these contracts did not have adequate support to confirm that procurement procedures were adhered to. These contracts were in excess of the $3,000 micro-purchase threshold set by the Organization?s policy but were below the $150,000 threshold where competitive bids would have been required according to the Organization?s policy. Recommendation: We recommend that the controls and processes that have been established be implemented and ensure the Organization is following its procurement policy and meeting the Uniform Guidance compliance requirements. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding. Refer to the corrective action plan.