HIV Alliance

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Opioid STR; Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.788, 93.959 Federal Award Identification Number and Year: 167552 - 2024 Pass-Through Agency: Oregon Health Authority Pass-Through Number(s): 167552 Award Period: January 4, 2021, through September 29, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Condition: During our testing we noted that documentation of the review and approval process for indirect costs charged to federal funds, as well as for quarterly reports, was not retained. Questioned costs: None. Context: CLA tested four billing reconciliations that were prepared to recognize the true revenue. For one billing reconciliation, no evidence of review and approval of the indirect cost charged to federal fund (i.e. monthly journal entries) were retained. For all quarterly reporting samples tested (two), no evidence of review and approval was retained to ensure reports are accurate. Cause: Inconsistent application of internal controls procedures. Effect: Without adequate controls in place to ensure costs are accurate, it may result in misappropriation of funds and noncompliance with grant regulations, which could result in penalties or repayment obligations. Repeat Finding: No Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence obtained and retained by the Alliance as proof of oversight of expenditure of federal funds. Additionally, CLA recommends increased emphasis and training on the importance of consistent application of procedures and controls. Views of responsible officials: There is no disagreement with the audit finding.

U.S. Department of Health and Human Services Significant Deficiency in Internal Controls over Compliance: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence obtained and retained by the Alliance as proof of oversight of expenditure of federal funds. Additionally, CLA recommends increased emphasis and training on the importance of consistent application of procedures and controls. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: All reports relating to a federally funded project will be reviewed prior to being submitted to the funding agency and documentation relating to that review will be retained by HIV Alliance. Name(s) of the contact person(s) responsible for corrective action: Renee Yandel, Executive Director; Wayne Hamblin, Finance Director Planned completion date for corrective action plan: July 1, 2025

2023-003 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirement: Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.446 Interest states that costs incurred for interest on borrowed capital are unallowable. HIV Alliance included interest expense in reported allowable costs. Context: Unallowable interest expense transactions, totaling approximately $6,000, were not properly excluded from costs to be paid with federal funds. Cause: In the June reconciliation of total program expenses to allowable expenses, interest expense was not removed, resulting in interest expense being funded with federal awards. This reconciliation process had been effectively identifying and excluding unallowable costs up to that point. Internal controls in place were not sufficient to prevent or detect and correct this error. Effect: Small amounts of unallowable costs were funded with federal awards and may result in the requirement to reimburse these funds. Additionally, this could increase the risk of future non-compliance if corrective actions are not taken. Recommendation: Processes and procedures should be implemented to strengthen the grant expense reconciliation process and also implement review processes to ensure all unallowable costs are consistently identified and excluded. Management's Response: Processes will be designed to incorporate management reviews of grant invoices and reported expenses.

Finding 2023-03- Compliance Requirement: Allowable Costs Currently all invoicing for expenses being charged to a contract or grant is split between the Accounting Manager and the Finance Director. HIV Alliance will implement a review process under which all invoices prepared by the Accounting Manager will be reviewed by the Finance Director for accuracy and all invoice prepared by the Finance Director will be reviewed by the Accounting Manager for accuracy. This new process will help ensure the accuracy of all invoices regarding allowable costs.

2023-004 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirements: Allowable Activities and Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.303 Internal Controls requires grantees to establish and maintain internal controls sufficient to provide reasonable assurance of compliance with applicable statutes, regulations, and terms and conditions of Federal awards. Internal controls related to the review and approval of non-payroll costs were not operating effectively throughout the grant period. Context: Twenty-five non-payroll expenses were selected for testing. The invoice for one of the selected items could not be located; as such, no evidence was available to demonstrate the operation of review and approval controls. The provided invoice and support for two additional items selected for testing did not show evidence of being reviewed. The three items were not determined to be instances of noncompliance as the information avaliabe was sufficient to demonstrate compliance with allowable activity and allowable cost requirements. Cause: Processes and procedures were not sufficient to ensure that evidence of the performance of internal controls was readily available for all grant expenditures. Effect: If not reviewed and approved according to HIV Alliance's policies, unallowable activities and costs could be funded with federal awards and result in instances of noncompliance. Recommendation: Processes and procedures should be reviewed and strengthened to ensure all controls are appropriately documented and available for review by internal and external parties at a later date. Management's Response: Processes will be implemented and monitored to ensure all expenses include evidence of the review and approval procedures performed.

Finding 2023-04- Allowable Activities and Allowable Costs All HIV Alliance expense transactions and journal entries will be entered by one member of the finance team and reviewed to verify accuracy and to verify that the appropriate documents and approvals are attached in FE by a second staff member.

DEPARTMENT OF HEALTH AND HUMAN SERVICES #2021-001 Epidemiology and Laboratory Capacity of Infectious Diseases (ELC) - CFDA No. 93.323; Grant No. 168222; Grant period - Year ended June 30, 2021. Condition: De minimis indirect rate was elected for use. Criteria: Internal controls should be in place that provide reasonable assurance that the de minimis indirect rate is applied consistently to all federal awards. Cause: Procedures in place failed to detect and prevent inconsistent use of de minmis rate. Effect: Because of the failure to detect and prevent inconsistent application of de minimis rate a higher rate was charged to the grant. Context: The grant was charged 15%. The grant allowed for 17.86% but as HIV Alliance elected de minimis rate, it must be applied consistently to all grants. Due to the grant allowing for an increased rate and the rate applied was less than allowed for rate, there are no questioned costs. Recommendation: Procedures should be implemented ensuring the use of the de minimis indirect rate for all federal programs. Views of Responsible Officials and Planned Corrective Actions: HIV Alliance agrees with the finding and the recommended procedures have been implemented.

Finding 2021-001 - Controls related to indirect rate HIV Alliance modified fiscal policy as follows, approved by the Board on February 22, 2022: "The federal indirect rate will be applied consistently to all federal programs, whether it be the de minimis rate or a federally negotiated indirect cost rate." HIV Alliance will implement the following controls to ensure compliance with this fiscal policy: - HIV Alliance Executive Assistant will maintain a spreadsheet of current contracts, we will add the following information: indirect rate - If the Staff Accountant prepares an invoice, the Finance Director will review using the spreadsheet to ensure the indirect rate is appropriately applied. - If the Finance Director prepares an invoice, the Executive Director will review using the spreadsheet to ensure indirect rate is appropriately applied. Contact person responsible for corrective action: Jennifer Salvatore, Finance Director Anticipated completion date: May 1, 2022.