AIDS HEALTHCARE FOUNDATION

Finding 2024-001: Allowable Cost/Cost Principles – Enhanced Documentation of Cost Allocation (Repeat Finding) Criteria or Specific Requirements Per 2 CFR Part 200.430 (g)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives. Per Uniform Guidance Compliance Supplement part 6 – Internal Control, non-federal entities are required to establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition Description A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges Of the 50 employee monthly reimbursements (10 for ALN 14.241; 40 for ALN 93.914) selected for allowable costs testwork, we noted 2 employee monthly reimbursements (1 for ALN 14.241; 1 for ALN 93.914) for where the hours reported per the timesheet did not agree with the hours reported in the related request for reimbursement invoices. The hours reported per the reimbursement invoices were greater than the hours reported per the timesheets. The Foundation subsequently provided documentation indicating that such differences had been properly corrected in the following month’s reimbursement invoice through an adjustment to the reported hours per the reimbursement invoice. B. Improved Documentation of Routinary Reviews of Employee Hours Charged to the Grants We performed testwork over the Foundation’s implementation of the Corrective Action Plan (CAP) for Finding 2023-001. Per the CAP, the Foundation will perform regular reviews of tracked hours and reconciliations at least quarterly. Of the 18 payroll reimbursement months (for ALN 93.914), and 4 payroll reimbursement months (for ALN 93.940) selected for testwork, we noted a total of 2 months (1 for ALN 93.914; 1 for ALN 93.940) whereby the related reviews of tracked hours were performed more than 90 days after the respective reimbursement month. C. Timecard Lacking Employee and Manager Approvals In performing allowable costs testwork over payroll expenditures, we noted the following: Questioned Costs A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges None. The Foundation corrected the discrepancies in subsequent monthly reimbursements. This issue is considered an internal control finding. B. Improved Documentation of Routinary Reviews of Employee Hours Charged to Grants None. This issue is considered an internal control finding. C. Timecards Lacking Employee and Manager Approvals None. This issue is considered an internal control finding. Cause and Effect A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges Per the Associate Director of Contract Accounting, this was a one-time error in the month’s request for reimbursement invoice. This error was corrected within the grant period and did not result in overbilling the funder. However, since the correction occurred after the Foundation’s fiscal year-end, it resulted in an overstatement of expenditures reported on the SEFA for the year ended December 31, 2024. B. Improved Documentation of Routinary Reviews of Employees' Hours Charged to Grants. Per the Associate Director of Contract Accounting, the routinary review of employee hours occurred. However, there were still reclassifications that needed to be performed beyond the normal review process. The review process was not properly implemented. C. Timecards Lacking Employee and Manager Approvals The identified condition resulted from failure to follow formal procedures requiring both the employee and manager to sign off on the timesheets.

Criteria or Specific Requirements Per 2 CFR 200.214 Suspension and debarment, non-Federal entities are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or excluded from or ineligible for participation in Federal assistance programs or activities. Per CFR 180.300, Subpart C: Responsibilities of Participants Regarding Transactions Doing Business With Other Persons, when an entity enters into a covered transaction with another person at the next lower tier, the entity must verify that the person with whom the entity intends to do business is not excluded or disqualified. The entity does this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Per Uniform Guidance Compliance Supplement part 6 – Internal Control, non-federal entities are required to establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition We performed testwork over the Foundation’s implementation of the Corrective Action Plan (CAP) for Finding 2023-002. Per the CAP, the Foundation will conduct regular, ongoing monitoring of vendors providing services billed to grantors, including identifying all grant-reimbursed vendors and coordinating with Accounts Payable to perform annual suspension and debarment checks. We noted that the Foundation’s updated formal policies and procedures now require suspension and debarment checks at initial vendor setup and on an annual basis thereafter. Based on test work over a sample of 6 vendors covering the period from September 1, 2024 (CAP implementation date) to December 31, 2024, we did not identify any vendors in the sample who were suspended or debarred. However, we were unable to obtain documentation demonstrating that the Foundation performed the annual vendor suspension and debarment verification checks. Evidence that the annual vendor suspension and debarment verification checks had been performed was not yet available. Questioned Costs None. Cause and Effect For the period from September 1, 2024 (CAP implementation date) to December 31, 2024, the annual vendor suspension and debarment verification checks were still in progress, and supporting documentation was not yet available. The Foundation subsequently completed the annual checks in February 2025, which aligns with the typical start dates of most vendor contracts.

Criteria or Specific Requirements Under 24 CFR §574.520, formula and competitive grant recipients are required to report to the U.S. Department of Housing and Urban Development (HUD) on grant activities, including HOPWA funds received and types of assistance provided. In 2022, HUD introduced the Consolidated Annual Progress Report (APR)/Consolidated Annual Performance and Evaluation Report (CAPER) reporting format, which must be completed by both grantees and their project sponsors. These reports are intended to provide detailed, accurate, and complete financial and performance data for all HOPWA-related activities. Additionally, per the OMB 2024 Compliance Supplement, Part 6 – Internal Control, federal program recipients must establish and maintain effective internal controls over federal award reporting. This includes controls to ensure: Data presented is accurate, complete, and in accordance with the award terms Reports reconcile to accounting records and underlying support Review and approval processes are in place before submission Condition In performing reporting testwork, we noted that for the APR/CAPER submitted by the Foundation for the grant year ending June 30, 2024, total grant expenditures reported per the APR/CAPER were understated by a total net amount of $67,208 when compared to total grant expenditures included in the monthly reimbursement request invoices as follows: Questioned Costs None. This issue is considered an internal control finding. Cause and Effect Per inquiry with the Associate Director of Contract Accounting, the above net understatement was due to a misunderstanding regarding the proper completion of certain fields in the new consolidated APR/CAPER workbook. The Foundation has requested additional guidance and clarification from the grantor regarding the proper completion of the workbook.

During our audit of the Foundation’s payroll expenditures, we observed that the final hours charged to the grant were adjusted to reflect accurate charges in addition to the timesheet-documented charges. While the hours themselves were determined to be valid, the documentation supporting these adjustments could be improved. Specifically, the Foundation needs to enhance the process of its cost allocation for the grants identified, document detailed calculations of the adjustments made at period end, and establish controls to ensure the reconciliation and adjustment process is conducted on a regular basis.

In performing testwork on the Foundation’s Procurement, Suspension and Debarment requirements, we noted that the Foundation has a formal written procurement policy in place. However, documentation of the initial review and ongoing monitoring of current suppliers’ suspension and debarment status is lacking.

Criteria or Specific Requirements Code of Federal Regulations, Subpart E: Cost Principles, section 75.430 Compensation?personal services, paragraph (i)(1) states that: ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed,? and paragraph (i)(1)(viii)I states that: ?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.? In addition, the Ryan White HIV/AIDS Program Treatment Extension Act Part A Grant Contract with Fulton County, GA Board of Commissioners Paragraph 9.15, states that, ?Subrecipient agrees that reimbursements requested under the terms of this Contract shall be made based upon actual expenditures incurred and not upon budgeted amounts.? Condition In performing testwork over the Foundation?s payroll expenditures that were billed to the following grant programs, we noted the following: A. Contract No. 2HA89HA00007-31-00 ? Outpatient Ambulatory Health Service Program Of the (12) payroll expenditures tested, we noted that: o Five (5) expenditures were supported by timesheets that did not indicate any program hours worked. o One (1) expenditure was supported by a timesheet showing lesser hours than the hours billed to the grantor. B. Contract No CODTPI/CODUD ? Housing Opportunities for People With AIDS Program Seven (7) out of eleven (11) expenditures tested were supported by timesheets that did not indicate any program hours worked. The above discrepancies were due to the fact that the amounts billed to the grantor were based on budget estimates rather than actual expenditures. We also noted that the total actual expenditures initially coded under the above 2 programs in the general ledger were lower than the respective total amounts billed for the fiscal year. This was attributed to the fact that some expenditures were classified under an unassigned category in the general ledger since the Foundation?s process of determining their correct program codes is ongoing. Upon further discussion with management, we were informed that the total actual expenditures for each program, when taking into consideration the expenditures classified under the unassigned category, exceeds the respective total amounts billed for the programs. Questioned Costs (Expenditures tested) A. $18,911 B. $22,433 Cause and Effect Discrepancies between the claims for reimbursements for payroll expenditures and supporting employee timesheets arise because the Foundation submits its claims for payroll reimbursements based on predetermined percentages for interim accounting purposes, rather than actual employee hours worked under the program. A reconciliation process is performed at the end of the fiscal year to determine the actual program expenditures. However, this reconciliation process was ongoing during the audit. Recommendation We recommend that the Foundation revisit its existing process and procedures in tracking and billing federal expenditures. A process should be in place whereby payroll expenditures charged to the federal programs are 1) accurately determined based on the actual hours worked by the employees on the respective programs; 2) adequately supported by timesheets and other source documentation; and 3) formally documented to easily agree and/or reconcile to the supporting documentation. This is to maintain transparency and accountability of federal funds and ensure compliance with federal requirements. Additionally, a system should be implemented to ensure that tracking of costs by fund is done in a timely manner. Views of Responsible Officials and Planned Corrective Actions The timesheets did not reflect the correct hours charged to the program. After discussions with program management, it was discovered that correct communication to staff had not been completed regarding proper program and grant payroll coding for work done on the program. This has been corrected. The Foundation?s contract administrative staff is working more closely with program staff to ensure for each payroll that the time worked on programs is properly reflected on timesheets that are approved by employees and managers. Necessary changes are communicated between program and contract administrative staff to ensure that timesheets reflect work hours properly. Personnel responsible for implementation: Steven Hartman Position of responsible personnel: Associate Director, Contract Accounting Date of Implementation: August 31, 2023

? In performing eligibility testwork over the Fulton County contract, we noted the following: one (1) out of eight (8) patients sampled that did not meet eligibility requirements was included in the reimbursement invoice submitted to Fulton County. ? Upon further review of reimbursement invoices for FY 2021, we noted an additional ineligible patient that was included in the reimbursement invoice for October 2021.

Finding No. 2020-001: Activities Allowed or Unallowed and Allowable Costs / Cost Principles: Indirect Expenses Federal Program Information Federal Catalog Number: 93.914 Federal Program Name: HIV Emergency Relief Project Grants Federal Agency: U.S. Department of Health and Human Services Pass-through Entities: County of Los Angeles, CA (County) Contract Number and Name: PH-003737 ? Core HIV Medical Services for Persons Living With HIV - Ambulatory Outpatient Medical Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs / Cost Principles Criteria or Specific Requirement Excerpt from 2 CFR ?200.403 Factors affecting allowability of costs: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (g) Be adequately documented. Condition During our audit, we noted that the Foundation used two different methods in identifying and applying indirect expenses for the following two contracts. ? For the contract covering the period from March 1, 2019 to February 28, 2020, the Foundation included an indirect expense line item in the cost analysis (worksheet). This worksheet served as the initial basis in preparing their final cost report at the end of the FY19-20 contract. The indirect cost in the worksheet amounted to $1.4 million. This amount was not charged in full to the contract but was included in the worksheet to demonstrate that an allocation had been made. ? For the contract covering the period from March 1, 2020 to February 28, 2021, the Foundation modified the cost analysis worksheet. Such that the allocated indirect expenses were removed from the contract allocation and separately presented in the worksheet. The allocated indirect expenses did not form part of the cost report at contract period end. Questioned Costs None. The Foundation has prepared a revised analysis for FY19-20. Based on our review of the revised analysis, we noted that the indirect expense included in the worksheet did not materially affect the total program costs reimbursable per contract. The total actual operating costs from the ten clinic sites still exceeded the reimbursement from the County by approximately $2,000,000. Cause and Effect The Foundation is always evaluating the cost reporting process for all of its contracts. One of the changes that was determined was the treatment of indirect expenses from a reporting perspective. The changes will improve the reporting to the County of the costs to run the various programs. Recommendation We recommend that the Foundation assess their cost analysis process on a regular basis to make sure that they can clearly demonstrate proper allocation of indirect expenses to all of its contracts. The Foundation also needs to establish a monitoring control to ensure that the cost allocation process is consistently applied as improvements to the cost analysis process are being implemented. We also suggest that documentation is in place to appropriately describe the basis of the current allocation process followed by the Foundation. This documentation could be in the form of a process memo developed internally. Views of Responsible Officials and Planned Corrective Actions The Foundation agrees that establishing policies and procedures for the allocation of indirect expenses is necessary. We will determine how best to roll this out with all of our contracts and indirect expenses will be evaluated every year during the preparation of our annual cost reports. Personnel responsible for implementation: Shibu Sam Position of responsible personnel: Acting Director, Contracts Administration Date of Implementation: July 1, 2021

Of the sixteen (16) patients selected for eligibility testing, we noted the following exceptions: -One patient had missing supporting proof of income as a basis to verify if the patient was eligible for the benefits under the program. -One patient?s available income information to determine eligibility was from 2015.

Of the seven (7) client files selected for eligibility testwork, we noted one (1) client file that did not have adequate eligibility documentation to support the client?s residency and level of income.

The Foundation did not meet the period?s contract goals in relation to the following service delivery goals:See Schedule of Findings and Questioned Costs for chart/table

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION