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We audited the Arkansas Department of Health’s (State agency) Public Health Preparedness and Response for Bioterrorism Program (Program) funding for the budget periods August 31, 1999, to August 30, 2000; August 31, 2000, to August 30, 2001; and August 31, 2001, to August 30, 2003 to determine whether the State agency (1) ensured that Program funds were not used to supplant current State or local funding; (2) recorded and reported Program funds awarded, expended, obligated, and unobligated by focus area in accordance with the cooperative agreement; and (3) ensured that Program funds were used for necessary, reasonable, allocable, and allowable costs in accordance with the terms of the cooperative agreement. The State agency (1) supplanted State funds with Federal funds; (2) did not submit a final Financial Status Report for the budget period August 31, 2001, to August 30, 2003, and did not submit the interim report by focus area; (3) reported over $2 million as unobligated on its interim Financial Status Report for budget period August 31, 2001, to August 30, 2003; (4) was unable to reconcile the Financial Status Report to the accounting records for the budget period August 31, 2000, to August 30, 2001, and locate two invoices, totaling approximately $35,000, requested for the budget period August 31, 1999, to August 30, 2000; (5) did not allocate employees’ time and effort to reflect the actual percentage of time devoted to the Program; and (6) charged State-funded positions to the Program in two instances without the knowledge of Program officials.
We recommended that the State agency provide the Centers for Disease Control (CDC) with documentation on the supplanting of State funds and request guidance on how to appropriately resolve this issue. In addition, we recommended that the State agency implement internal control procedures and a time allocation system. In a written response to our report, the State agency either provided explanations for its actions or explained what steps it has taken to address our findings.