Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.
Finding 2022-002: Tracking of Federal Expenses and Preparation of the Schedule of Expenditures
of Federal Awards (SEFA)
Criteria: Title 2 CFR 200 Section 200.510 “Financial Statements” requires recipients of Federal funds
to prepare a SEFA for the period covered by the auditee's financial statements which must include the
total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity
must: Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal Government”
issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: USTTI experienced difficulty in preparing and ensuring that all Federal expenditures were
identified, categorized and included in the SEFA. Due to the amount of program codes in the
accounting system, it was difficult to identify which subprogram codes related to the various Federal
programs. Additionally, we noted that indirect costs reported to the Federal granting agencies were not
properly calculated. The condition impacted the entire SEFA which is considered to be a systematic
problem. Cause: The high volume of subprogram codes were contributing factors to the error as well as
improper calculation of the indirect rate on the grants.
Effect: USTTI was unable to prepare the Schedule of Expenditures of Federal Awards.
Questioned Costs: None.
Context: USTTI was unable to complete its SEFA. As it has never prepared a SEFA in the past, the
condition appears to be systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend USTTI prepare its SEFA on a quarterly basis and it should be
reviewed and approved by an individual in a supervisory capacity. The SEFA should be prepared in
accordance with the regulations under Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). USTTI should enhance the review process to ensure the amounts agree to its reported
expenses. Additionally, USTTI should review its indirect rate calculation (i.e. ensuring components are
correctly identified and the mathematical calculations are accurate) to verify it is not charging over its
actual indirect rate.
Finding 2022-003: Procurement
Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement
procedures consistent with the requirements for procurement regulations included in paragraphs 318
through 327.
Condition: We noted procurement procedures are outsourced to a third party and management is
heavily involved in the ultimate decision. However, this policy is not formalized.
Cause: USTTI did not have a documented formal procurement policy in place.
Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the
Criteria section above.
Questioned Costs: None.
Context: USTTI does not have a formal procurement policy, and hence, not in compliance with
Federal standards.
Our audit work in this area consisted of internal control testwork over a random sample of
expenditures, as well as substantive testwork over transactions above a defined threshold from select
expense accounts that were charged to the Federal program. We consider our samples to be
representative of the respective populations, and thus, are statistically valid samples. The issue is
considered systemic in nature. Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2
CFR 200. We then recommend that USTTI management ensure its policy is distributed and
communicated in a formal manner to its employees, and that management properly enforce
compliance with its policy. All procurement actions should be clearly documented in writing and
maintained in the vendor or contractor files.
Finding 2022-004: Suspension and Debarment
Criteria: Under 2 CFR §200.213, Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These
regulations restrict awards, subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or
activities. The non-Federal entity must verify that the person with whom you intend to do business is
not excluded or disqualified, 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.
Condition: During our testing over Suspension and Debarment, we determined that USTTI did not
perform screenings on potential or current vendors, suppliers or contractors that were paid with
Federal funds.
Cause: USTTI does not have a formal internal policy with respect to screening vendors, suppliers,
contractors and employees in order to adhere to compliance over suspension and debarment.
Effect: Failure to screen potential and current vendors, suppliers, contractors and employees
increases the potential that Federal funds be inadvertently provided to parties deemed to be
suspended or disbarred by the United States Government.
Questioned Costs: None.
Context: We noted that vendors, suppliers etc. selected for testing did not have a formally
documented Suspension and Debarment check conducted prior to engagement.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that management develop and implement a formal policy on
suspension and debarment. This policy should include a threshold for when vendors, suppliers,
contractors and employees should be screened. All screenings should be conducted prior to signing a
contract or issuing payment. We recommend that USTTI notify all employees of this policy and ensure
that it is enforced during the upcoming fiscal year.
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.