Audit 14675

FY End

2021-12-31

Total Expended

$1.21M

Findings

2

Programs

1

Organization: Society of Manufacturing Engineers (MI)

Year: 2021 Accepted: 2024-01-31

Auditor: Plante & Moran PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
10889	2021-003	Significant Deficiency	Yes	B
587331	2021-003	Significant Deficiency	Yes	B

ALN	Program	Spent	Major	Findings
12.300	Basic and Applied Scientific Research	$1.21M	Yes	1

Contacts

Name	Title	Type
LXS1B8J23AJ7	Craig Connop	Auditee
3134253218	John Bebes	Auditor
No contacts on file

Notes to SEFA

Accounting Policies: The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of SME and SME Education Foundation (the “Organization”) under programs of the federal government for the year ended December 31, 2021. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, functional expenses, or cash flows of the Organization. Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Organization has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate to recover indirect costs, as allowed under the Uniform Guidance.

Finding Details

Finding 2021-003

Assistance Listing Number, Federal Agency, and Program Name - 12.300, Office of Naval Research, Research and Development Cluster Federal Award Identification Number and Year - N0001 19 S F006 Finding Type - Significant deficiency Repeat Finding - Yes 2020 001 Criteria - Per 2 CFR 430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100 percent of compensated activities. Condition - The budgeting and billing methods used did not impose limitations, as required by the terms and provisions of the grant agreement. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - Originally identified in 2020, the Organization initially charged amounts to the grant that exceeded actual compensation costs. This was resolved in late 2021, and, as a result, the Organization did not submit reimbursement requests to the Office of Naval Research until a revised budget was approved and correct billing practices put in place. Cause and Effect - The Organization did not have the internal controls in place to identify this error and was unable to correct it until a third party consultant was hired to correct the error. Recommendation - Management should implement controls to ensure expenditures charged to the grant accurately reflect the work performed and comply with terms and provisions of the grant agreement. Views of Responsible Officials and Corrective Action Plan - The Organization acknowledges this finding. Billing for 2021 and 2022 was held once the error was discovered to avoid exacerbating the problem. The amount that was overbilled was returned to the agency by reducing the amount of reimbursement requests for 2021. All of the revised billings and reimbursement were completed in November 2022. Management has also implemented controls to ensure expenditures charged to the grant accurately reflect the work performed and comply with terms and provisions of the grant agreement and appointed outside consultants to ensure appropriate billing and indirect cost rate calculations.

Finding 2021-003

Assistance Listing Number, Federal Agency, and Program Name - 12.300, Office of Naval Research, Research and Development Cluster Federal Award Identification Number and Year - N0001 19 S F006 Finding Type - Significant deficiency Repeat Finding - Yes 2020 001 Criteria - Per 2 CFR 430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100 percent of compensated activities. Condition - The budgeting and billing methods used did not impose limitations, as required by the terms and provisions of the grant agreement. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - Originally identified in 2020, the Organization initially charged amounts to the grant that exceeded actual compensation costs. This was resolved in late 2021, and, as a result, the Organization did not submit reimbursement requests to the Office of Naval Research until a revised budget was approved and correct billing practices put in place. Cause and Effect - The Organization did not have the internal controls in place to identify this error and was unable to correct it until a third party consultant was hired to correct the error. Recommendation - Management should implement controls to ensure expenditures charged to the grant accurately reflect the work performed and comply with terms and provisions of the grant agreement. Views of Responsible Officials and Corrective Action Plan - The Organization acknowledges this finding. Billing for 2021 and 2022 was held once the error was discovered to avoid exacerbating the problem. The amount that was overbilled was returned to the agency by reducing the amount of reimbursement requests for 2021. All of the revised billings and reimbursement were completed in November 2022. Management has also implemented controls to ensure expenditures charged to the grant accurately reflect the work performed and comply with terms and provisions of the grant agreement and appointed outside consultants to ensure appropriate billing and indirect cost rate calculations.