Audit 19962

Title: Basis of Presentation Accounting Policies: The SEFA has been prepared in accordance with the accrual basis of accounting and with accounting principles generally accepted in the United States of America, and is consistent with the preparation of the Institutes consolidated financial statements. Amounts reflected in the SEFA include only expenditures of federal awards whereas the corresponding amounts reported in the consolidated financial statements also include expenditures of federal fixed price contracts and nonfederal awards. Such expenditures are recognized following the applicable cost principles wherein certain types of expenditures are unallowable. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.An award is considered expended when the activity related to the award occurs. The activity generally pertains to events requiring compliance with laws, regulations, and the provisions of contract and grant agreements. Direct costs have been recognized on the accrual basis of accounting when costs are incurred. For time and materials contracts, expenditures are recognized as hours and costs are incurred based on negotiated rates. Fees on costplus contracts are recognized as costs are incurred and expenditures include a proportionate share of the fees earned.The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of the Institute and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements. Actual results could differ from those estimates.The Institutes consolidated financial statements include the results of operations of International Resources Group Ltd. (IRG), a for-profit corporation, acquired on January 6, 2017. After the acquisition, IRG continued to be the prime contractor on contracts originally awarded under the Federal Acquisition Regulation prior to the acquisition date through September 30, 2017. Effective October 1, 2017, all but one of these contracts were novated to the Institute to be the prime contractor. The expenditures related to these novated contracts are included in the Institutes SEFA for the year ended September 30, 2022. The one remaining IRG contract that was not novated had approximately $.2 million in revenues for the year ended September 30, 2022. The Institute determined this contract did not meet the definition of a federal award as IRG is not a non-federal entity, as defined in Uniform Guidance. Therefore, the corresponding expenditures incurred during the period related to this contract are not included in the Institutes SEFA for the year ended September 30, 2022. De Minimis Rate Used: N Rate Explanation: The Institute has elected not to use the 10percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs are recovered from the federal government by applying a federally negotiated indirect cost rate or by allocating these costs among benefiting programs in accordance with a federally approved plan. Each programs share of indirect costs is recognized on the accompanying SEFA. The schedule of expenditures of federal awards (the SEFA) includes the federal award activity of the Research Triangle Institute (the Institute) under programs of the federal government for the year ended September 30, 2022. The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the SEFA presents only a selected portion of the operations of the Institute, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Institute. Assistance listing numbers (ALN numbers) are unique numbers assigned to identify Federal Assistance Listings, the publicly available listing of Federal assistance programs managed and administered by the General Services Administration, formerly known as the Catalog of Federal Domestic Assistance. As provided for in the Uniform Guidance, when no ALN number is assigned, the purpose of federal contracts from the same federal agency is assessed, and those made for the same purpose are combined and considered one program. Programs without an ALN number are presented with only the federal agency's two-digit prefix followed by the abbreviation RD for those programs in the research and development cluster or U (i.e. unknown) and sequentially numbered by federal agency in place of an ALN number. The Institute assigns sequential numbers on an annual basis unless a program had already been assigned a number on the SEFA in a prior year. The federal agency two-digit prefixes are as follows: Prefix Federal Agency 10 Department of Agriculture 11 Department of Commerce 12 Department of Defense 14 Department of Housing and Urban Development 15 Department of the Interior 16 Department of Justice 17 Department of Labor 19 Department of State 20 Department of Transportation 21 Department of the Treasury 30 Equal Employment Opportunity Commission 43 National Aeronautics & Space Administration 45 National Endowment for the Arts & Humanities 47 National Science Foundation 64 Department of Veterans Affairs 66 Environmental Protection Agency 81 Department of Energy 84 Department of Education 85 Scholarship Foundations 93 Department of Health and Human Services 97 Department of Homeland Security 98 U.S. Agency for International Development 99 Miscellaneous

Title: Relationship to Federal Financial Reports Accounting Policies: The SEFA has been prepared in accordance with the accrual basis of accounting and with accounting principles generally accepted in the United States of America, and is consistent with the preparation of the Institutes consolidated financial statements. Amounts reflected in the SEFA include only expenditures of federal awards whereas the corresponding amounts reported in the consolidated financial statements also include expenditures of federal fixed price contracts and nonfederal awards. Such expenditures are recognized following the applicable cost principles wherein certain types of expenditures are unallowable. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.An award is considered expended when the activity related to the award occurs. The activity generally pertains to events requiring compliance with laws, regulations, and the provisions of contract and grant agreements. Direct costs have been recognized on the accrual basis of accounting when costs are incurred. For time and materials contracts, expenditures are recognized as hours and costs are incurred based on negotiated rates. Fees on costplus contracts are recognized as costs are incurred and expenditures include a proportionate share of the fees earned.The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of the Institute and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements. Actual results could differ from those estimates.The Institutes consolidated financial statements include the results of operations of International Resources Group Ltd. (IRG), a for-profit corporation, acquired on January 6, 2017. After the acquisition, IRG continued to be the prime contractor on contracts originally awarded under the Federal Acquisition Regulation prior to the acquisition date through September 30, 2017. Effective October 1, 2017, all but one of these contracts were novated to the Institute to be the prime contractor. The expenditures related to these novated contracts are included in the Institutes SEFA for the year ended September 30, 2022. The one remaining IRG contract that was not novated had approximately $.2 million in revenues for the year ended September 30, 2022. The Institute determined this contract did not meet the definition of a federal award as IRG is not a non-federal entity, as defined in Uniform Guidance. Therefore, the corresponding expenditures incurred during the period related to this contract are not included in the Institutes SEFA for the year ended September 30, 2022. De Minimis Rate Used: N Rate Explanation: The Institute has elected not to use the 10percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs are recovered from the federal government by applying a federally negotiated indirect cost rate or by allocating these costs among benefiting programs in accordance with a federally approved plan. Each programs share of indirect costs is recognized on the accompanying SEFA. The regulations and guidelines governing the preparation of federal financial reports vary by federal agency and among programs administered by the same agency. Accordingly, the amounts reported in the federal financial reports do not necessarily agree with the amounts reported in the accompanying SEFA, which is prepared as explained in Notes 1 and 2 above.

Title: Subrecipients Accounting Policies: The SEFA has been prepared in accordance with the accrual basis of accounting and with accounting principles generally accepted in the United States of America, and is consistent with the preparation of the Institutes consolidated financial statements. Amounts reflected in the SEFA include only expenditures of federal awards whereas the corresponding amounts reported in the consolidated financial statements also include expenditures of federal fixed price contracts and nonfederal awards. Such expenditures are recognized following the applicable cost principles wherein certain types of expenditures are unallowable. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.An award is considered expended when the activity related to the award occurs. The activity generally pertains to events requiring compliance with laws, regulations, and the provisions of contract and grant agreements. Direct costs have been recognized on the accrual basis of accounting when costs are incurred. For time and materials contracts, expenditures are recognized as hours and costs are incurred based on negotiated rates. Fees on costplus contracts are recognized as costs are incurred and expenditures include a proportionate share of the fees earned.The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of the Institute and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements. Actual results could differ from those estimates.The Institutes consolidated financial statements include the results of operations of International Resources Group Ltd. (IRG), a for-profit corporation, acquired on January 6, 2017. After the acquisition, IRG continued to be the prime contractor on contracts originally awarded under the Federal Acquisition Regulation prior to the acquisition date through September 30, 2017. Effective October 1, 2017, all but one of these contracts were novated to the Institute to be the prime contractor. The expenditures related to these novated contracts are included in the Institutes SEFA for the year ended September 30, 2022. The one remaining IRG contract that was not novated had approximately $.2 million in revenues for the year ended September 30, 2022. The Institute determined this contract did not meet the definition of a federal award as IRG is not a non-federal entity, as defined in Uniform Guidance. Therefore, the corresponding expenditures incurred during the period related to this contract are not included in the Institutes SEFA for the year ended September 30, 2022. De Minimis Rate Used: N Rate Explanation: The Institute has elected not to use the 10percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs are recovered from the federal government by applying a federally negotiated indirect cost rate or by allocating these costs among benefiting programs in accordance with a federally approved plan. Each programs share of indirect costs is recognized on the accompanying SEFA. The Institute must make case-by-case determinations whether each agreement it makes for the disbursement of federal program funds casts the party receiving the funds as a subrecipient or a contractor based on the Uniform Guidance definitions and managements judgement. The total amount identified as provided to subrecipients during the year ended September 30, 2022 was $76.0 million.