Audit 314879

FY End
2023-12-31
Total Expended
$41.55M
Findings
2
Programs
2
Organization: Technoserve, Inc. (VA)
Year: 2023 Accepted: 2024-07-11
Auditor: Rsm US LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
478190 2023-001 Material Weakness - Cash Management
1054632 2023-001 Material Weakness - Cash Management

Programs

ALN Program Spent Major Findings
10.606 Food for Progress $336,385 - 0
98.001 Usaid Foreign Assistance for Programs Overseas $147,309 Yes 0

Contacts

Name Title Type
M2MWD2VFJ468 Jeff Chrisfield Auditee
2027191307 Thomas J. Sneeringer Auditor
No contacts on file

Notes to SEFA

Title: Note 1. Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The entity does not use the 10% rate option as it negotiates a formal indirect rate agreement with its oversight agency for use on all federal grants. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of TechnoServe, Inc. and Affiliates (TechnoServe) under programs of the federal government for the year ended December 31, 2023. The information in this 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 (Uniform Guidance). Because the Schedule presents only selected portions of the operations of TechnoServe, it is not intended to and does not present the financial position, changes in net assets or cash flows of TechnoServe.
Title: Note 2. Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The entity does not use the 10% rate option as it negotiates a formal indirect rate agreement with its oversight agency for use on all federal grants. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Title: Note 3. Indirect Costs Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The entity does not use the 10% rate option as it negotiates a formal indirect rate agreement with its oversight agency for use on all federal grants. TechnoServe has elected not to use the 10% de minimis cost rate allowed under the Uniform Guidance.
Title: Note 4. Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The entity does not use the 10% rate option as it negotiates a formal indirect rate agreement with its oversight agency for use on all federal grants. Amounts to subrecipients shown separately in the Schedule are also a component of the federal expenditures selected.
Title: Note 5. Monetization Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amount shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The entity does not use the 10% rate option as it negotiates a formal indirect rate agreement with its oversight agency for use on all federal grants. Under U.S. Public Law 480, Title II, the United States Department of Agriculture (USDA) has provided agricultural commodities to TechnoServe for the purpose of promoting food security and agricultural market development under the Food for Progress Program. During the year ended December 31, 2023, TechnoServe had six USDA Food for Progress awards active in the following countries: Benin, Ecuador, El Salvador, Guatemala, Nicaragua, Peru, Mozambique, Cote d’lvoire, Ghana, Nigeria, Ethiopia, Burundi and Honduras. The commodities granted to TechnoServe are sold as received to local agro-processing firms or other local buyers. The proceeds from the sales of donated commodities are used to finance TechnoServe’s development activities in the above-mentioned countries. At December 31, 2023, TechnoServe had $49,523,291 of funds on hand from such activities.

Finding Details

Finding No. 2023-001 – Cash Management and Subrecipient Monitoring Controls Material Weakness Federal Agency: United States Agency for International Development (USAID) Federal Assistance Listing Number: ALN 98.001 Federal Program: USAID Foreign Assistance for Programs Overseas Award Name: Advancing Food Fortification Opportunities to Reinforce Diets (USAID AFFORD) Award Number: 7200AA22LE00002 Criteria: Per 2 CFR 200.303, recipients of federal awards must establish and maintain effective internal control over federal awards to provide reasonable assurance that federal awards are managed in a way that is compliant with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Payments totaling approximately $331,000 intended to a subrecipient were fraudulently diverted by an employee for personal gain. Cause: Ineffective control procedures allowed for changes in payment instructions. Effect: Misappropriation of assets of approximately $331,000. Reportable questioned costs: None Context: Cash disbursements of federal funds intended for subrecipients of the federal program were misappropriated due to a man-in-the-middle email scheme perpetrated by a TechnoServe program manager. The intended subrecipient was paid and TechnoServe was able to recover most of the losses through the bank and insurance. Repeat Finding: No Recommendation: We recommend TechnoServe review and strengthen controls in place around cash management disbursements and subrecipient monitoring. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Finding No. 2023-001 – Cash Management and Subrecipient Monitoring Controls Material Weakness Federal Agency: United States Agency for International Development (USAID) Federal Assistance Listing Number: ALN 98.001 Federal Program: USAID Foreign Assistance for Programs Overseas Award Name: Advancing Food Fortification Opportunities to Reinforce Diets (USAID AFFORD) Award Number: 7200AA22LE00002 Criteria: Per 2 CFR 200.303, recipients of federal awards must establish and maintain effective internal control over federal awards to provide reasonable assurance that federal awards are managed in a way that is compliant with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Payments totaling approximately $331,000 intended to a subrecipient were fraudulently diverted by an employee for personal gain. Cause: Ineffective control procedures allowed for changes in payment instructions. Effect: Misappropriation of assets of approximately $331,000. Reportable questioned costs: None Context: Cash disbursements of federal funds intended for subrecipients of the federal program were misappropriated due to a man-in-the-middle email scheme perpetrated by a TechnoServe program manager. The intended subrecipient was paid and TechnoServe was able to recover most of the losses through the bank and insurance. Repeat Finding: No Recommendation: We recommend TechnoServe review and strengthen controls in place around cash management disbursements and subrecipient monitoring. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.