2022-004 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430.
Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one year end journal entry as a program expense. Upon review of the supporting documentation for the journal entry, it was noted that one individual included in the allocation was no longer an employee of the Organization during the year ended June 30, 2022.
Cause: The Organization lacks written policies, approval procedures and documentation to allocate senior personnel effort and time costs to program accounting records.
Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-005 in the prior year.
Recommendation: We recommend the Organization strengthen its controls and processes over time and effort allocations by establishing written policies, timesheet allocations, approvals and segregation of duties in compliance with 2 CFR 200.430.
Response: The Organization will improve its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes.
Questioned Costs: $10,000 – Based on the support for the journal entry, this is the amount allocated for the individual that was no longer an employee of the Organization during the year ended June 30, 2022.
2022-005 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: Program costs for allocation of indirect costs were based on percentage of total costs at year end and not allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414.
Condition: Our testing noted that program charges include journal entries allocate indirect costs without necessary review and approvals to ensure allowability of the costs to program activities.
Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program.
Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-006 in the prior year.
Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company.
Response: The Organization will allocate indirect costs to program costs based on incurred costs. Monthly allocations will be approved by the program administrator and separately reported in the general ledger.
Questioned Costs: $78,400 – This is the amount of indirect costs charged to the program.
2022-006 Subaward Monitoring
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: Written documentation pertaining to the identification, risk assessment of and monitoring of sub awardees was not available as required by 2 CFR 200.331-333.
Condition: The Organization lacked documentation to indicate compliance with subaward monitoring responsibilities required Per 2 CFR 200.331-333, including the policies and procedures to identify and assess risks and monitor subaward recipients as required by grant recipients.
Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities.
Effect: The organization is not compliant with 2 CFR 200.331-333 which requires the Organization to monitor that the sub awardee is maintaining adequate financial reporting, recordkeeping and compliance with respect to funds received. The Organization could not document sub-awardee risk assessment or monitoring or reviewed debarment or suspension of the sub-awardee.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-007 in the prior year.
Recommendation: We recommend the Organization establish policy and procedures to document how sub awardees are selected, monitored and perform required risk assessment pertaining to the selection of the sub awardee.
Response: The Organization will establish appropriate procedures for sub awardee monitoring.
Questioned Costs: None
2022-007 Allowable Cost Documentation
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: 2 CFR 200.403 requires that costs must be adequately documented.
Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card.
Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program.
Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented.
Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year.
Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program.
Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges.
Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.
2022-008 Allowable Cost Determination and Subaward Monitoring
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP).
Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient.
Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities.
Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP).
Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year.
Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant.
Response: The Organization will establish appropriate procedures for sub awardee monitoring.
Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.
2022-004 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430.
Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one year end journal entry as a program expense. Upon review of the supporting documentation for the journal entry, it was noted that one individual included in the allocation was no longer an employee of the Organization during the year ended June 30, 2022.
Cause: The Organization lacks written policies, approval procedures and documentation to allocate senior personnel effort and time costs to program accounting records.
Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-005 in the prior year.
Recommendation: We recommend the Organization strengthen its controls and processes over time and effort allocations by establishing written policies, timesheet allocations, approvals and segregation of duties in compliance with 2 CFR 200.430.
Response: The Organization will improve its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes.
Questioned Costs: $10,000 – Based on the support for the journal entry, this is the amount allocated for the individual that was no longer an employee of the Organization during the year ended June 30, 2022.
2022-005 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: Program costs for allocation of indirect costs were based on percentage of total costs at year end and not allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414.
Condition: Our testing noted that program charges include journal entries allocate indirect costs without necessary review and approvals to ensure allowability of the costs to program activities.
Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program.
Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-006 in the prior year.
Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company.
Response: The Organization will allocate indirect costs to program costs based on incurred costs. Monthly allocations will be approved by the program administrator and separately reported in the general ledger.
Questioned Costs: $78,400 – This is the amount of indirect costs charged to the program.
2022-006 Subaward Monitoring
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: Written documentation pertaining to the identification, risk assessment of and monitoring of sub awardees was not available as required by 2 CFR 200.331-333.
Condition: The Organization lacked documentation to indicate compliance with subaward monitoring responsibilities required Per 2 CFR 200.331-333, including the policies and procedures to identify and assess risks and monitor subaward recipients as required by grant recipients.
Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities.
Effect: The organization is not compliant with 2 CFR 200.331-333 which requires the Organization to monitor that the sub awardee is maintaining adequate financial reporting, recordkeeping and compliance with respect to funds received. The Organization could not document sub-awardee risk assessment or monitoring or reviewed debarment or suspension of the sub-awardee.
Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-007 in the prior year.
Recommendation: We recommend the Organization establish policy and procedures to document how sub awardees are selected, monitored and perform required risk assessment pertaining to the selection of the sub awardee.
Response: The Organization will establish appropriate procedures for sub awardee monitoring.
Questioned Costs: None
2022-007 Allowable Cost Documentation
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: 2 CFR 200.403 requires that costs must be adequately documented.
Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card.
Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program.
Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented.
Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year.
Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program.
Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges.
Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.
2022-008 Allowable Cost Determination and Subaward Monitoring
Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22)
Federal Agency: National Science Foundation
Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP).
Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient.
Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities.
Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP).
Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year.
Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant.
Response: The Organization will establish appropriate procedures for sub awardee monitoring.
Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.