Audit 366729

Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020 through September 27, 2025 Criteria or specific requirement: 2 CFR 200.329(c)(1) states that “the non-federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity”. Per the award agreement for contract W912DW-20-2-0003, "Recipient shall submit to the Agreement Administrator progress reports on a quarterly basis. Reports are due no later than 30 days following the end of each reporting period”. Condition: One of two quarterly performance progress reports (SF-PPR) tested was not submitted timely. The report was due within 30 days of June 30, 2024, but was not submitted until August 14, 2024. Questioned costs: None. Context: CLA tested two of four SF-PPRs due during the audit period. One of these reports was submitted 14 days after the submission due date. Cause: Late filing is due to a lack of adherence to the due dates as defined within the contract terms. The Organization does not have adequate controls in place to ensure timely report submissions. Effect: Not filing reports on a timely basis can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities' ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Repeat finding: The finding is a repeat of a finding in the immediate prior year. The prior year finding number was 2023-004. Recommendation: CLA recommends for the Organization to place emphasis on stronger controls around the timely filing of required reports, such as retaining a monthly checklist of required reconciliations and reports. Views of responsible officials: There is no disagreement with the audit finding.

Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020 through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain a record sufficient to detail the history of procurement”. Condition: A formal procurement policy was not adopted until partway through FY24. One procurement lacked adequate documentation to support the history and reasoning behind the procurement. Questioned costs: $3,729 known questioned costs. Context: Internal procurement policies were updated to match UG requirements after FY23 audit procedures identified deficiencies. The new policies were adopted on April 8, 2024, and then amended further on August 1, 2024, which was approximately two months before the final audit report was issued. One of seven procurements tested lacked adequate supporting documentation to support the history and reasoning behind the procurement and one additional selected procurement did not have adequate evidence of internal controls to support the procurement. These procurements were both small purchases that were procured in February and March 2024, respectively, prior to the adoption of the final procurement policies. Cause: Prior to completing the prior year’s audit, staff were not aware of the specific compliance requirements and procedures for procurement. Effect: Purchases may occur that do not follow the procurement standards as required by Uniform Guidance and could lead to expenditure of federal funds that are not suitable or preferrable to the federal program. Repeat finding: The finding is a repeat of a finding immediately in the prior year. The prior year finding number was 2023-002. Recommendation: CLA recommends regular review of the Organization's procurement policies to ensure they continue to meet procurement standards, as set by Uniform Guidance, and they continue to be consistently implemented. CLA also recommends reviewing internal controls surrounding procurements to ensure they are sufficient to prevent noncompliance. Views of responsible officials: There is no disagreement with the audit finding.

Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020 through September 27, 2025 Criteria or specific requirement: Per 2 CFR 200.414(f), "recipients and subrecipients that do not have a current Federal negotiated indirect cost rate (including provisional rate) may elect to charge a de minimis rate of up to 15% [formerly 10%] of modified total direct costs (MTDC)”. Condition: One of the Organization's requests for reimbursement requested indirect costs in excess of the 10% de minimis rate that was allowable at the time of the request. Questioned costs: $8,519 known questioned costs. Context: This was deemed to be an isolated incident as it only applied to the first drawdown request of FY24, which was the first request since the Organization transitioned from having a Federal negotiated indirect cost rate agreement (NICRA) to using the de minimis rate. Cause: Due to confusion about the timing of the transition from a NICRA to using the de minimis rate. Effect: Indirect costs in excess of the allowable indirect cost rate may be charged to the federal program. Any costs in excess of the allowable amount may be considered unallowable costs and may be required to be reimbursed to the federal program. Repeat finding: No Recommendation: CLA recommends additional internal scrutiny and controls surrounding applicable compliance requirements when there is a change in policies and procedures, such as the change in effective indirect cost rate. Views of responsible officials: There is no disagreement with the audit finding.