Audit 369415

2024 – 001 (Allowability) Federal Agency: U.S. Department of Commerce Program, Assistance Listing Number: 11.611 – Manufacturing Extension Partnership Federal Award Identification Number and Year: 70NANB23H099 2024 Pass-Through Agency: National Institute of Standards and Technology Award Periods: January 1, 2024-December 31, 2024 Type of Finding: Significant deficiency in Internal Control over Compliance and Other Matter. Condition: During testing of compliance with federal award requirements, it was noted that the Organization charged 100% of payroll processing fees to the federal grant. These costs were not directly attributable to the grant and should have been allocated proportionally based on the direct benefit to the program. Criteria or Specific Requirement: Per the Uniform Guidance (2 CFR §200), costs charged to federal awards must be allowable, allocable, and reasonable. Indirect or shared costs must be allocated using a reasonable and consistent methodology that reflects the relative benefit to the federal program. Questioned costs : None. Context : Two of the forty disbursement expenses met the criteria described in this finding. The population contained $1,967 in total expenses of this nature. Effect: Unallowable costs were charged to the federal award, resulting in noncompliance with cost principles. While the dollar amount may not be material, the deficiency represents a breakdown in internal control that could lead to future questioned costs or audit findings. Cause: The Organization lacked adequate internal controls to ensure that shared administrative costs were properly evaluated and allocated. There was no documented methodology or review process to determine the appropriate portion of these costs that should be charged to the grant. Repeat Finding: No. Recommendation: We recommend that the Organization update the cost allocation plan for shared expenses. This plan should include documented procedures for evaluating and allocating costs based on direct benefit to federal programs, and should be reviewed periodically for compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has initiated corrective actions. Please see management’s planned corrective action in a separate letter.