Audit 373101

Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Compact Sector Grants Area: Allowable Costs/Costs Principles Questioned Costs: $7,080 Criteria: In accordance with grant award D23AF00012, Compact Sector Grant assistance may not be obligated for international travel during Fiscal Year 2023. Condition: For 1 (or 5%) of 21 samples tested, Compact Sector Grant assistance was used for international travel. Sector Grant Acct_Num FY23 Expenditure D23AF00012 10-90-92-10195-23-8331 $7,080 Cause: The State did not effectively enforce monitoring controls over compliance with allowable costs/cost principles requirements as stipulated in the grant awards. Effect: The State is in noncompliance with the applicable allowable costs/cost principles requirements, and total questioned costs of $7,080 are reported because the projected questioned costs exceed the $25,000 threshold. Recommendation: Responsible personnel should take steps to verify that Compact Sector Grant assistance is used for allowable purposes and in line with grant award D23AF00012. Views of Responsible Officials: Management agrees with the finding. Refer to separate Corrective Action Plan.

Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Compact Sector Grants Area: Procurement, Suspension and Debarment Questioned Costs: $40,345 Criteria: 2 CFR section 180.300 requires entities, that enter into covered transactions, must verify that the person with whom they intend to do business, is not excluded or disqualified by: a.) Checking SAM.gov Exclusions; or b.) Collecting a certification from that person; or c.) Adding a clause or condition to the covered transaction with that person. Condition: Out of 25 samples tested (100%), the State did not perform the required verification of individuals as mandated by 2 CFR section 180.300. Cause: There is no procedure in place for verifying the debarment, suspension, or exclusion status of entities prior to entering into covered transactions. Effect: The State is noncompliant with the applicable requirements. Questioned costs of $40,345 are reported as it exceeds the $25,000 threshold to report projected questioned costs. Recommendation: The State should establish and implement formal procedures to verify the debarment, suspension, or exclusion status of entities before entering into covered transactions. This process should include regular checks against the System for Award Management (SAM) database and other relevant resources. Views of Responsible Officials: Management agrees with the finding. Refer to separate Corrective Action Plan.

Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Compact Sector Grants Area: Reporting Questioned Costs: $0 Criteria: In accordance with Compact Sector Grants, a SF-425 Federal Financial Report and a narrative project status report will be submitted quarterly for the periods beginning October 1, January 1, April 1, July 1 and ending September 30. Condition: For 1 (or 13%) of 8 samples tested, a SF-425 Federal Financial Report was not submitted. Cause: The State did not effectively monitor the submission of all required reports. Effect: The State is not compliant with the applicable reporting requirement. Recommendation: Responsible personnel should take steps to verify that all required reports are submitted in accordance with the grant agreement. Views of Responsible Officials: Management agrees with the finding. Refer to the Corrective Action Plan.