Audit 381145

Finding # 2025-001 Type: Material weakness over allowable costs Type: Immaterial noncompliance over allowable costs Assisting Listing Number: 43.001 Federal Agency: National Aeronautics and Space Administration Name of Federal Program: Science Requirement: There should be sufficient segregation of duties over the general ledger and government grant accounting. Condition: One individual computes the indirect charges and prepares the drawdown requests without a secondary review by a senior member of management. Context: Two out of forty expenses tested were completed by one individual with no review. Three out of four cash draws tested were submitted with no secondary review. Immaterial errors were noted in amounts charged for indirect costs. Cause: Controls for reviews and approvals were not consistently followed. Effect: Amounts charged to contracts for indirect costs or draw down requests could be inaccurate. Questioned Costs: Insignificant. Recommendation: Management should establish a consistent procedure to ensure indirect rate calculations and monthly billings are reviewed prior to submission. Management Response: Management has implemented and formalized policies and procedures governing the preparation, review, and timely submission of federal reports. Management has also transitioned to an accounting software that limits the ability for indirect rate calculations to be completed by one individual. Monthly draw requests will be completed by the Finance Director during month-end close and submitted to the Chief Financial Officer for review prior to submission.

Finding # 2025-002 Type: Material weakness over procurement Type: Noncompliance over procurement Assisting Listing Number: 43.001 Federal Agency: National Aeronautics and Space Administration Name of Federal Program: Science Requirement: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Condition The Organization does not have controls or a policy in place to ensure compliance with this requirement. Context The Organization will occasionally check to determine if vendors are suspended or debarred but they do not have a consistent process or controls to ensure that no vendors used for “covered transactions” are suspended or debarred. Of the three transactions examined, no vendors were identified that were suspended or debarred. In addition, there is not a competitive bid process over the defined thresholds for comparative pricing. Cause Management has not instituted controls or policy over this compliance requirement. Effect This could result in the Organization engaging in activities with a vendor that is suspended or debarred. It may also result in a contracted price that is not favorable to the Organization. Questioned Costs: None noted. Recommendation Management should establish a consistent procedure to verify that vendors are not suspended or debarred and implement controls that are documented to support this process. A procurement policy should also be implemented consistent with the aforementioned guidance. Management’s Response Management is developing a vendor procurement policy as well as procedures for setting up new vendors and retaining documentation for any vendor confirmations.

Finding # 2025-003 Type: Material weakness reporting Type: Noncompliance over reporting Assisting Listing Number: 43.001 Federal Agency: National Aeronautics and Space Administration Name of Federal Program: Science Requirement Federal Financial Reports (FFR) are due within 30 days following the end of each quarter. There should be controls in place to ensure reports are prepared, reviewed and submitted timely. Condition The FFR were not reviewed prior to submission by a secondary individual and were not submitted timely. Context The five examined FFR reports were all filed after the compliance period, of which only one was appropriately reviewed. Cause Controls for reviews, approvals, and submission were not implemented or consistently followed. Effect The reporting deadline was not monitored, resulting in the report being filed late. Questioned Costs None identified Recommendation Management should establish a consistent procedure to review and approve reports before submission by a member of management different from the preparer. Management’s Response Management is developing a tracking system to ensure reports are compiled by the Director of Finance and reviewed by Chief Financial Officer, and submitted prior to the deadline date.