Audit 408898

Finding Number: 2025-002 Compliance Requirement: Subrecipient Monitoring Program: Government Department /Agency: PhysTEC: Community Models that Transform Physics National Science Foundation (NSF) Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The National Science Foundation’s Proposal & Award Policies & Procedures Guide (PAPPG) (NSF 24-1) Part II Chapter VII B.4. - Subawarding or Transferring Part of an NSF Award (Subaward) states that - “Excluding the purchase of items such as commercially available materials and supplies, equipment, or general support services allowable under the award, no part of an NSF award may be subawarded or transferred to another organization without prior NSF authorization. The intent to enter into such arrangements should be disclosed in the proposal. If it becomes necessary to subaward or transfer part of an NSF award after an award has been made, the recipient shall submit, at a minimum: a. a clear description of the work to be performed by each subrecipient; b. a separate budget and budget justification for each subaward; and c. If funding is requested to support a postdoctoral researcher, and the original proposal did not include a mentoring plan, then the request must include the requisite mentoring plan as described in Chapter II.C.2.j. The plan must be uploaded under “Mentoring Plan” in the Supplementary Documentation section of Research.gov. The request must be signed and submitted by the Authorized Organizational Representative (AOR) via use of NSF’s electronic systems, and NSF authorization will be indicated by an amendment to the award signed by the Grants and Agreements Officer. The NSF award terms and conditions will identify which articles flow-down to subrecipients. Condition: During testing of subrecipient activity, we noted that APS issued 3 new subawards under the NSF grant after the original award date without obtaining prior NSF authorization. APS indicated it believed explicit NSF approval was not required and that subaward information was communicated through its annual reports to NSF. Questioned Costs: Not Determinable. Context: During testing of APS’ subrecipient activity, 3 new subawards were issued after the award date without evidence that prior NSF authorization was requested by the AOR and approved through an award amendment by the Grants and Agreements Officer. Effect: APS was not in compliance with NSF award requirements, which increases the risk of questioned costs, noncompliance with award terms, and potential administrative action by NSF. Cause: APS’ internal controls did not ensure personnel identified and complied with NSF prior-approval requirements for post-award subawards, and APS personnel misunderstood annual reporting to be sufficient in place of specific prior authorization. Repeat Finding: No. Recommendation: APS should enhance its grant compliance review procedures to require documented assessment of prior-approval requirements before executing post-award subawards and obtain and retain written NSF authorization, when required, before subawards are issued. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.

Finding Number: 2025-001 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Programs: Government Department /Agency: Travel: DFD Meeting Travel Grant Program National Science Foundation (NSF) Assistance Listing Number: 47.041 Award Number: CBET-2434521 Award years: 7/01/2024 – 2/28/2026 PhysTEC: Community Models that Transform Physics Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 National Physics REU Leadership Group Workshop and Community-Building Assistance Listing Number: 47.049 Award Number: PHY-2011908 Award years: 06/01/2020 – 12/31/2025 Inclusion Across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science Assistance Listing Number: 47.076 Award Number: HRD-1834540 Award years: 09/01/2018 – 05/02/2025 Changing Physics and Astronomy Education Culture: A Reflective Practice Model of Faculty Development to Support Diversity, Equity, Inclusion, and Excellence Assistance Listing Number: 47.076 Award Number: DUE-2141678 Award years: 05/01/2022 – 04/30/2027 Collaborative Research: Mobilizing Physics Teachers to Promote Inclusive and Communal Classroom Cultures through Everyday Actions Assistance Listing Number: 47.076 Award Number: DRL-2300608 Award years: 09/15/2023 – 04/25/2025 Inclusive Graduate Programs: An AGEP Pilot in Physics Assistance Listing Number: 47.076 Award Number: 60066090 APS Award years: 08/15/2023 – 05/02/2025 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. g) Be adequately documented.” Condition: During our test work over payroll transactions for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that 3 of 40 sampled transactions were duplicate charges to the program. In response, APS reviewed the full payroll population and determined that the total amount of duplicated payroll charges was $29,181. APS subsequently corrected the Schedule of Expenditures of Federal Awards (SEFA) to remove all duplicated costs. Questioned Costs: $29,181. Context: This is a condition identified per review of APS’ compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $48,928. Effect: Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause: APS did not maintain effective internal controls during one month of the year to ensure that only allowable costs were charged to the program, due to internal controls not operating as intended following a system enhancement to the grants management timekeeping system. Repeat Finding: No. Recommendation: BDO recommends that management strengthen controls over payroll processing and grant expenditure review to ensure salary costs charged to federal awards are accurate, supported, and recorded only once. Specifically, management should implement and document a review control to identify duplicate payroll postings before and after upload to the general ledger and grant ledger, reconcile payroll charges to approved payroll records on a timely basis, and investigate and resolve any exceptions noted. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.