Audit 411415

Finding No. 2025-001 U.S. Department of Commerce National Oceanic and Atmospheric Administration Assistance Listing No. (ALN) 11.999 – Abandoned and Derelict Vessels (ADV) - Leveraging Strategic Partnerships for Removal, Disposal, Prevention and Education Type of finding – Material Weakness in Internal Controls and Non-Compliance over Subrecipient Monitoring Repeat Finding – No Criteria The BoatU.S. Foundation (BoatU.S.) team coordinates the subrecipient monitoring process for the ADVs - Leveraging Strategic Partnerships for Removal, Disposal, Prevention and Education. ADVs program is funded by the US Department of Commerce, passed through by National Oceanic and Atmospheric Administration (NOAA). Per 2 CFR 200.303(a), BoatU.S. must establish and maintain effective internal controls over Federal awards that provides reasonable assurance that they are managing Federal awards in compliance with Federal statues, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs. Per 2 CFR Section 200.332, all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the certain information at the time of the subaward and if any of these data elements change, include the changes in the subsequent award modification. Required information includes: (1) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number (ALN) at the time of disbursement, and, (2) A non-Federal entity that expends $1 million or more in Federal awards during the non-Federal entity's fiscal year must have a single audit conducted in accordance with § 200.514 except when it elects to have a program-specific audit conducted in accordance with paragraph (c) or (d) of this section. Also, per 2 CFR Section 200.332, the pass-through entity is responsible for monitoring the activities of the subrecipient, as necessary, to ensure that the subaward is used for authorized purposes, in compliance with the Federal statutes, regulations, and the terms and conditions of the subaward; and that the subaward performance goals are achieved. Condition BoatU.S. Foundation did not incorporate the need for a single audit for subrecipients that expend more than $1 million of federal funding in a given fiscal year into the fiscal year 2025 contracts and the contracts and disbursements currently do not indicate ALN number at the time of each disbursement. Regarding subrecipient monitoring, no substantial documentation of onsite monitoring and validation of subrecipient costs being used for authorized purposes was performed. BoatU.S. Foundation Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2025 Cause BoatU.S.’s internal controls relating to subrecipient monitoring were not effective to properly monitor, obtain information and document the subrecipient monitoring process. Effect BoatU.S. was not in compliance with federal monitoring compliance regulations due to having insufficient documentation. Questioned Costs Unknown Recommendation: BoatU.S. should ensure that all requirements are incorporated into subrecipient contracts and disbursement information. BoatU.S. should also strengthen documentation of onsite and all monitoring procedures performed. Finally, BoatU.S. should implement stronger controls to ensure timely receipt of biannual subrecipient expense reports. Views of Responsible Officials: Management concurs with the audit finding. Corrective Action Plan: The BoatU.S. ADVs contract will be amended for fiscal year 2026 contracts to include the ALN, and the need for a Single Audit for subrecipients that expend over $1,000,000 in federal funding in their given fiscal year. BoatU.S. will implement stricter deadlines for subrecipients to submit their biannual reports in 2026. Progress monitoring will be done throughout the year and documented by BoatU.S. personnel. This should also include project cost documentation of the subrecipient is used for authorized purposes. These reports may need to include photos of the tasks completed, if necessary. BoatU.S. plans to only reimburse for progress costs as incurred by the subrecipient. Implementation date: September 2026 Responsible Person: Alison Trimble, Director, Operations