Finding 2025-002: Significant Deficiency in Internal Control over Compliance - Completeness of Schedule of Expenditures of Federal Awards (SEFA) Agency: National Aeronautics and Space Administration ALN: 43.003 and 43.008 Condition and Context: During the audit, we identified $479,625 of federal expenditures that were excluded from the SEFA. However, the related expenses were recorded in the expense general ledger. In addition, an audit adjusting entry was posted to record grant revenue and accounts receivable related to this activity. Criteria: Management is responsible for the proper preparation and reconciliation of the SEFA. Cause: The year-end financial reporting process did not include an accurate reconciliation of grant agreements, reimbursement requests, and other supporting documentation to the general ledger and SEFA. Effect: The SEFA was incomplete by $479,625 prior to audit adjustment because federal expenditures were excluded from the SEFA even though the related expenses were recorded in the expense general ledger. Questioned Costs: $-0-. Repeated Finding: The finding is similar to prior-year Finding 2024-002; however, the current-year finding relates to SEFA completeness and the exclusion of federal expenditures from the SEFA. Recommendation: We recommend that NCRP strengthen its grant accounting and financial reporting controls to ensure that all grant revenue and related expenditures are completely and accurately recorded in the general ledger and reported in the SEFA. We continue to recommend, as part of the system of internal controls over the monthly and year-end closing process, that the outsourced and internal accounting staff communicate and coordinate efforts relating to the closing process. Management Response: NCRP agrees with the finding. The procedures established after Finding 2024-002 did not detect this item, and management's review was not documented. The Financial Manager will maintain an award-level schedule of federal expenditures, reconciled monthly to the general ledger, and the President and an accounting reviewer will review and sign off on the SEFA before it is given to the auditors.
Finding 2025-003: Significant Deficiency - Late Submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse Agency: Department of Health and Human Services, National Aeronautics and Space Administration, and Department of Energy ALN: 93.070, 43.003, 43.008, and 81.108 Condition and Context: NCRP submitted their Single Audit Reporting Package late for the year ended December 31, 2024, to the Federal Audit Clearinghouse. Criteria: NCRP is required to adhere to reporting deadlines. The single audit submission to the Federal Audit Clearinghouse is due the earlier of nine months after fiscal year end or 30 days after the audit report is finalized. Cause: Due to inadequacies in the financial and year-end closing process resulting from the lack of communication between the in-house accountant and the outsourced accountants and the transition to new accounting software, the single audit submission to the Federal Audit Clearinghouse was not filed on time for 2024. Effect: This resulted in the single audit submission to the Federal Audit Clearinghouse being filed late. Questioned Costs: $-0-. Repeated Finding: No. Recommendation: Appropriate written policies and procedures should be established to ensure timely filing of reports and the assignment of responsible personnel. Management Response: NCRP agrees with the finding. The Financial Manager will maintain a written compliance calendar of all federal reporting deadlines, including the Federal Audit Clearinghouse due date, with the President as backup, and it will be reviewed monthly with the accountant. The accountant will confirm the audit timeline and filing responsibility in writing at the start of each audit cycle.
Finding 2025-004: Significant Deficiency in Internal Control over Compliance - Cash Management Agency: National Aeronautics and Space Administration and Department of Energy ALN: 43.003, 43.008, and 81.108 Condition and Context: During our testing of the Cash Management compliance requirement for the Research and Development Cluster, we selected twelve reimbursement requests totaling $715,625. For four reimbursement requests, totaling $58,676, NCRP was unable to provide support, evidencing that the reimbursement request was reviewed and approved prior to submission to the federal awarding agency. As a result, we were unable to determine whether NCRP’s control requiring review and approval of reimbursement requests was performed as designed for the selected items. Criteria: For the Cash Management compliance requirement, when federal awards are funded on a reimbursement basis, program costs must be paid with the entity’s funds before the entity requests reimbursement from the federal awarding agency or pass-through entity. A relevant Cash Management risk for reimbursement-basis awards is that costs claimed were not incurred prior to requesting reimbursement. Cause: NCRP did not retain sufficient documentation to evidence the review and approval of reimbursement requests prior to submission. NCRP’s existing procedures did not ensure that evidence of review and approval was consistently documented and retained in a manner sufficient to demonstrate the operation of the control. Effect: Without documented review and approval of reimbursement requests, there is an increased risk that reimbursement requests may be submitted before costs are incurred and paid, may include costs that are inaccurate or unsupported, or may otherwise not comply with the Cash Management requirements. Questioned Costs: $-0-. Repeated Finding: No. Recommendation: We recommend that management strengthen internal controls over the reimbursement request process to ensure that all reimbursement requests are reviewed, approved, and supported prior to submission. We recommend that NCRP periodically monitor reimbursement request files to confirm that approval documentation is complete and retained. Management Response: NCRP agrees with the finding. Approval was given but was not consistently documented. Effective immediately, every reimbursement request will carry a written sign-off from the approving official before submission, retained in the grant file. Each quarter, an independent reviewer, such as the Senior Vice President or the accountant, will spot-check a sample of requests and document the results.