2022-006: Internal Control Over Compliance and Compliance with Period of Performance Program: U.S. Department of State AL Number: 19.518 AL Name: Overseas Refugee Assistance Program for Western Hemisphere Grant Award Numbers Under the Uniform Guidance Requirements: Direct Award Number Award Period SPRMCO20CA0209 September 20, 2020 through September 29, 2021 N/A September 20, 2021 through September 29, 2022 Criteria ? CFR ?200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its grants? period of performance process. In accordance with CFR Section 200.403(h), cost must be incurred during the approved budget period. The federal awarding agency is authorized at its discretion to waive prior written approvals to carry forward unobligated balances to subsequent budget period pursuant to ?200.308(e)(3). In accordance with CFR Section 200.458, pre-award costs are those incurred prior to the effective date of the federal award or subaward directly pursuant to the negotiation and in anticipation of the federal award where such costs are necessary for efficient and timely performance of the scope of the work. Such costs are allowable only to the extent they would have been allowable if incurred after the date of the federal award and only with the written approval of the federal awarding agency. In accordance with CFR Section 200.344, the federal awarding agency or pass-through entity will close out the federal award when it determines that all applicable administrative actions and all required work of the federal award have been completed by the nonfederal entity. Per CFR Section 200.344(b), unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance. Condition ? During our testing of period of performance, we noted exceptions where expenditures were incurred outside of the grant?s performance period. Cause ? Policies and procedures were not appropriately adhered to in certain instances to ensure that supporting documentation was maintained to evidence that costs were incurred during the period of performance and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect - The lack of adherence to the established internal control procedures around the period of performance of the award can lead to noncompliance with law and regulations and possible loss of funding for the related program. Questioned Costs ? $125 Context: During our testing of the allowable costs/cost principles compliance requirements, we sampled 25 nonpayroll expenditures, totaling $6,365, for the Overseas Refugee Assistance Program for Western Hemisphere and noted that four items, totaling $125, were incurred and paid outside of the grant award period. Repeat Finding - This finding is a repeat finding from prior year. This finding was reported as finding 2021-001 in the 2021 reporting package. Recommendation - We recommend management revisits and considers revising its internal procedures around detecting expenditures incurred outside of the period of performance of the awards. Views of Responsible Officials - Management agrees with the finding and takes responsibility to comply with the period of performance compliance requirements. Management is emphasizing prompt period closing to ensure that no items are recorded in the wrong period.
SD 2022-001: PERIOD OF PERFORMANCE Assistance Listing No. 59.075 Shuttered Venue Operators Grant Program 2022 Funding U.S. Small Business Administration Criteria: The Uniform Guidance specifies that a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance. Guidance is found under Standards for Financial and Program Management (200.309). Recipients of the supplemental award can spend all award funds (both initial and supplemental phase awards) received over an 18-month period after the initial phase award issuance date for eligible and allowable costs incurred between March 1, 2020 and June 30, 2022. Pre-award costs can be charged if they are authorized by the federal awarding agency or pass-through entity (200.458). Additionally, under 2 CFR 200.303, non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with the Uniform Guidance. Condition: Grant funds were disbursed for marketing expenses incurred prior to the start of the funding period without approval of the granting agency. Marketing expenses incurred prior to March 1, 2020 were applied to the grant as they related to producing a theatrical or live performing arts productions that were scheduled to occur during March and April of 2020 but cancelled due to the impacts of COVID-19. Cause: The control did not operate effectively as the reviewer did not have a sufficient understanding of the grant requirements. Perspective: There was initially $9,344 of expenses applied to the grant. Effect: Shuttered venue operators grant funding was applied to expenses incurred outside the period of availability. Prior to the report being filed the Center utilized other expenses that were within the period of availability. Questioned Costs: $0 Recommendation: Only allowable costs incurred during the period of performance should be charged to the federal award. Supporting documentation should be reviewed in conjunction with the grant agreement and other applicable compliance requirements including statutes and uniform reporting requirements for restrictions, limitations, and conditions pertaining to the grant to minimize the amount of disallowed costs. Management Response: Management concurs with the suggestion. Grant personnel has been reminded to review supporting documentation in conjunction with the grant agreement and other applicable compliance requirements including statutes and uniform reporting requirements for restrictions, limitations, and conditions pertaining to the grant to minimize the amount of disallowed costs.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.