Finding 1061065 (2023-002)

Cluster: Research and Development Supporting Agency: Department of Commerce, Department of Energy, and Department of Human and Health Services Award Names: Standards/Guidance for Rapid Qualification of Metal-Based Additive Manufacturing, Accelerating Commercial Maritime Demonstration Projects for Advanced Nuclear Reactor Technologies, Safety and Health Risks in Energy Transition for the Commercial Fishing Industry, The NASA Floater: 15MW Ultra-lightweight Concrete Hull with Sea-Water Ballast Tuned Mass Dampers, Scale model Experiments for Co-Designed FOWTs Supporting A High-Capacity (15 MW) Turbine, Demonstrating a Reduced-Footprint Synthetic Rope Mooring System that Minimizes Fishing Impacts and Costs for a 10MW+ Floating Wind Turbine Award Numbers: 70NANB21H038, DE-NE0009226, U01OH012502, UMS-1258, ABS-061720, and FOA- 2236 Assistance Listing Title: National Institute of Standards and Technology, Office of Nuclear Energy, Advanced Research Projects Agency, Office of Energy Efficiency and Renewable Energy, Center for Disease Control and Prevention (CDC) Assistance Listing Number: 11.609, 81.121, 81.135, 81.087, 93.262 Award Year: FY 2023 Criteria 2 CFR 200.303 notes that a non-Federal entity must: 1. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). 2.Evaluate and monitor the non-Federal entity’s compliance with statutes, regulations, and the terms and conditions of Federal awards. We note that with regards to the Company’s internal controls over Federal awards, a monthly budget to actual review is to be performed and review evidenced for each grant to monitor grant activity, including allowability. Condition We selected 6 quarters out of a population of 61 quarters across the Research and Development Cluster awards for testing to evidence that a budget to actual review was being performed, as required by Company policy. Through our testing, we noted 6 instances where appropriate supporting documentation was not maintained to support that the budget to actual review was performed. We noted through inquiry of management that for each selection, a review of expenses was performed but evidence was not formally maintained of the budget to actual review. However, when reviewing the award budget and cumulative expenses incurred on the award for each selection, it was noted that each quarter selected was within budget. Cause The Company indicated budget to actual monitoring and reviews were not consistently performed due to a lack of clarity in the Company policy. The Company policy did not clearly articulate the process owners by activity and was updated in Q4 2023, therefore responsible parties were not aware of this required activity. Effect Lack of executing this control could result in ineligible costs being submitted for payment and jobs going above the agreed upon budget. Questioned Costs None noted. Recommendation We recommend the Company review their policies and ensure appropriate communication and coordination amongst relevant parties to ensure the budget to actual review is performed according to policy and appropriate documentation is maintained. This is a repeat finding of 2022-002, which continued to remain open during FY2023. Management’ Views and Corrective Action Plan Management’s Views and Corrective Action Plan are included at the end of this report.