Finding Text
Finding No.: 2021-010
Pass-Through Entity: Republic of the Marshall Islands
Federal Agency: U.S. Department of the Interior
AL Program: 15.875 Economic, Social and Political Development of the Territories
Federal Award No.: Compact of Free Association Program, As Amended
Area: Reporting
Questioned Costs: $0
Criteria: Under the terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards, the College is required to submit:
1. As supporting report for the initial payment request, a duly accomplished standard Form SG1- Subgrant Objectives and Budget Proposal;
2. As supporting report for subsequent payment requests, a duly accomplished standard Form SG2- Performance and Financial Evaluation quarterly report;
3. Duly accomplished Form SG2-Performance and Financial Evaluation final report within 30 calendar days after the end of the MOA’s term. If the organization is receiving subsidy or subgrant in the new fiscal year or new funding period, the prior year’s or prior funding period’s SG2 final report is required to be submitted together with the SG1 report, before the initial payment can be released under the new subsidy or subgrant MOA.
Further, the College shall maintain an acceptable financial management system during the term of the sub-award agreement including an accurate, current and complete disclosure of financial activity of Company funds and consistency with all financial administration, program monitoring, performance reporting and enforcement provisions of the Financial Management Act.
Conditions:
1. The College did not prepare and submit the required Form SG1- Subgrant Objectives and Budget Proposal as supporting report for the initial payment for the U.S. Compact Funding subaward for the Education Sector, Ebeye Special Needs – Adult Education, Compact Capital Fund and Supplemental Education Grant.
2. The College did not provide the required Form SG2-Performance and Financial Evaluation final report and Form SG2- Performance and Financial Evaluation quarterly report for the quarter ended June 30, 2021 for the U.S. Compact Funding subaward for the Education Sector, Ebeye Special Needs – Adult Education, Compact Capital Fund and Supplemental Education Grant.
3. Expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report did not agree to the underlying quarterly expenditures report submitted to the Secretary of Finance as follows:
a. 1st Quarter ended December 31, 2020
b. 2nd Quarter ended March 31, 2021
4. Expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report did not agree to the quarterly expenditures reported in SEFA as follows:
a. 1st Quarter ended December 31, 2020
b. 2nd Quarter ended March 31, 2021
No reconciliation was provided to reconcile the quarterly expenditures reported in SEFA against the expenditures reported per the Form SG2- Performance and Financial Evaluation quarterly report.
Cause: The College lacks adequate internal controls over the timely and accurate preparation and review of required reports as stipulated in the sub-award agreements.
Effect: The College appears to be in noncompliance with applicable reporting requirements. No questioned costs are presented as the total expenditures per SEFA for the fiscal year were reconciled with the federal awards received from the RMI Government.
Recommendation: College management should strengthen controls so that required reports are timely and accurately prepared and reviewed and submitted within the specified timeframes to evidence compliance with applicable reporting requirements.
Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.