Finding Text
Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 38 Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition During our audit, we identified errors and inconsistencies in the Schedule of Expenditures of Federal Awards (SEFA). Specifically, the SEFA was not prepared accurately and did not fully reconcile to the underlying accounting records. In addition, the SEFA was prepared without evidence of an independent review to ensure completeness and accuracy prior to submission. Criteria New Space must prepare a SEFA for the period covered by the financial statements and include total federal awards expended as determined under 2 CFR 200.502. New Space must establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with statutes, regulations, and award terms. Effect SEFA inaccuracies increase the risk of material misstatement in required supplementary information and may contribute to improper major federal program selection under the risk-based approach, resulting in a substandard Single Audit. Cause New Space does not have documented SEFA preparation processes and no independent review control assigned to a separate reviewer. Recommendation New Space management should implement a documented SEFA process that (1) prepares the SEFA from the general ledger and grant support, (2) performs and retains a line-by- NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 39 line reconciliation, and (3) requires an independent reviewer (title) to evidence review/approval before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action Management concurs and will implement a documented SEFA preparation process that prepares the SEFA directly from the general ledger and grant support schedules. A line-by-line reconciliation will be performed independently by the financial advisor and reviewed prior to finalization by the executive director, with documentation retained to support accuracy and completeness. Owned by: Financial Analyst By: December 31, 2023