Finding Text
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards 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 (Financial Reporting) Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 43 Condition We reviewed all quarterly SF-425 reports for the award for the year 2022. All reports contained amounts that did not agree to the underlying accounting records. The total absolute difference noted across the reports tested was $4,426,176, primarily related to [e.g., misclassification of expenditures, timing, drawdowns vs expenditures. Criteria Uniform Guidance requires recipients/subrecipients to maintain records that adequately identify the source and application of federal funds and that are supported by source documentation. The recipient/subrecipient must establish, document, and maintain effective internal control over the federal award to provide reasonable assurance of compliance with statutes, regulations, and award terms. The Federal agency’s financial reporting uses OMB-approved government-wide data elements, which at publication consist of the Federal Financial Report (SF-425). Additionally, the award/Partnership Intermediary Agreement requires submission of quarterly SF-425 reports for the award (cite clause/paragraph). Effect AFRL did not receive reliable financial information for monitoring and federal reporting purposes, increasing the risk of incorrect oversight decisions and delayed identification of award issues. Cause No documented reconciliation of SF-425 lines to the general ledger and no independent supervisory review prior to submission. Recommendation New Space should implement a documented SF-425 preparation and review control that (1) reconciles each reported line to the general ledger/supporting schedules, (2) requires an independent reviewer (title) to evidence review and approval before submission, and (3) retains the reconciliation and approval with the submitted report for audit trail purposes. Views of Responsible Officials and Planned Corrective Action Management concurs and will establish a documented SF-425 preparation procedure requiring reconciliation of all reported amounts to the general ledger and supporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 44 schedules. The financial analyst will prepare the report based on the monitored running budget and the executive director will review and approve each report prior to submission to AFRL. Owned by: Financial Analyst By: March 31, 2023.