Finding Text
FINDING 2025-001 Information on the federal program: Federal Program: Congressionally Directed Program Federal Award ID: 80NSSC24K1009 Assistance Listing Number: 43.014 Compliance Requirement: Other – Written Policies and Procedures (2 CFR 200 Subparts D and E) Type of Finding: Internal Control over Compliance (Material Weakness) Criteria: 2 CFR 200 Subpart D requires non-Federal entities to establish and maintain effective internal control over the federal award that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal award, which typically includes written policies and procedures over key compliance areas. In addition, 2 CFR 200 Subpart E (Cost Principles) requires that costs charged to federal awards be reasonable, allocable, and consistently treated, which is ordinarily supported by documented policies and procedures. Condition: The Organization did not have written policies and procedures addressing key compliance requirements related to its federal award as required by 2 CFR 200, Subpart D (Post Federal Award Requirements) and Subpart E (Cost Principles). Specifically, the Organization lacked written policies and procedures over procurement and standards of conduct / conflict of interest. Cause: The Organization is relatively small and received its first federal award during the current year. Management had not previously developed formal written policies and procedures specific to federal awards and relied primarily on informal practices and existing general financial procedures. Effect: In the absence of written policies and procedures, there is an increased risk that federal program activities and costs may not be carried out or recorded in full accordance with the requirements of 2 CFR part 200 and the terms and conditions of the award. However, our testing did not identify any instances of noncompliance or unallowable costs as a result of this condition. Questioned Costs: None. Context: This condition was noted for the year ended June 30, 2025, Single Audit in connection with the Congressionally Directed Program, the major program. The Organization had no other federal programs during the year. Recommendation: We recommend that the Organization develop and implement formal written policies and procedures specific to the administration of federal awards, including but not limited to: procurement and standards of conduct and conflict-of-interest provisions. These policies and procedures should be approved by governance, communicated to relevant personnel, and periodically reviewed and updated as needed. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will develop and formally adopt written policies and procedures specific to federal awards that address the areas noted above. Management anticipates completing and implementing these policies and procedures by June 30, 2026.