Finding 1214640 (2023-005)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2026-05-13

Audit: 401348

Organization: Micronesia Conservation Trust (FM)

Auditor: ERNST & YOUNG LLP

AI Summary

Core Issue: The Trust failed to meet the minimum level of effort requirements for employee salaries as outlined in the grant agreement.
Impacted Requirements: Compliance with documentation standards, including timesheets and activity logs, was inadequate for 57% of tested salaries.
Recommended Follow-Up: The Trust should establish formal procedures to ensure proper documentation and monitoring of compliance with grant terms.

Finding Text

Finding No.: 2023-005 Federal Agency: Agency for International Development AL Program: 98.001 Foreign Assistance for Programs Overseas Federal Award No.: 72049220C00004 Area: Level of Effort Questioned Costs: $0 Criteria: Based on the grant agreement, the not-for-profit entity must comply with the minimum level of effort requirements as explicitly stated in the grant award terms and conditions. This includes, but is not limited to, the minimum number of hours, activities, or resources dedicated to the grant-funded project as specified in the agreement. The entity is required to maintain adequate documentation and records demonstrating that the minimum level of effort has been met. This includes timesheets, activity logs, progress reports, and any other relevant evidence supporting compliance with the level of effort requirements. Condition: Seven (7) employees’ salaries were tested, amounting in total to $76,666. For four (4) samples (or 57%) amounting in total to $5,882, the Trust did not meet the minimum level of effort requirement specific to meeting minimum direct labor labor/salary budgets to be charged to the program as stated in the grant agreement. Cause: The Trust has lacks monitoring controls to comply with the terms and conditions of the grant award. Effect: The Trust has instances of noncompliance on employees’ salaries that did not comply to the minimum level of effort specified in the grant agreement. Recommendation: The Trust should revisit and implement formal procedures to document written evidence to comply with minimum level of effort requirements. Identification as a Repeat Finding: This is not a repeat finding. Views of Responsible Officials: Management agrees with the finding. See separate Corrective Action Plan

Corrective Action Plan

Finding No.: 2023-005 Area: Level of Effort Views of responsible official and planned corrective actions: Management acknowledges the requirement to comply with the Level of Eﬀort provisions outlined in the grant agreement. Management conﬁrms that the Trust is committed to maintaining adequate systems and documentation to demonstrate that all required time, activities, and resources are properly allocated to grant-funded projects. To strengthen compliance, we will continue to ensure that staﬀ maintain accurate timesheets and activity logs, and that these records are reviewed on a regular basis by program and ﬁnance personnel. Management will also conduct periodic oversight reviews to conﬁrm that Level of Eﬀort requirements are being met and properly supported by documentation. Contact Person: Melanie Lawrence Aiseam, Chief Financial Officer Expected Completion Date: The Trust started training last year, and this is ongoing.

Other Findings in this Audit

1214637 2023-002

Material Weakness Repeat
1214638 2023-003

Material Weakness Repeat
1214639 2023-004

Material Weakness Repeat
1214641 2023-006

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
98.001	USAID FOREIGN ASSISTANCE FOR PROGRAMS OVERSEAS	$286,185
11.482	CORAL REEF CONSERVATION PROGRAM	$75,382
15.875	ECONOMIC, SOCIAL, AND POLITICAL DEVELOPMENT OF THE TERRITORIES	$48,705
10.664	COOPERATIVE FORESTRY ASSISTANCE	$1,298