Finding 1215961 (2025-002)

Finding 2025 002 Expenditure Charged Outside of the Period of Performance Federal Agency: U.S. Department of Health and Human Services Program Name: Research and Development (R&D) Cluster ALN #: 93.310 Federal Award Numbers: 5U54CA272163 03 Federal Award Year: September 1, 2024 – August 31, 2025 Compliance Requirement: Equipment Criteria According to 2 CFR § 200.1, the period of performance is the time during which the non Federal entity may incur new obligations to carry out the work authorized under the Federal award. For a cost to be allowable, it must be incurred during the approved budget period, as stated in the terms and conditions of the award. During fiscal year 2025, certain grants were terminated resulting in a shorter period of performance than the grant agreement originally stated. 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that expenditures charged to a federal award were incurred within that award’s specified period of performance. Condition Found During our testing of 25 expenditures totaling $277,862 charged to federal awards with performance period ending dates during the audit period, we identified one expenditure and its related indirect cost charge that were not incurred within the grant's shortened period of performance. That period of performance had been shortened by an early termination notice. Additionally, we noted that controls were not operating effectively to prevent or detect the charging of expenditures to a federal award after the period of performance had concluded. Cause While adjustments were made to the University’s controls to respond to the shortened timeframe related to terminated grants, the control did not operate at a level of precision to identify that the expenditure in question was outside of the termination period. Possible Asserted Effect Charging expenditures outside of the authorized period of performance results in non compliance with federal regulations and the terms of the grant agreement. Questioned Costs $1,994 Repeat Finding A similar finding was not reported in the prior year audit. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend the University review its procedures to ensure that all expenditures are reviewed for allowability and are incurred within the active period of performance before being charged to a federal award. Views of University Officials The University agrees with the finding and will implement corrective actions related to awards subject to shortened periods of performance. The university will continue to assess and strengthen its controls and review procedures to reduce the likelihood of similar occurrences in the future.