Finding Text
Finding No.: 2023-007 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Period of Performance Questioned Costs: $9,883 Criteria: The terms of the sub-awards administered by RepMar under the Compact of Free Association grant awards stipulate the period of performance during which time only costs resulting from obligations of the funding period may be charged. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. For one (or 4%) of twenty-three items, aggregating $45,931 of $75,337 in total non-payroll expenditures, the item amounting to $1,209 (Check # 1039088; PO# 22-PO-2614) was incurred prior to the funding period stipulated in the grant awards. 2. For twenty (or 54%) of thirty-seven items, aggregating $20,993 of $121,401 in total payroll expenditures, the following costs of salaries charged to the program were incurred prior to the funding period stipulated in the grant awards: Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to period of performance. Effect: The College is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $9,883 based on the items identified in Conditions above. For item #s 10 through 20, only $2,246 is included in the total questioned costs, which relates to costs incurred prior to the funding period stipulated in the grant awards. Identification as a Repeat Finding: 2022-011 Recommendation: College management should improve internal control policies and strengthen controls to comply with applicable period of performance requirements. Specifically, review should be made to ensure all costs charged to the program are within the funding period stipulated in the grant awards. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.