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Finding Number: 2025-002 Compliance Requirement: Subrecipient Monitoring Program: Government Department /Agency: PhysTEC: Community Models that Transform Physics National Science Foundation (NSF) Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The National Science Foundation’s Proposal & Award Policies & Procedures Guide (PAPPG) (NSF 24-1) Part II Chapter VII B.4. - Subawarding or Transferring Part of an NSF Award (Subaward) states that - “Excluding the purchase of items such as commercially available materials and supplies, equipment, or general support services allowable under the award, no part of an NSF award may be subawarded or transferred to another organization without prior NSF authorization. The intent to enter into such arrangements should be disclosed in the proposal. If it becomes necessary to subaward or transfer part of an NSF award after an award has been made, the recipient shall submit, at a minimum: a. a clear description of the work to be performed by each subrecipient; b. a separate budget and budget justification for each subaward; and c. If funding is requested to support a postdoctoral researcher, and the original proposal did not include a mentoring plan, then the request must include the requisite mentoring plan as described in Chapter II.C.2.j. The plan must be uploaded under “Mentoring Plan” in the Supplementary Documentation section of Research.gov. The request must be signed and submitted by the Authorized Organizational Representative (AOR) via use of NSF’s electronic systems, and NSF authorization will be indicated by an amendment to the award signed by the Grants and Agreements Officer. The NSF award terms and conditions will identify which articles flow-down to subrecipients. Condition: During testing of subrecipient activity, we noted that APS issued 3 new subawards under the NSF grant after the original award date without obtaining prior NSF authorization. APS indicated it believed explicit NSF approval was not required and that subaward information was communicated through its annual reports to NSF. Questioned Costs: Not Determinable. Context: During testing of APS’ subrecipient activity, 3 new subawards were issued after the award date without evidence that prior NSF authorization was requested by the AOR and approved through an award amendment by the Grants and Agreements Officer. Effect: APS was not in compliance with NSF award requirements, which increases the risk of questioned costs, noncompliance with award terms, and potential administrative action by NSF. Cause: APS’ internal controls did not ensure personnel identified and complied with NSF prior-approval requirements for post-award subawards, and APS personnel misunderstood annual reporting to be sufficient in place of specific prior authorization. Repeat Finding: No. Recommendation: APS should enhance its grant compliance review procedures to require documented assessment of prior-approval requirements before executing post-award subawards and obtain and retain written NSF authorization, when required, before subawards are issued. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.