Finding Text
Finding No.: 2024-015 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, As Amended Area: Reporting Questioned Costs: $0 Criteria: Grant agreements stipulate the type and frequency of reports to be submitted. Furthermore, timely, accurate and complete reporting should be facilitated by an internal control framework conducive to effective monitoring, preparation and independent review of required reports. Lastly, financial reports should reconcile with underlying accounting records. 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient 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 Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition 1: There are no policies and procedures to monitor the due dates of required reports and track the status of report submissions. It does not appear that RepMar has developed means to monitor compliance with reporting requirements. Condition 2: For 34 of 141 financial reports due in fiscal year 2024, the following deficiencies were noted: 1. For 2 (or 6%), the underlying FMIS expenditure report was not provided or was incomplete: Item # Fund # SPG Code Award # Quarter End 1 10406 70020300 D23AF00006-00 9/30/2023 2 10409 71940100 D24AF00122-00 06/30/2024 2. For 21 (or 62%), the financial reports were not available for examination: Item # Fund # SPG Code Award # Quarter End Due Date Date Submitted 1 10409 70041300 D23AF00046-00 09/30/2023 10/31/2023 unknown 2 10409 70120100 D23AF00037-00 09/30/2023 10/31/2023 unknown 3 10409 70220100 D23AF00075-00 09/30/2023 10/31/2023 unknown 4 10405 70570200 D24AF00368-00 12/31/2023 01/31/2024 unknown 5 10409 70120100 D23AF00037-00 12/31/2023 01/31/2024 unknown 6 10409 70520600 D23AF00011-01 12/31/2023 01/31/2024 unknown 7 10409 71960100 D24AF00091 12/31/2023 01/31/2024 unknown 8 10412 71880000 D20AF00061-02 12/31/2023 01/31/2024 unknown 9 10405 70570200 D24AF00368-00 03/31/2024 04/30/2024 unknown 10 10406 70500300 D24AF00008-00 03/31/2024 04/30/2024 unknown 11 10409 70520600 D23AF00011-01 03/31/2024 04/30/2024 unknown 12 10409 71930100 D24AF00048-00 03/31/2024 04/30/2024 unknown 13 10412 70610100 D21AF10198-02 03/31/2024 04/30/2024 unknown 14 10406 70130101 D23AF00038-00 06/30/2024 07/31/2024 unknown 15 10409 71960100 D24AF00091 06/30/2024 07/31/2024 unknown 16 10412 70610100 D21AF10198-02 06/30/2024 07/31/2024 unknown 17 10415 70620300 D24AF00071-00 12/31/2023 01/31/2024 unknown 18 10419 72090100 D24AF00416-00 12/31/2023 01/31/2024 unknown 19 10415 70620100 D24AF00030-00 03/31/2024 04/30/2024 unknown 20 10415 70620300 D24AF00071-00 03/31/2024 04/30/2024 unknown 21 10415 70620500 D24AF00369-00 03/31/2024 04/30/2024 unknown 3. For 2 (or 6%), SF-425 reports do not align with the underlying FMIS expenditure report: Item # Fund # SPG Code Award # Quarter End SF-425 Amount FMIS Amount Difference 1 10305 11030101 D23AP00147-00 06/30/2024 $ – $ 421 $ (421) 2 10305 11110101 D23AP00145-00 06/30/2024 $ 29,950 $ 200 $ 29,750 Additionally, the SF-425 reports for item #s 1 and 2 and Award No. D22AP00180-00 for the same quarter end did not include the applicable Special Purpose Grant (SPG) codes. As a result, the completeness and accuracy of the reported amounts could not be verified. Cause: RepMar lacks adequate internal control policies and procedures governing effective monitoring, preparation and independent review of required reports. Moreover, RepMar lacks adequate internal control policies and procedures over retention of required reports and the underlying accounting records. Effect or Potential Effect: Sufficient appropriate audit evidence supporting compliance with applicable reporting requirements were not obtained which results in report modification. No questioned cost is reported as the condition relates to inadequacy of internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and the underlying accounting records. Identification as a Repeat Finding: 2023-018 Recommendation: RepMar should establish adequate internal control policies and procedures governing monitoring, preparation, independent review and retention of required reports and the underlying accounting records. Views of Responsible Officials: Condition 1. Item 1. A financial reporting tool was recently established to support the timely preparation and submission of reports. Additionally, the Ministry recruited a Senior Financial Analyst in February to oversee the monitoring, preparation, and timely submission of financial reports. Condition 2-1. Items 1-2 Effective FY2025, the Accounting Division is now required to prepare drawdown request forms using the detailed expenditure report (journal listing). Each request is submitted to the Finance Secretary only after approval by Accounting Management. Condition 2-2. Items 1-21 A financial reporting tool was recently established to support the timely preparation and submission of reports. Additionally, the Ministry recruited a Senior Financial Analyst in February to oversee the monitoring, preparation, and timely submission of financial reports. Condition 2-3. Items 1-2 Effective FY2025, the Accounting Division is now required to prepare drawdown request forms using the detailed expenditure report (journal listing). Each request is submitted to the Finance Secretary only after approval by Accounting Management. However, the Ministry disagrees with the finding on the SF-425 not containing the SPG code since the latter is not a required US field. SPG code is internal to the MOF. Grant number D22AP00180 is also established in the FMIS as part of the setup of SPG 10450101. Auditor’s Response: Condition 2-3: We acknowledge management’s disagreement; the finding does not cite omission of SPG codes from the SF-425 form. Rather, we are stating that inclusion of SPG codes could have facilitated our verification of the completeness and accuracy of the amounts reported therein. Accordingly, based on the evidence available at the time of audit conclusion, the finding remains unchanged.