Finding Text
Assistance Listing, Federal Agency, and Program Name - Assistance Listing 11.611, U.S. Department of Commerce, National Institute of Standards and Technology (NIST) – Manufacturing Extension Partnership Federal Award Identification Number and Year - Federal award numbers include 70NANB20H067, 70NANB25H095, 70NANB24H330, and 70NANB23H051 for the year ended December 31, 2025 Pass-through Entity - Not applicable – direct award from NIST Finding Type - Material weakness Repeat Finding - No Criteria - In accordance with Uniform Guidance (2 CFR 200.303), the Organization is required to establish and maintain effective internal control over federal programs, including controls to ensure reports used to support federal compliance requirements are accurate, complete, and subject to appropriate review and approval. Such controls should provide reasonable assurance of compliance with federal requirements related to reporting, allowable costs, matching, program income, and cash management. Condition - During the year ended December 31, 2025, NIST Recovery Reports were prepared without evidence of a secondary review or approval by an individual independent of the preparer and knowledgeable of grant requirements. The Recovery Reports are used not only for reporting to the federal agency but also to ensure compliance of allowable expenditures, matching contributions, program income, and the amount eligible for federal reimbursement and drawdown. Questioned Costs - None identified If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The deficiency affected NIST Recovery Reports prepared during the period July through December 2025. A sample of reports prepared during this period was tested, and no evidence of secondary review or approval was identified in any instance tested. The population consists of all NIST Recovery Reports submitted during the period. While no questioned costs were identified, the Recovery Reports are relied upon to ensure compliance of expenditures eligible for federal reimbursement, matching contributions, program income calculations, cash drawdowns, and amounts reported on the SEFA. Cause and Effect - The Organization did not design or consistently implement a control requiring independent review and approval of NIST Recovery Reports prior to submission. Additionally, responsibilities for review and oversight were not clearly defined, resulting in reports being prepared and submitted without secondary review. As a result, there is a reasonable possibility that errors in expenditure calculations, matching contributions, program income determinations, indirect cost allocations, reimbursement requests, or federal reporting would not be detected in a timely manner. This increases the risk of noncompliance with allowable cost, matching, program income, reporting, and cash management requirements, as well as the risk of inaccurate federal drawdowns and SEFA reporting. Recommendation - We recommend that management implement a formal control requiring documented secondary review and approval of all NIST Recovery Reports by a qualified individual prior to submission. The review should ensure accuracy, completeness, and compliance with applicable federal requirements. Views of Responsible Officials and Corrective Action Plan - Management agrees with the finding requiring documented secondary review and approval of NIST Recovery Reports prior to submission and will implement the following control: The Controller will prepare the monthly NIST Recovery Report and submit the report to the Vice President of Operations for review and approval. The Vice President of Operations will provide documented evidence of the review and approval to the Controller. Upon receipt of the documented evidence of review, the Controller will request that the Vice President of Operations initiate the recovery of the monthly NIST reimbursement amount.