Finding Text
Finding 2024-006 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior Assistance Listing: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D20AF00050-02 Area: Period of performance Questioned Costs: $0 Criteria: Article VI, section 1(c)(ii) of the FSM-U.S. Fiscal Procedures Agreement requires obligations to be incurred within the authorized award period and liquidated no later than 120 days after the end of the funding period, unless otherwise agreed. Funding for sector grants for public infrastructure shall be available for obligation for the time period described in the terms and conditions of the sector grants. The Government of the Federated States of Micronesia shall liquidate obligations incurred under a grant not later than 120 days after the end of the funding period or as otherwise mutually agreed. Condition: Grant D20AF00050, which is not a sector grant for public infrastructure, was originally awarded in May 2020 and subsequently reprogrammed. Among other changes, the reprogramming authorized the obligation of certain grant funds for medical infrastructure projects. The final extension of the grant, identified as D20AF00050-02, lapsed on September 30, 2023. No documentation was provided demonstrating that the grantor approved a waiver of the applicable period-of-performance requirements for the reprogrammed expenditures or granted a no-cost extension beyond September 30, 2023. The two closing payments were made on March 5 and May 21, 2024, 37 and 114 days, respectively, after the stated liquidation deadline for the following transactions:Cause: The State did not adequately monitor the grant’s closeout requirements or establish procedures to ensure that obligations incurred before the end of the period of performance were liquidated within the prescribed timeframe. Effect: The State did not comply with the grant’s liquidation and closeout requirements. However, because the costs were allowable and the related obligations were properly incurred within the period of performance, the late payments do not, by themselves, affect the allowability of the underlying expenditures. Recommendation: The State should strengthen its grant closeout procedures to ensure that all allowable obligations are liquidated within the timeframe established by the grant agreement and applicable federal requirements. When timely liquidation is not possible, the State should request and obtain written approval from the grantor for an extension before the liquidation deadline and retain the approval with the grant records. Identification as a Repeat Finding: Not applicable View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.