FAC Explorer

Finding 395189 (2023-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-04-30
Audit: 305074
Organization: Energy Northwest (WA)
Auditor: Baker Tilly US LLP

AI Summary

  • Core Issue: Energy Northwest failed to submit the annual indirect cost rate proposal on time for the fiscal year ending June 30, 2023.
  • Impacted Requirements: This non-compliance with the Natrium Project ARDP agreement could delay audits and the application of updated cost rates.
  • Recommended Follow-Up: Energy Northwest should create a compliance checklist for federal grant agreements, ensuring all requirements and deadlines are met, with a second review for accuracy.

Finding Text

Criteria: Per the terms of the Natrium Project Advanced Reactor Demonstration Program (ARDP) Subrecipient Services Agreement between Terra Power, LLC (the Company), and Energy Northwest (Subrecipient) Dated as of May 6, 2022, Section 5.2.1 states: Promptly after each Subrecipient Fiscal Year End, subrecipient shall provide to Company, annually not later than the date that is 90 days after such Subrecipient Fiscal Year End, an annual indirect cost rate proposal, reconciled to the Subrecipient's financial statements and costs incurred for items included in the indirect cost rate (with respect to each year an "Annual Indirect Rate Proposal"). Condition: For the fiscal year-ending June 30, 2023, Energy Northwest did not submit an annual indirect cost rate proposal reconciled their financial statements within 90 days of year-end. Cause: Energy Northwest did not have a process in place to identify and track all special terms and provisions of the subrecipient agreement, resulting in the indirect cost rate proposal not being provided to TerraPower, LLC, within the specified deadline. Effect: Non-compliance with the contract provisions could result in a delay in the audit of the annual indirect cost rate proposal as well as a delay in application of the updated indirect cost rate. Questioned Costs: None noted Recommendation: Energy Northwest should develop a compliance checklist for each federal grant agreement that outlines the various requirements and the applicable deadlines. The compliance checklist should be reviewed by a second individual for accuracy. Management Response: Energy Northwest Management understands it is our responsibility to have adequate controls to ensure we comply with all provisions of federal grant contracts. We agree with the auditor’s recommendation and subsequently EN will create a compliance checklist for each federal grant contract to ensure all requirements are complied with according to the specified timelines. This will strengthen our existing controls related to federal grant contracts. To ensure we have the right picture we will also confirm on subrecipient grants our understanding of the requirements.

Corrective Action Plan

Re: Finding 2023-001 Significant Deficiency and Compliance with Special Tasks and Provisions Energy Northwest Management understands it is our responsibility to have adequate controls to ensure compliance with all provisions of a federal grant contract. To further enhance our internal controls, Energy Northwest will establish the following Corrective Action Plan: Corrective Action Plan to Be Taken – Management will develop a checklist process to be utilized for all federal grants that will outline the specific provisions of each contract, who is responsible for the provision and the due date of each provision. Prior to finalization of the checklist, a review of the checklist will be done to ensure it encompasses all the provisions of the contract. Energy Northwest’s procedures will be updated to include the checklist process. Responsible Parties to Ensure Corrective Action Is Taken – Accounting Manager and Accounting & Budgets Director. The Corrective Action Timeline –  Checklists for existing federal contracts completed – September 30, 2024  Procedure updated with checklist process – September 30, 2024

Categories

Subrecipient Monitoring Special Tests & Provisions

Other Findings in this Audit

  • 971631 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
81.121 Nuclear Energy Research, Development and Demonstration $9,222