Finding Text
Internal Controls over Compliance and Compliance with the Period of Performance Compliance Requirement
See Schedule of Findings and Questioned Costs for chart/table.
Criteria or Specific Requirement: In accordance with §200.309, a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Unless the Federal awarding agency or pass-through entity authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award as required by §200.344(b). When used in connection with a non-Federal entity’s utilization of funds under a Federal award, “obligations” means orders placed for property, services, contracts, and subawards made, and similar transactions during a given period that require payment by the non-Federal entity during the same or a future period as described in §200.71.
Condition: We identified three instances out of 25 sample items selected, whereby expenses were incurred outside of the award period of performance. These expenses totaled $85 for award 72052020CA00002 and $2 for award AID-OAA-A-11-00012.
Questioned Costs: For Award 72052020CA00002, we identified $85 in known questioned costs as a result of our sampling and testing procedures related to the close-out period of the award.
Context: BDO’s testing of the period of performance compliance requirement was performed by examining whether the expenses selected as part of our testing of allowable costs and allowable activities were incurred within the proper period of performance of the award. Testing of 120 expenses for AL# 98.001 resulted in no exceptions to the period of performance requirements. BDO also performed specific period of performance procedures on those awards that began or ended during 2023. A total of 25 expenses for AL# 98.001 were selected across the awards that began or ended during 2023, and the two compliance matters identified above resulted from those specific 25 items tested for AL# 98.001.
Cause: PSI management has procedures in place to review expenditures to determine the appropriate period of performance; however, those procedures were not performed to a level of detail to identify expenses that were incurred outside the period of the award.
Effect: The lack of adherence to the established internal control procedures around the period of performance of the award resulted in noncompliance and questioned costs that need to be returned to the U.S. Agency for International Development. Continued noncompliance with federal statutes, regulations, and the provisions of the award agreements could ultimately result in additional disallowed costs for the major program.
Repeat Finding: This finding is a repeat finding and was reported as finding 2022-006 in the 2022 schedule of findings and questioned costs.
Recommendation: We recommend management revisit and consider revising their internal procedures around detecting expenditures incurred outside of the period of performance in order to prevent the charging of costs outside of the period of performance of the award. Furthermore, we believe an option would be to close the project within the accounting system, and create a separate project to accumulate any costs incurred after the end of the period of performance. The costs incurred subsequent to the end of the period of performance should go through the review and approval of individuals at PSI Headquarters.
Views of Responsible Officials: PSI management agrees with the finding and recommendations set forth within and will provide training to appropriate staff responsible for monitoring expenses on the program. Refer to management’s corrective action plan for additional information.