Finding Text
MW2020-009 PROGRAM INCOME (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-
011)
Condition
The use of program income generated through a federally funded program will be governed by
the terms and conditions of the federal grant award, or sub-award, are subject to the same
allowability requirements in 2 CFR 200 for same award objectives and the regulations at 2 CFR
200.307. Program income is defined as “Gross income earned by the recipient that is directly
generated by a supported activity or earned as a result of the federal award during the period of
performance” by 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and
Audit Requirements for Federal Awards.
Program income consists of registration fees collected for training, meetings or workshops and
the proceeds from the sale of publications as a result of the federal award during the period of
performance. Program income is treated as an additive to the federal funds received by CUAHSI.
During a drawdown, program income reduces the amount that is requested to cover reimbursable
costs through the Flexible Billing module. This allows program income to be applied to the
award before a reimbursement is requested from NSF adding the value of program income
received to the awarded amount. Program income reporting is due annually on November 15th.
NSF requires that all cumulative program income is reported for all open grants and agreements
in the current year. CUAHSI recorded $293,591 of program income for the year ended
December 31, 2019. This amount should have been deducted from the grant drawdowns for the
year ended December 31, 2019 in accordance with the criteria listed above. There was no audit
evidence to support whether the grant revenue was adjusted on the drawdowns. These matters
warrant resolution as they may have subsequent adverse impacts. They may ultimately need to
be addressed by the oversight agencies.
Criteria
Pursuant to 2 CFR 200 for award objectives and the regulations at 2 CFR 200.307, program
income is defined as “Gross income earned by the recipient that is directly generated by a
supported activity or earned as a result of the federal award during the period of performance” by
2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements
for Federal Awards.Criteria (continued)
CUAHSI lacked comprehensive documentation demonstrating the proper authorization,
allocation, and approval processes for the utilization of program income. 2 CFR 200.307
mandates that clear documentation be maintained to support the proper allocation of program
income and its alignment with the program's goals. The non-compliance with program income
regulations, as outlined in this finding, highlights the need for corrective action to align
CUAHSI’s practices with the stipulated regulations. Management's commitment to addressing
these issues will play a pivotal role in rectifying the deficiencies identified during the audit.
Effect
This is a violation of the terms and conditions of the federal contract with the NSF. Noncompliance
can lead to penalties, fines, or even termination of the contract. It may also damage
CUAHSI’s reputation and future eligibility for federal funding and jeopardize CUAHSI’s ability
to secure future grants or contracts from other funding agencies. Granting organizations typically
prioritize funding recipients with a track record of compliance and accountability.
Cause
Lack of resources and detailed attention to the risks, along with circumvention of controls has
resulted in weak internal controls, and conflicting or incomplete policies and procedures.
Recommendation
The auditor recommends that CUAHSI develops and implements controls over policies
consistent with 2 CFR 200.307.Current Year Status
This condition still exists for the year ended December 31, 2020. During the completion of the
audit, the auditor noted that CUAHSI failed to submit the required Program Income Reporting
Worksheet by the required deadline of forty five (45) days after the end of the year to ensure
with the program income policies in accordance with the UG for the year ended December 31,
2020.
View of Responsible Official and Planned Corrective Action
See accompanying Corrective Action Plan.