Finding 558066 (2024-001)

Criteria or Requirement 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include establishing procedures to ensure timely and accurate reporting of financial information required by the agreement with the United States Postal Service or obtaining written approval of any extension of reporting deadlines. Condition Found, including Perspective The Organization has not established adequate internal control procedures to ensure the timely submission of the Financial Report, Contribution Reports, and Quality Report (collectively the Annual Reports) to the United States Postal Service (USPS) for the National Postal Museum (NPM) project. Prior to the June 30, 2024 reporting deadline, the Organization notified USPS the Annual Reports would be submitted late as a result of employee turnover, and USPS acknowledged the delay. A formal extension of the deadline was not granted. The Organization eventually submitted its Annual Reports to the USPS on February 12, 2025 (227 days late), for the June 30, 2024 reporting deadline. Possible Cause and Effect The Organization experienced turnover within the NPM project. Specifically, the individual responsible for preparing the Annual Reports left the Organization in fiscal year 2023 and it took time for the successor to learn the reporting process resulting in delayed reporting. Questioned Costs None identified. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No Recommendation We recommend the Organization appropriately identify resources needed to fulfill the reporting requirements under the NPM agreement to help ensure the Annual Reports are submitted to the USPS within the required deadlines. Additionally, the Organization should establish a comprehensive list of NPM requirements and should establish procedures to cross train staff to perform required responsibilities applicable to the NPM Project. Views of Responsible Officials The Smithsonian agrees with the finding. The Smithsonian would like to add that the reports were delivered to the sponsor and that the sponsor was satisfied with them. Furthermore, the sponsor has provided written acknowledgment that they were “verbally kept up to date” by the National Postal Museum (NPM) regarding this potential delay. Moving forward, NPM will strengthen senior management oversight of report delivery, review due dates more rigorously, and enhance internal controls to ensure timely submission. Any potential delays will be confirmed in writing to the sponsor ahead of the due date, and compliance updates will be provided by NPM senior management to the sponsor on a regular basis. Additionally, NPM will establish procedures to cross train staff to perform required responsibilities applicable to the NPM Project.