Finding Text
Finding No.: 2022-002
Federal Agency: U.S. Department of the Interior
AL Program: 15.875 Economic, Social, and Political Development of the Territories
Federal Award No.: Enewetak/Ujelang Local Government (EULG) Food and Agriculture
Support Program
Questioned Costs: $1,763,366
Area: Allowable Costs/Cost Principles
Criteria:
Federal program expenditures should be necessary and reasonable for the performance of the Federal
award, in accordance with allowable costs/cost principles requirements, and be directly related to,
and in accordance with, program intent and objectives.
Condition:
Of 39 non-payroll transactions tested, aggregating $1,587,482 of $2,199,010 in total non-payroll
program expenditures, the following deficiencies were noted:
The grant terms and conditions state that assistance under the award may not be sub-granted
or transferred; however, $1,737,620 of the funding was disbursed directly to a subrecipient,
of which $685,289 represented reimbursement for payroll costs which were not supported
by underlying timesheets, personnel action forms, and registers. Furthermore, no executed
subgrant agreement with the subrecipient was made available.
The grant terms and conditions state that assistance may not be used for payment of
professional legal or administrative fees, however, $24,000 in legal fees were charged to the
program (APV #s 770018, 777397, 783370, and 789894).
For 1 (or 3%) voucher (#769225) amounting to $1,746, the underlying lease agreement does
not support the disbursement duty station is on
Enewetak while the leased housing is located on Majuro.
Cause:
Inadequate file maintenance to support expenditures charged to federal programs. RepMar did not
effectively monitor the validity and allowability of expenditures. Furthermore, RepMar lacks
adequate internal control policies and procedures to facilitate adherence with grant terms and
conditions.
Effect:
RepMar is in noncompliance with allowable costs/cost principles requirements. The reportable
questioned cost is $1,763,366.
Recommendation:
Documents supporting expenditures should be maintained. Further, RepMar management should
strengthen monitoring controls and adopt adequate internal control policies and procedures to
facilitate adherence with grant terms and conditions.
Views of Responsible Officials:
We partially agree with the finding and provide details in our Corrective Action Plan.