Finding 575377 (2021-001)

Material Weakness
Requirement
AB
Questioned Costs
-
Year
2021
Accepted
2025-09-02

AI Summary

  • Core Issue: The accounting system fails to accurately track and allocate costs for federal grants, risking non-compliance with federal requirements.
  • Impacted Requirements: Policies for classifying direct and indirect costs and determining cost allowability under 2 CFR 200.302 are not established.
  • Recommended Follow-Up: Management should create a corrective action plan to properly classify costs and configure the accounting system for better budget tracking.

Finding Text

2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Condition: The accounting system utilized did not provide for the accumulation of costs by the applicable budgetary program activities for either the 2014 or the 2020 grant awards. The accounting system also did not immediately provide for the proper allocation of direct and indirect expenses. Functional categories in the accounting system are considered direct expenses or indirect expenses contingent upon the nature of the classification. Therefore, the accounting system does not further readily classify expenditures with budget amounts for each federal award. Furthermore, the entity failed to establish policies and procedures related to the classification of direct and indirect costs and for determining the allowability of costs in accordance with subpart E of 2 CFR 200.302. Questioned Costs: Not applicable. Context: Total federal expenditures for the program as listed on the Schedule of Federal Awards was $6,267,848 with $703,925 charged to indirect expenses. As noted in subsequent findings, the compliance requirements related to Activities Allowed or Unallowed, and Allowable Costs/Cost Principles were impacted by these conditions. Cause: The accounting system utilized is not properly configured to fully comply with the provisions stipulated above. Furthermore, there is a lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs as determined in accordance with Subpart E of 2 CFR 200.302. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Effect: The lack of an accounting system to properly allocate by budgetary categories per award documents leads to a greater risk that the program could expend the federal award in a manner that is not consistent with federal award requirements. Additionally, the lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs creates a greater risk that costs may be improperly allocated or be unallowable pursuant to Subpart E of 2 CFR 200.302. Recommendation: Management should develop an effective correction action plan to address this matter in a timely manner. The plan should establish the methodology of designating program costs as either direct or indirect. The accounting system should be configured in a manner which allows for a timely comparison of actual expenses to the budget forecasts for the award program. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.

Corrective Action Plan

Agency: National Center for the Advancement of STEM Education, Inc. (nCASE) Person Responsible for Corrective Action: Name: Nancy Priselac Title: Executive Director Anticipated Completion Date: December 8, 2023 Response to Finding: Management concurs with audit recommendation. Correction Action to be Taken: Management has worked with outside consultants and updated the accounting system and implemented written procedures on direct and indirect cost identification and the allowability of costs. Allowable and unallowable costs are distinctly designated by category in our accounting program. This will ensure easy identification in the Chart of Accounts and allow transactions to be broken into easily recognizable sections. By including STEM program activity fields and unique identifiers in our accounting system for each entry, a consistent format is achieved that allows a comparison of estimated or forecasted expenses to actual costs. The new link between the two allows us to easily pull the data into the technical report. DoD has reviewed the matters covered in the audit report thoroughly, and the grant was closed out without any repayment of funds to DoD. Upon subsequent review and reconciliation, amounts were not overcharged.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 575378 2021-002
    -
  • 575379 2021-003
    Material Weakness
  • 575380 2021-004
    Material Weakness
  • 575381 2021-005
    Significant Deficiency
  • 575382 2021-006
    Material Weakness
  • 575383 2021-007
    Material Weakness
  • 575384 2021-008
    Material Weakness
  • 1151819 2021-001
    Material Weakness
  • 1151820 2021-002
    -
  • 1151821 2021-003
    Material Weakness
  • 1151822 2021-004
    Material Weakness
  • 1151823 2021-005
    Significant Deficiency
  • 1151824 2021-006
    Material Weakness
  • 1151825 2021-007
    Material Weakness
  • 1151826 2021-008
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
12.431 Basic Scientific Research $6.27M