Finding Text
Special Tests and Provisions
Material Weakness in Internal Control over Compliance and Material Noncompliance
Research and Development Cluster
Criteria: The Organization is required to maintain controls to ensure compliance with the terms of the contracts and/or grants which it negotiated with the federal government and is required to comply with the terms of the contract or grant agreements.
Condition: During the period of the contracts with these provisions, the Organization did not have a control structure in place to monitor compliance with these key personnel provisions. Consequently, for one (1) of the contracts that contained a key personnel provision, the identified key person was removed from the contract and not replaced. The Contracting Officer was not informed of this change.
Cause: The Organization did not have controls in place to monitor compliance with the key personnel provisions.
Effect or potential effect: The Organization did not comply therefore with the provisions of the contract.
Questioned costs: None.
Context: Our sample was not intended to be statistically valid.
Recommendation: The Organization should incorporate a step in their contract review process that identifies any key personnel requirements. The Organization should discuss with the Contracting Officer prior to signing the contract the reasonableness of the provision.
Additionally, for any key personnel provisions in contracts negotiated with the federal government, the Organization should ensure that it has controls in place to monitor compliance with these provisions. This control apparatus should include regular review of the Organization’s compliance with these provisions and documented instances of noncompliance should be communicated to the Contracting Officer as soon as practicable.
Views of responsible officials and planned corrective actions: Management's response is reported in "Management's Views and Corrective Action Plan" included at the end of this report.
Identification of prior year finding: 2022-002