AMERICAN PHYSICAL SOCIETYNon-Profit

Finding Number: 2025-001 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Programs: Government Department /Agency: Travel: DFD Meeting Travel Grant Program National Science Foundation (NSF) Assistance Listing Number: 47.041 Award Number: CBET-2434521 Award years: 7/01/2024 – 2/28/2026 PhysTEC: Community Models that Transform Physics Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 National Physics REU Leadership Group Workshop and Community-Building Assistance Listing Number: 47.049 Award Number: PHY-2011908 Award years: 06/01/2020 – 12/31/2025 Inclusion Across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science Assistance Listing Number: 47.076 Award Number: HRD-1834540 Award years: 09/01/2018 – 05/02/2025 Changing Physics and Astronomy Education Culture: A Reflective Practice Model of Faculty Development to Support Diversity, Equity, Inclusion, and Excellence Assistance Listing Number: 47.076 Award Number: DUE-2141678 Award years: 05/01/2022 – 04/30/2027 Collaborative Research: Mobilizing Physics Teachers to Promote Inclusive and Communal Classroom Cultures through Everyday Actions Assistance Listing Number: 47.076 Award Number: DRL-2300608 Award years: 09/15/2023 – 04/25/2025 Inclusive Graduate Programs: An AGEP Pilot in Physics Assistance Listing Number: 47.076 Award Number: 60066090 APS Award years: 08/15/2023 – 05/02/2025 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. g) Be adequately documented.” Condition: During our test work over payroll transactions for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we noted that 3 of 40 sampled transactions were duplicate charges to the program. In response, APS reviewed the full payroll population and determined that the total amount of duplicated payroll charges was $29,181. APS subsequently corrected the Schedule of Expenditures of Federal Awards (SEFA) to remove all duplicated costs. Questioned Costs: $29,181. Context: This is a condition identified per review of APS’ compliance with specified requirements using a statistically valid sample. Total amount of samples selected for testing amounted to $48,928. Effect: Lack of proper review of expenditures could result to unallowable costs charged to the program. Cause: APS did not maintain effective internal controls during one month of the year to ensure that only allowable costs were charged to the program, due to internal controls not operating as intended following a system enhancement to the grants management timekeeping system. Repeat Finding: No. Recommendation: BDO recommends that management strengthen controls over payroll processing and grant expenditure review to ensure salary costs charged to federal awards are accurate, supported, and recorded only once. Specifically, management should implement and document a review control to identify duplicate payroll postings before and after upload to the general ledger and grant ledger, reconcile payroll charges to approved payroll records on a timely basis, and investigate and resolve any exceptions noted. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.

Finding Number: 2025-002 Compliance Requirement: Subrecipient Monitoring Program: Government Department /Agency: PhysTEC: Community Models that Transform Physics National Science Foundation (NSF) Teacher Education Assistance Listing Number: 47.049 Award Number: PHY-2325980 Award years: 09/15/2023 – 08/31/2028 Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The National Science Foundation’s Proposal & Award Policies & Procedures Guide (PAPPG) (NSF 24-1) Part II Chapter VII B.4. - Subawarding or Transferring Part of an NSF Award (Subaward) states that - “Excluding the purchase of items such as commercially available materials and supplies, equipment, or general support services allowable under the award, no part of an NSF award may be subawarded or transferred to another organization without prior NSF authorization. The intent to enter into such arrangements should be disclosed in the proposal. If it becomes necessary to subaward or transfer part of an NSF award after an award has been made, the recipient shall submit, at a minimum: a. a clear description of the work to be performed by each subrecipient; b. a separate budget and budget justification for each subaward; and c. If funding is requested to support a postdoctoral researcher, and the original proposal did not include a mentoring plan, then the request must include the requisite mentoring plan as described in Chapter II.C.2.j. The plan must be uploaded under “Mentoring Plan” in the Supplementary Documentation section of Research.gov. The request must be signed and submitted by the Authorized Organizational Representative (AOR) via use of NSF’s electronic systems, and NSF authorization will be indicated by an amendment to the award signed by the Grants and Agreements Officer. The NSF award terms and conditions will identify which articles flow-down to subrecipients. Condition: During testing of subrecipient activity, we noted that APS issued 3 new subawards under the NSF grant after the original award date without obtaining prior NSF authorization. APS indicated it believed explicit NSF approval was not required and that subaward information was communicated through its annual reports to NSF. Questioned Costs: Not Determinable. Context: During testing of APS’ subrecipient activity, 3 new subawards were issued after the award date without evidence that prior NSF authorization was requested by the AOR and approved through an award amendment by the Grants and Agreements Officer. Effect: APS was not in compliance with NSF award requirements, which increases the risk of questioned costs, noncompliance with award terms, and potential administrative action by NSF. Cause: APS’ internal controls did not ensure personnel identified and complied with NSF prior-approval requirements for post-award subawards, and APS personnel misunderstood annual reporting to be sufficient in place of specific prior authorization. Repeat Finding: No. Recommendation: APS should enhance its grant compliance review procedures to require documented assessment of prior-approval requirements before executing post-award subawards and obtain and retain written NSF authorization, when required, before subawards are issued. Related Noncompliance – Noncompliance. Views of Responsible Officials: APS concurs with the auditor’s findings and recommendations. APS’ corrective action is described in the Management’s Corrective Action Plan included in Management’s Section.

Finding Number: 2023-001 Internal Control over Compliance and Compliance with the Subrecipient Monitoring Compliance Requirement, Repeat Finding, Finding No. 2022-001 Identification of the Major Federal Program: Programs: Government Agency: Inclusion Across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science Assistance Listing Number: 47.076 Award Number: HRD-1834540 Award Years: 09/01/2018 – 02/28/2025 PhysTEC: Building a Solution to the National Physics Teacher Shortage Assistance Listing Number: 47.049 Award Number: PHY-1707990 Award Years: 07/01/2017 – 06/30/2023 National Science Foundation (NSF) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions – Our examination of the program’s subrecipient monitoring requirements includes the review and approval of financial and performance quarterly reports by the program managers. The quarterly reports are prepared by APS’ grants administrator with inputs provided by the subrecipient submitted to the program managers. Of the program’s twenty (20) subrecipients, we examined eight (8) subrecipients and observed that although the respective program managers had monitoring oversight of the various grant’s financial and programmatic activities, there was no formal evidentiary documentation to support the monitoring oversight process performed by the program managers. Furthermore, our examination of the program’s subrecipient monitoring requirements includes follow-ups by APS to ensure the subrecipients take timely and appropriate action on all deficiencies pertaining to federal awards provided to the subrecipients which have been detected through reviews of audits, on-site reviews, and other means. We selected six (6) subrecipients for testing and noted that for two (2) samples selected APS was unable to provide evidence that it monitored the subrecipients through review of its single audit reports, on-site reviews, and other means. We also tested a sample of three (3) subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds timely and on one (1) of the sub awards reported, the contract award amount reported is less than the actual expenditures incurred by the subrecipient. APS began implementation of its corrective action plan on June 5, 2023, and the exceptions identified above is as a result of the fact that APS was still in the implementation process of its corrective action plan. Cause - Management does not have adequate internal controls and policies and procedures in place to ensure that a review is performed on the financial and programmatic reports in a timely manner and to ensure that its subrecipients do not have any audit deficiencies relating to federal award programs and if any deficiencies are detected, that the subrecipients takes timely and appropriate action to resolve the deficiencies identified. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS’ noncompliance with the reporting requirements. Effect or potential effect – APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. In addition, failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs – None. Context – These are conditions identified per review of APS compliance with specified compliance requirements using a statistically valid sample. Recommendations – BDO recommends that APS continue to apply the implemented policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are documented and maintained. Furthermore, APS should continue to implement policies to obtain and review single audit reports of its subrecipients in order to ensure compliance with all the required laws, guidelines and requirement under the award. BDO recommends that APS continues to implement established policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS’ corrective action is described in the Management’s Corrective Action Plan included below.

Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.

Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a)Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles. (b)Conform to any limitations or exclusions set forth in these principles or in the Federal awardas to types or amount of cost items. (c)Be consistent with policies and procedures that apply uniformly to both federally-financedand other activities of the non-Federal entity. (d)Be accorded consistent treatment. A cost may not be assigned to a Federal award as a directcost if any other cost incurred for the same purpose in like circumstances has been allocatedto the Federal award as an indirect cost. (e)Be determined in accordance with generally accepted accounting principles (GAAP), except,for state and local governments and Indian tribes only, as otherwise provided for in this part. (f)Not be included as a cost or used to meet cost sharing or matching requirements of any otherfederally-financed program in either the current or a prior period. (g)Be adequately documented.? Condition ? In our examination of the program?s indirect cost charges, we noted that APS did not charge the appropriate indirect cost of $81,916 for the months of May through July 2022 to the program. Consequently, an adjustment was recorded to correct the SEFA. Cause ? Management did not adhere to their internal policies and procedures to ensure that all federal transactions are charged to the programs and that the SEFA is complete and accurate. Effect or potential effect ? The SEFA may not be fairly presented, in all material respects, in relation to the basic financial statements taken as a whole. In addition, the lack of adherence to the established internal controls policies and procedures can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements. Questioned Costs ? None. Context ? This is a condition identified per review of APS? compliance with specified requirements using a statistically valid sample. Recommendation ? We recommend that APS strengthen their policies and procedures to ensure the completeness and accuracy of the SEFA. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.

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