NORTH PACIFIC RESEARCH BOARDNon-Profit

Significant Deficiency in Cash Management Compliance Documentation Identifying Award Information Federal Agency: U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA) Assistance Listing Number: 11.472 Federal Program: Unallied Science Program Criteria Under Uniform Guidance cash management requirements, recipients should minimize the time elapsing between the transfer of federal funds and the disbursement of those funds for allowable program costs. Effective internal controls should ensure that cash draws are supported by incurred allowable expenditures and that sufficient documentation is maintained to demonstrate that amounts drawn are based on eligible costs incurred under the applicable federal award. Condition NPRB receives federal funding directly from NOAA under cost-reimbursement awards and requests reimbursement through the Automated Standard Application for Payments (ASAP) system. The ASAP system does not require supporting documentation to be submitted when requesting funds. During our audit procedures and discussions with management, we noted NPRB did not maintain documentation that linked individual cash draws to specific allowable expenditures incurred under the related federal awards. Specifically: - Management was unable to reconcile individual draw requests made during the fiscal year to the specific expenses supporting each draw. - NPRB did not maintain a formal draw schedule or other supporting documentation demonstrating that expenditures had been incurred prior to requesting reimbursement and that draw amounts were based on actual allowable costs. Cause NPRB has not established or implemented adequate procedures requiring cash draw requests to be supported by documented reconciliations to incurred grant expenditures. In addition, controls were not designed to maintain an audit trail between individual draw requests, underlying allowable costs, and amounts reported on the Schedule of Expenditures of Federal Awards.   Effect Without adequate documentation and reconciliation procedures, NPRB cannot demonstrate that federal funds were drawn only after related allowable expenditures were incurred. As a result: - Federal funds may be drawn in advance of allowable expenditures, resulting in noncompliance with federal cash management requirements. - Management may be unable to detect errors or unsupported draw amounts in a timely manner. - NPRB lacks sufficient documentation to support the accuracy and completeness of draw activity during monitoring or audit procedures. Although audit procedures indicated cumulative expenditures exceeded cumulative draw amounts at fiscal year-end, the lack of documentation and reconciliation controls increases the risk of noncompliance with federal cash management requirements. Known Question Costs Not applicable. Repeat Finding This is not a repeat finding. Recommendations We recommend NPRB strengthen its cash management controls by: - Maintaining detailed support for each cash draw request, including documentation identifying the specific expenditures being reimbursed. - Documenting and retaining periodic reconciliations between: . individual draw requests and underlying expenditures, . cumulative draw activity and the general ledger, and . cumulative draw activity and federal expenditures reported on the SEFA. Views of Responsible Officials Management concurs with the finding and has provided the attached corrective action plan.

Significant Deficiency in Internal Control Over Compliance and Noncompliance Related to Management Decisions for Subrecipient Audit Findings Identifying Award Information Federal Agency: U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA) Assistance Listing Number: 11.472 Federal Program: Unallied Science Program Criteria Under the requirements for pass-through entities in 2 CFR 200.332, 2 CFR 200.521, and related sections, the pass-through entity is required to monitor the activities of a subrecipient. This includes among other things, obtaining the Single Audit reports for the subrecipient and identify any findings report directly related to the pass-through entity’s subaward to the subrecipient. The pass-through entity is responsible for issuing a management decision for audit findings that affect subawards it issues to subrecipients under a Federal award. Condition and Context Among the five sub-awards we tested, one subrecipient had an audit finding directly related to NPRB’s subaward to that subrecipient. NPRB did not retain documentation evidencing that NPRB followed up with the subrecipient to issue a management decision related to the finding. Cause NPRB did not have procedures and controls in place to ensure the required management decisions were issued to subrecipients. Effect NPRB did not comply with the manage decision requirement for pass-through entities that are codified in Title 2 U.S. Code of Federal Regulations. Known Question Costs Not applicable. Repeat Finding This is not a repeat finding. Recommendations We recommend that management update procedures to ensure subrecipient Single Audit reports are reviewed and management decisions are communicated, and related documentation is retained. Views of Responsible Officials Management concurs with the finding and has provided the attached corrective action plan.