ALASKA OCEAN OBSERVING SYSTEMNon-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: 11.012 Federal Program: Integrated Ocean Observing System (IOOS) 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 AOOS 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 AOOS 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. - AOOS 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 AOOS 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, AOOS 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. - AOOS 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 AOOS 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 Reporting for the Federal Funding Accountability and Transparency Act. Identifying Award Information Federal Agency: U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA) Assistance Listing Number: 11.012 Federal Program: Integrated Ocean Observing System (IOOS) ALASKA OCEAN OBSERVING SYSTEM Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109‐282) (FFATA) that are codified in Title 2 U.S. Code of Federal Regulations, Part 170 ‐ Reporting Subaward and Executive Compensation Information. The prime awardee is required to file a FFATA sub‐award report by the end of the month following the month in which the prime recipient awards any sub‐grant in total greater than or equal to $30,000. The report must be filed in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition and Context Among the three sub-awards we tested that were new subawards during the period under audit, we found that AOOS had not filed the required FFATA subaward report. Cause AOOS did not have procedures and controls in place to ensure the required FFATA sub-award reports were filed by the due date. Effect AOOS did not comply with the FFATA subaward reporting requirements 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 FFATA reports are filed for all first-tier subawards by the required due date. Views of Responsible Officials Management concurs with the finding and has provided the attached corrective action plan.

Program: ALN 11.012, National Oceanic and Atmospheric Administration, Implementation and Development of Regional Coastal Ocean Observing System, Alaska Ocean Observing System grant numbers NA16NOS0120027, NA21NOS0120094, NA23NOS0120080, NA24NOSX012C0027 Criteria: 2 CFR section 200.303(d)(2), states that a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. Condition: Reports were submitted to the federal agency without documented review or approval by management. Cause: The entity contracts with another organization to act as its fiscal agent. The fiscal agent experienced significant turnover and delays in hiring qualified personnel for finance roles, and the entity did not retain documentation of report reviews. Possible asserted effect: Lack of review increases the risk of submitting incomplete or inaccurate information, potentially leading to audit findings or questioned costs. Questioned costs: None Context: Inspection of all reports submitted during the year indicated that no financial or performance reports had documented approval prior to submission. Statistical sampling: No Repeat finding: No Recommendations: We recommend the entity work with its fiscal agent to provide oversight and compensating controls in times of staff vacancy, and develop policies that incorporate review and documentation of review of reports prior to them being submitted to the granting agencies. Views of responsible officials: AOOS will work with its fiscal agent to strengthen oversight and establish compensating controls during staff vacancies to ensure proper review of reports. In addition, AOOS will develop and implement policies that require management review and documentation of all reports prior to submission to granting agencies, thereby ensuring accuracy, accountability, and compliance with federal requirements