National Consortium for Graduate Degrees for Minorities in Engineering

2023-002 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.049-Mathematical and Physical Sciences, Award 2043575, Award Period 3/15/21 – 2/28/23) Federal Agency: National Science Foundation Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430. Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one journal entry as a program expense. Cause: The Organization did not adhere to documented policies for allocating senior personnel effort and time costs to program accounting records. Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-004 in the prior year. Recommendation: We recommend the Organization communicate and enforce policies for allocating senior personnel effort and time costs to grant and accounting personnel and implement formal processes to monitor compliance with federal awards. View of Responsible Officials: The Organization has since improved its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes. Time and effort are now allocated via approved time and expense personnel reports and the charges are reconciled to the accounting records and there is a formal process to monitor compliance with this requirement. Questioned Costs: None

Finding 2023-002 – Allocation of Program Effort by Employees In response to the finding, GEM will institute controls and processes to document and allocate personnel time and effort to NSF program: A comprehensive manual for grants and federal funding has been developed, establishing clear written policies and procedures specific to the management of federal awards. With these documented guidelines now in place, our focus is on ensuring strong oversight and consistent adherence to the established policies across all applicable operations. GEM has implemented a new timekeeping system that will allocate time and effort via approved time and expense personnel reports and reconcile these the accounting records and NSF program charges. Anticipated date of completion: Process was implemented on December 31, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

2022-004

2023-003 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25 and ALN 47.084-Technology, Innovation and Partnerships, Award 1940055, Award Period 9/19/22 – 3/31/25) Federal Agency: National Science Foundation Criteria: Program costs for allocation of indirect costs should be based on percentage of total costs at year end and allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414. Condition: Our testing noted that program charges included nine monthly journal entries to allocate indirect costs based on budgeted calculations and one year-end entry to adjust the calculation based on actual results. The entries did not have the necessary review and approvals to ensure allowability of the costs to activities. Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program. Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414. Without a policy of reviewing and approving indirect costs on a regular basis, there is a risk that unallowable costs are allocated to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-005 in the prior year. Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company. View of Responsible Officials: The Organization has since implemented controls and procedures to allocate indirect costs to program costs based on incurred costs. Monthly allocations are approved by the program administrator and separately reported in the general ledger. Questioned Costs: $202,309 – This is the amount of indirect costs charged to the program.

Finding 2023-003 – Indirect Cost Allocations In response to the finding, GEM will improve program costs allocation documentation by instituting the following controls and procedures: GEM allocated indirect costs to the NSF program based on actual expenses incurred and monthly allocations approved by the program administrator. These indirect costs are recorded separately in the accounting system. Formal written procedures are now in place, and we will maintain active oversight to ensure full adherence to all established policies. Anticipated date of completion: Monthly journal entry is set up with calculations for determining the dollar amount. The date of completion was October 2022 and have been updated since then. Responsible party: Jamie D. Hicks, Senior Accounting Manager

2022-005

2023-005 Allowable Cost Documentation Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25 and ALN 47.084-Technology, Innovation and Partnerships, Award 1940055, Award Period 9/19/22 – 3/31/25) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 48 non-payroll expenses for testing. Of those 48, 21 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 21 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Without a policy that requires detailed receipts to be submitted for credit card charges, there is a risk that unallowable costs are charged to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-007 in the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. View of Responsible Officials: The Organization has since implemented a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $25,573. This is the total known cost from the 21 transactions identified in our sample to have insufficient documentation.

Finding 2023-005 – Allowable Cost Documentation In response to the finding, GEM addressed allowable cost documentation by instituting the following: A formal policy was established on 9/30/23, and going forward, GEM will implement additional oversight procedures to ensure the policy is followed and that all requirements are met. GEM has also incorporated the formal credit card policy into the employee handbook, outlining the procedures for submitting receipts on a monthly basis. Anticipated date of completion: This policy has been in effect since September 30, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

2022-007

2022-004 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430. Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one year end journal entry as a program expense. Upon review of the supporting documentation for the journal entry, it was noted that one individual included in the allocation was no longer an employee of the Organization during the year ended June 30, 2022. Cause: The Organization lacks written policies, approval procedures and documentation to allocate senior personnel effort and time costs to program accounting records. Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-005 in the prior year. Recommendation: We recommend the Organization strengthen its controls and processes over time and effort allocations by establishing written policies, timesheet allocations, approvals and segregation of duties in compliance with 2 CFR 200.430. Response: The Organization will improve its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes. Questioned Costs: $10,000 – Based on the support for the journal entry, this is the amount allocated for the individual that was no longer an employee of the Organization during the year ended June 30, 2022.

Finding 2022-004 – Allocation of Program Effort by Employees In response to the finding, GEM will institute controls and processes to document and allocate personnel time and effort to NSF program GEM will allocate time and effort via approved time and expense personnel reports and reconcile these the accounting records and NSF program charges. Anticipated date of completion: Process was implemented on December 31, 2022. Responsible party: Jamie Hicks, Senior Accounting Manager

2021-005

2022-004 Allocation of Program Effort by Employees – Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: The financial management requirements include processes and controls over the allocation of personnel time and effort to program activities as required by 2 CFR 200.430. Condition: Our testing of payroll expenses charged to the program noted that the Organization allocates senior personnel time and effort in one year end journal entry as a program expense. Upon review of the supporting documentation for the journal entry, it was noted that one individual included in the allocation was no longer an employee of the Organization during the year ended June 30, 2022. Cause: The Organization lacks written policies, approval procedures and documentation to allocate senior personnel effort and time costs to program accounting records. Effect: The Organization does not maintain a compliant effort system and is not in compliance with 2 CFR 200.430 which could lead to inaccurate allocation of personnel costs to the federal program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-005 in the prior year. Recommendation: We recommend the Organization strengthen its controls and processes over time and effort allocations by establishing written policies, timesheet allocations, approvals and segregation of duties in compliance with 2 CFR 200.430. Response: The Organization will improve its procedures for allocating senior personnel time and effort in its accounting and financial record keeping processes. Questioned Costs: $10,000 – Based on the support for the journal entry, this is the amount allocated for the individual that was no longer an employee of the Organization during the year ended June 30, 2022.

Finding 2022-004 – Allocation of Program Effort by Employees In response to the finding, GEM will institute controls and processes to document and allocate personnel time and effort to NSF program GEM will allocate time and effort via approved time and expense personnel reports and reconcile these the accounting records and NSF program charges. Anticipated date of completion: Process was implemented on December 31, 2022. Responsible party: Jamie Hicks, Senior Accounting Manager

2021-005

2022-005 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: Program costs for allocation of indirect costs were based on percentage of total costs at year end and not allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414. Condition: Our testing noted that program charges include journal entries allocate indirect costs without necessary review and approvals to ensure allowability of the costs to program activities. Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program. Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-006 in the prior year. Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company. Response: The Organization will allocate indirect costs to program costs based on incurred costs. Monthly allocations will be approved by the program administrator and separately reported in the general ledger. Questioned Costs: $78,400 – This is the amount of indirect costs charged to the program.

Finding 2022-005 – Indirect Cost Allocations In response to the finding, GEM will improve program costs allocation documentation by instituting the following controls and procedures. GEM will allocate indirect costs and charges to the NSF program based on incurred costs and monthly allocations approved by the program administrator. These indirect costs will be separately reported in the accounting records. Anticipated date of completion: Monthly journal entry is set up with calculations for determining the dollar amount. The date of completion was October 2022 and have been updated since then. Responsible party: Jamie D. Hicks, Senior Accounting Manager

2021-006

2022-005 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: Program costs for allocation of indirect costs were based on percentage of total costs at year end and not allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414. Condition: Our testing noted that program charges include journal entries to allocate indirect costs without necessary review and approvals to ensure allowability of the costs to program activities. Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program. Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414. Without a policy of reviewing and approving indirect costs on a regular basis, there is a risk that unallowable costs are allocated to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2021-006 in the prior year. Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company. Response: The Organization will allocate indirect costs to program costs based on incurred costs. Monthly allocations will be approved by the program administrator and separately reported in the general ledger. Questioned Costs: $78,400 – This is the amount of indirect costs charged to the program.

Finding 2022-005 – Indirect Cost Allocations In response to the finding, GEM will improve program costs allocation documentation by instituting the following controls and procedures. GEM will allocate indirect costs and charges to the NSF program based on incurred costs and monthly allocations approved by the program administrator. These indirect costs will be separately reported in the accounting records. Anticipated date of completion: Monthly journal entry is set up with calculations for determining the dollar amount. The date of completion was October 2022 and have been updated since then. Responsible party: Jamie D. Hicks, Senior Accounting Manager

2021-006

2022-007 Allowable Cost Documentation Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.

Finding 2022-007 – Allowable Cost Documentation In response to the finding, GEM addressed allowable cost documentation by instituting the following: GEM established a formal credit card policy in the employee handbook that explains the policy and procedures for turning in receipts monthly. Anticipated date of completion: This policy has been in effect since September 30, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

2022-007 Allowable Cost Documentation Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must be adequately documented. Condition: We selected 45 non-payroll expenses for testing. Of those 45, 30 were found to have insufficient documentation to determine if the cost were allowable or unallowable to the federal program. The 30 expenses found to have insufficient documentation were purchased on a credit card. Cause: The Organization did not maintain sufficient internal controls over credit card usage to ensure detailed receipts were available to support the expense charged to the federal program. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs charged to federal programs are adequately documented. Without a policy that requires detailed receipts to be submitted for credit card charges, there is a risk that unallowable costs are charged to the program. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization implement internal controls that require detailed receipts to be submitted for all credit card charges. The charges listed on the receipts should be reviewed for allowability and approved by the appropriate personnel before charging to the federal program. Response: The Organization will implement a formal credit card policy which requires that detailed receipts be submitted for review and approval for all credit card charges. Questioned Costs: $9,987. This is the total known cost from the 30 transactions identified in our sample to have insufficient documentation.

Finding 2022-007 – Allowable Cost Documentation In response to the finding, GEM addressed allowable cost documentation by instituting the following: GEM established a formal credit card policy in the employee handbook that explains the policy and procedures for turning in receipts monthly. Anticipated date of completion: This policy has been in effect since September 30, 2023. Responsible party: Jamie Hicks, Senior Accounting Manager

2022-008 Allowable Cost Determination and Subaward Monitoring Federal Program: Research and Development Cluster (ALN 47.041, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP). Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient. Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities. Effect: The Organization was not compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP). Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant. Response: The Organization will establish appropriate procedures for sub awardee monitoring. Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.

Finding 2022-008 – Allowable Cost Determination and Subaward Monitoring In response to the finding, GEM enhances subaward monitoring by instituting the following. GEM updated its sub awardee procedures to require supporting documentation of actual costs to ensure appropriate recording of grant expenses in GEM’s records. Anticipated date of completion: This was implemented September 30, 2023. Responsible party: Dr. Marcus Huggans Principal Investigator

2022-008 Allowable Cost Determination and Subaward Monitoring Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 8/31/22) Federal Agency: National Science Foundation Criteria: 2 CFR 200.403 requires that costs must have been incurred and recognized in accordance with generally accepted accounting principles (GAAP). Condition: We selected 45 non-payroll expenses for testing. Of those 45, 1 was a journal entry to accrue for a passthrough payment to a subaward recipient. Supporting documentation indicated that this journal entry was recorded based on a budgeted amount and not actual performance by the subaward recipient. Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities. Effect: The Organization was not in compliance with 2 CFR 200.403 which requires that costs must be incurred and recognized in accordance with generally accepted accounting principles (GAAP). Without a policy to monitor the sub awardee, there is a risk that Organization passes through funds without verifying that the sub awardee has performed under the grant. Identification as a repeat finding, if applicable: The finding is not a repeat finding of the prior year. Recommendation: We recommend the Organization establish policy and procedures to monitor the sub awardee. These policies and procedures should include a requirement that the sub awardee presents supporting documentation to the Organization to demonstrate actual cost and performance under the agreement prior to the Organization recording the expense to the grant. Response: The Organization will establish appropriate procedures for sub awardee monitoring. Questioned Costs: None. An adjustment was posted to remove the costs that were booked based on budget from current year expenditures.

Finding 2022-008 – Allowable Cost Determination and Subaward Monitoring In response to the finding, GEM enhances subaward monitoring by instituting the following. GEM updated its sub awardee procedures to require supporting documentation of actual costs to ensure appropriate recording of grant expenses in GEM’s records. Anticipated date of completion: This was implemented September 30, 2023. Responsible party: Dr. Marcus Huggans Principal Investigator

THE ORGANIZATION LACKS WRITTEN POLICIES, APPROVAL PROCDURES AND DOCUMENTATION TO ALLOCATE INDIRECT COSTS TO THE PROGRAM.

Finding 2021-005 ? Indirect Cost AllocationsIn response to the finding, GEM will improve program costs allocation documentation by instituting the following controls and procedures:GEM will allocate indirect costs and charges to NSF program based on incurred costs and monthly allocations approved by the program administrator. These indirect costs will be separately reported in the accounting records. Written policies and procedures document specific definitions for indirect, direct, and unallowable costs.

THE ORGANIZATION LACKED WRITTEN POLICIES AND PROCDURES TO EXECUTE APPROPRIATE SUBAWARD MONITORING RESPONSIBILITIES.

Finding 2021-006 ? Subaward MonitoringIn response to the finding, GEM enhance subaward monitoring by instituting the following:GEM will establish written documentation to ensure appropriate oversight of sub-awardee compliance with NSF program responsibilities. Documentation outlines roles and responsibilities for communication and management of sub-awardee activity as well as procedures and roles for addressing non-compliance with program terms.