EDISON WELDING INSTITUTE

Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster Federal Award Identification Number and Year - Various, 2024 Pass-through Entity - Various Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - No Criteria - EWI should only charge indirect costs approved in accordance with the provisional indirect cost rate approved by the cognizant granting agency. Condition - EWI overcharged indirect costs to the granting agencies by $26,632 during 2024. Questioned Costs - $26,632 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - Questioned costs were computed by using the approved indirect cost rates and comparing the indirect costs that were charged to the grants. Context - During audit procedures, all direct costs charged to the grants were reviewed and indirect costs were recalculated based on the approved provisional indirect cost rates. The calculated indirect costs were then compared to the indirect costs actually charged to the grants. The difference was computed as an amount overcharged to the grants of $26,632. Cause and Effect - EWI failed to properly review the indirect costs that were charged to the grants to ensure that indirect costs were properly applied. Recommendation - EWI should periodically review the indirect costs and the approved indirect cost rates that are actually charged to the grants. Views of Responsible Officials and Corrective Action Plan - Management agrees with the finding as reported and has taken measures to strengthen the review of indirect costs charged to the grants.

CFDA Number, Federal Agency, and Program Name - CFDA No. 12.800, Department of Defense, Air Force Defense Research Sciences Program Federal Award Identification Number and Year - GE Sub 20182090 Pass through Entity - GE Global Research Finding Type - Significant deficiency Repeat Finding - No Criteria - Costs must meet the following general criteria in order to be allowable under Federal awards: Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (2 CFR 200.403(a,b)). Condition - Edison Welding Institute, Inc. (EWI) assigned costs to a federal award that were not an allowable activity in accordance with the award agreement. These costs assigned were for fee, a profit rate that EWI is able to assign to various federal awards. Questioned Costs - $22,950 Identification of How Questioned Costs Were Computed - Total amount of fees charged to the grant for the fiscal year that were not allowable costs in accordance with the grant agreement. Context - Of the sample of 12 grants selected for testing for the research and development cluster major program, 1 grant had unallowable costs charged. This type of cost was disallowed under the specific grant identified. Cause and Effect - EWI did not have proper controls in place to ensure that fee costs assigned to federal awards were allowable and adequately document in the approved award agreement. For this specific federal award, there was a misunderstanding as EWI's initial proposal included a fee, but the final federal award agreement did not specifically allow for fee. As a result, EWI charged fees that were not allowable in accordance with the grant agreement. Recommendation - EWI should implement a control process to review all new federal awards to ensure that fees charged to the grant are allowable and adequately documented in the award agreement. Views of Responsible Officials and Corrective Action Plan - Going forward, the Government Proposal team will obtain specific fee allowability details (allowability and percentage) from the appropriate agency contact before the bid/no bid decision is made. It will be documented in the bid decision worksheet. The legal team will verify allowability and percentage from the contracting officer during the contracting process and ensure the details are disclosed in the contractual documents.

CFDA Number, Federal Agency, and Program Name - Research and Development Cluster; Department of Defense, Department of Transportation, National Aeronautics and Space Administration, Nuclear Regulatory Commission; Various Programs Federal Award Identification Number and Year - N/A Pass through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - Per requirements for provisional rates from 2 CFR 200, Appendix IV, provisional indirect cost rates are required to be obtained for each fiscal period and final rates based on actual allowable costs are required to be obtained after each fiscal period. If provisional rates exceed the final rates based on actual allowable costs, adjustment is required to be made resulting in return of funds. Condition - Edison Welding Institute, Inc. (EWI) did not request provisional indirect cost rate approval for the year ended June 30, 2019 from their cognizant agency (Department of Defense), but used a previously approved rate for the year ended June 30, 2018. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - Provisional indirect cost rate approval was not obtained for the year ended June 30, 2019. Instead, EWI used a previously approved provisional indirect cost rate that was approved for the year ended June 30, 2018. EWI monitored actual indirect costs throughout the year to ensure that the indirect costs charged to the grant under the fiscal year 2018 provisional rates did not exceed actual indirect costs. As indirect costs charged under the fiscal year 2018 provisional rates did not exceed the costs allowed under the fiscal year 2019 final rates, there are no questioned costs. Cause and Effect - EWI did not have a process in place to ensure that the annual provisional and final indirect cost rate approvals were obtained in a timely manner resulting in EWI having to use fiscal year 2018 rates for fiscal year 2019. Recommendation - EWI should implement a process in place to ensure that annual provisional and final indirect cost rate approvals are obtained in a timely manner. Views of Responsible Officials and Planned Corrective Actions - Going forward, the fiscal year final rate approval will be requested within 3 months of audit completion. Fiscal year provisional rates will be requested within 3 months of completion of budget.