EIN: 411000424
UEI: F6JMJXYQPHJ6
Audited by: Eide Bailly
Oversight agency: 45 [National Endowment for the Arts / National Endowment for the Humanities]
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Data as of August 28, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on December 12, 2025. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by June 12, 2026 (77 days ago).
What is a management decision? →The Organization has documented procurement procedures that conform to applicable federal standards regarding testing vendors for suspension and debarment; however, the procedures were not followed for two vendors selected for testing. Cause: The Organization's internal control process did not identify the two vendors for whom the suspension and debarment verification was not performed. Effect: Payments could be made to recipients who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 14 total transactions were selected for testing. Two vendors did not have support showing the search for suspension and debarment was performed which accounted for $155,100 of $716,818 of federal awards. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization enhance internal control procedures to ensure all suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding. The Organization takes compliance with federal procurement requirements seriously and has already implemented additional internal controls to address this.
Show full finding ▾Hide full finding ▴National Endowment for the Arts Federal Financial Assistance Listing 45.025, Affects all grant awards included under Federal Financial Assistance Listing 45.025 on the Schedule Promotion of the Arts Partnership Agreements Procurement, Suspension, and Debarment Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: The Organization has documented procurement procedures that conform to applicable federal standards regarding testing vendors for suspension and debarment; however, the procedures were not followed for two vendors selected for testing. Cause: The Organization's internal control process did not identify the two vendors for whom the suspension and debarment verification was not performed. Effect: Payments could be made to recipients who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 14 total transactions were selected for testing. Two vendors did not have support showing the search for suspension and debarment was performed which accounted for $155,100 of $716,818 of federal awards. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization enhance internal control procedures to ensure all suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding. The Organization takes compliance with federal procurement requirements seriously and has already implemented additional internal controls to address this.
We acknowledge the audit finding and agree that, for the two vendors identified, documentation of suspension and debarment verification was not completed or retained in accordance with proper internal controls for our federal programs. This was an oversight in our procurement documentation process and not an intentional omission. Neither vendor had any exclusions based on the SAM.gov database record. Since becoming aware of this issue, the organization is in the midst of implementing the following corrective actions to strengthen compliance with suspension and debarment requirements: (1) Revised Procurement Procedures- We will update our written procurement policies and procedures to explicitly require and document suspension and debarment checks prior to the execution of any contract using federal funds. This includes checking the federal SAM.gov database or obtaining a signed certification from the vendor, as permitted. (2) Standardized Documentation- We will create a standardized checklist that must be completed and filed in the procurement record for each vendor before payment of federal funds. This form documents the date, verification method, and staff member responsible. (3) Staff Training- All staff involved in procurement and accounts payable will complete training on federal procurement requirements, including suspension and debarment verification. This training will be repeated annually and upon onboarding of new staff. (4) Internal Control Review- A secondary review step has been added. Before any payment of federal funds is processed, our finance team will verify that the suspension and debarment check is on file. This dual review adds an additional layer of assurance.
FAC accepted this audit on January 17, 2023 — management decision was due July 17, 2023.
In our testing of procurement, suspension and debarment, and subrecipient monitoring, it was identified that the Organization does not check for suspension and debarment before signing subawards with subgrantees. Cause: Lack of understanding of all of the specific requirements under the Uniform Guidance that controls were not adequately designed to ensure compliance with all of these requirements. Effect: By not reviewing the suspension and debarment before signing a subaward, the Organization could grant funds to a subrecipient that was suspended or debarred and need to void the subgrant award. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 transactions out of 934 total transactions was selected for testing. Required documentation to satisfy suspension and debarment prior to entering into a subgrant was not performed for all 60 of the items selected. Repeat Finding from Prior Year: No Recommendation: We recommend that management maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to ensure vendors are not suspended or debarred prior to signing the subaward. Views of Responsible Officials: Management agrees with this finding.
Show full finding ▾Hide full finding ▴2022-002 National Endowment for the Arts Promotion of the Arts Partnership Agreements, 45.025 Procurement, Suspension and Debarment, and Subrecipient Monitoring Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards under assistance listing 45.025 on the Schedule of Expenditures of Federal Awards Criteria: Uniform Guidance set forth the procurement, suspension and debarment, and subrecipient monitoring standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the amount of the transaction. Condition: In our testing of procurement, suspension and debarment, and subrecipient monitoring, it was identified that the Organization does not check for suspension and debarment before signing subawards with subgrantees. Cause: Lack of understanding of all of the specific requirements under the Uniform Guidance that controls were not adequately designed to ensure compliance with all of these requirements. Effect: By not reviewing the suspension and debarment before signing a subaward, the Organization could grant funds to a subrecipient that was suspended or debarred and need to void the subgrant award. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 transactions out of 934 total transactions was selected for testing. Required documentation to satisfy suspension and debarment prior to entering into a subgrant was not performed for all 60 of the items selected. Repeat Finding from Prior Year: No Recommendation: We recommend that management maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to ensure vendors are not suspended or debarred prior to signing the subaward. Views of Responsible Officials: Management agrees with this finding.
Finding 2022-002 Federal Agency Name: National Endowment for the Arts Program Name: Promotion of the Arts Partnership Agreement CFDA # 45.025 Finding Summary: Controls were not adequately designed to ensure compliance with all requirements for procurement, suspension, and debarment under Uniform Guidance. Responsible Individuals: Anne Romens, Vice President and Joshua Feist, Director of Grantmaking Corrective Action Plan: In the future, starting with the next round of subgrant awards, the grants team will verify through the SAM.gov website that potential subgrantees are not suspended or debarred before issuing subgrant agreements. This verification will be documented on the subgrantee file. Estimated Completion Date: March 31, 2023
The Organization has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, but the controls did not operate as designed in certain instances. Cause: The Organization has a process for allocating employee wages based on hours worked, however, the retroactive adjustment to employee pay, bonus allocation for one employee, and one pay period for one employee did not follow this process. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of six employees out of 27 was selected for testing, which accounted for $249,558 of $2,212,036 of federal program expenditures. Five of the six employees tested did not have the retroactive pay increases allocated or calculated properly, one employee had an error in bonus allocation, and one employee had an error in the calculation of payroll allocated for one pay period. The errors are estimated to be approximately $5,385 over the sample. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over timesheet allocation to ensure pay is properly allocated to each grant in accordance with the policy established by the Organization. Views of Responsible Officials: Management agrees with this finding.
Show full finding ▾Hide full finding ▴2022-003 National Endowment for the Arts Promotion of the Arts Partnership Agreements, 45.025 Allowable Activities and Costs and Period of Performance Material Weakness in Internal Control over Compliance and Noncompliance Grant Award Number: Affects all grant awards under assistance listing 45.025 on the Schedule of Expenditures of Federal Awards Criteria: The Organization?s internal control structure should be designed to properly follow the allocation methodology for employees? pay to each grant, in accordance with the policy established by the Organization. Condition: The Organization has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, but the controls did not operate as designed in certain instances. Cause: The Organization has a process for allocating employee wages based on hours worked, however, the retroactive adjustment to employee pay, bonus allocation for one employee, and one pay period for one employee did not follow this process. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of six employees out of 27 was selected for testing, which accounted for $249,558 of $2,212,036 of federal program expenditures. Five of the six employees tested did not have the retroactive pay increases allocated or calculated properly, one employee had an error in bonus allocation, and one employee had an error in the calculation of payroll allocated for one pay period. The errors are estimated to be approximately $5,385 over the sample. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over timesheet allocation to ensure pay is properly allocated to each grant in accordance with the policy established by the Organization. Views of Responsible Officials: Management agrees with this finding.
Finding 2022-003 Federal Agency Name: National Endowment for the Arts Program Name: Promotion of the Arts Partnership Agreement CFDA # 45.025 Finding Summary: The Organization has a process for allocating employee wages based on hours worked, however, retroactive pay adjustments, bonus allocation for one employee, and one pay period for one employee did not follow this process. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Responsible Individuals: Anne Romens, Vice President and Emily Anderson, Chief Administrative Officer Corrective Action Plan: Arts Midwest uses Paylocity, a third-party payroll provider, for employee time tracking and payroll processing. Salary and benefit allocations to departments and grants are based on labor distribution reports generated by Paylocity. The Finance Team will review and verify report parameters and details to ensure they are accurate before the payroll costs are imported into the accounting system. In addition, the finance and operations teams will verify any one-time pay adjustments are correctly calculated and allocated based on related period of hours worked. With the start of a new Chief Financial Officer, this will be a priority for the first quarter of 2023. Estimated Completion Date: March 31, 2023
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