EIN: 471811249
UEI: FR17LCN9FCK3
Data as of August 26, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on September 30, 2024. 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 March 30, 2025 (514 days ago).
What is a management decision? →Management noted that the 2022 SEFA was understated by $146,051. No issues were noted during the audit regarding the 2023 expenditures reported on the SEFA for the year ended December 31, 2023. Therefore, this compliance finding is not considered to be a material weakness. Cause: While the total expenses reported in the 2022 financial statements was correct, $146,051 of the Federal expenditures were not clearly or properly classified as Federal in the 2022 general ledger. As a result, expenses totaling $146,051 were not included on the 2022 SEFA. Effect or Potential Effect: As a result of the understatement of expenditures reported on the 2022 SEFA, a material misstatement of the 2022 financial statements occurred. In addition, the 2023 SEFA includes the unreported 2022 costs of $146,051. Questioned Costs: None. Repeat Finding: See Finding 2022-006. Recommendation: We recommend that management implement procedures to easily segregate Federal expenditures so that an accurate SEFA can be prepared on a consistent basis.
Show full finding ▾Hide full finding ▴Finding 2023-003: Error in the 2022 SEFA (Significant Deficiency) Information on the Federal Programs: Both Major Programs Criteria or Specific Requirement: In accordance with 2 CFR Section 200.508 (b), an entity is required to prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA). Condition: Management noted that the 2022 SEFA was understated by $146,051. No issues were noted during the audit regarding the 2023 expenditures reported on the SEFA for the year ended December 31, 2023. Therefore, this compliance finding is not considered to be a material weakness. Cause: While the total expenses reported in the 2022 financial statements was correct, $146,051 of the Federal expenditures were not clearly or properly classified as Federal in the 2022 general ledger. As a result, expenses totaling $146,051 were not included on the 2022 SEFA. Effect or Potential Effect: As a result of the understatement of expenditures reported on the 2022 SEFA, a material misstatement of the 2022 financial statements occurred. In addition, the 2023 SEFA includes the unreported 2022 costs of $146,051. Questioned Costs: None. Repeat Finding: See Finding 2022-006. Recommendation: We recommend that management implement procedures to easily segregate Federal expenditures so that an accurate SEFA can be prepared on a consistent basis.
Views of Responsible Officials and Action Taken: FCE agrees with the finding and has implemented a corrective action plan that requires the accounting and reporting to be performed by an outside CPA firm with expertise in accrual basis accounting, cost allocation and grant accounting concepts. During FCE’s monthly financial review, we examine each grant/class level in QB, ensuring that expenses are properly charged to the correct grant in the correct period of performance.
2022-006
FCE did not have a documented procurement policy until January 2024. In addition, for all disbursements tested, FCE did not verify, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. However, FCE provided documentation of the verification that occurred after the payments had been made and no exclusion issues were noted with the vendors. Cause: Prior to the implementation of a formal procurement policy in January 2024, FCE did not require that evidence of SAM checks be maintained in its vendor files. However, FCE performed a search after the payments had been made. In this way, FCE was able to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded.Effect or Potential Effect: FCE was not in compliance with the procurement policy and documentation requirements of the Uniform Guidance until January 2024. Questioned Costs: None. Repeat Finding: See Findings 2022-002 and 2022-003. Recommendation: FCE established internal controls in January 2024 to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Show full finding ▾Hide full finding ▴Finding 2023-004: Procurement, Suspension, and Debarment (Significant Deficiency) Information on the Federal Programs: Both Major Programs Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: FCE did not have a documented procurement policy until January 2024. In addition, for all disbursements tested, FCE did not verify, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. However, FCE provided documentation of the verification that occurred after the payments had been made and no exclusion issues were noted with the vendors. Cause: Prior to the implementation of a formal procurement policy in January 2024, FCE did not require that evidence of SAM checks be maintained in its vendor files. However, FCE performed a search after the payments had been made. In this way, FCE was able to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded.Effect or Potential Effect: FCE was not in compliance with the procurement policy and documentation requirements of the Uniform Guidance until January 2024. Questioned Costs: None. Repeat Finding: See Findings 2022-002 and 2022-003. Recommendation: FCE established internal controls in January 2024 to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Views of Responsible Officials and Action Taken: We agree with the finding and recommendation and have implemented a verification step in our vendor approval and onboarding process which requires all vendors to be run through the SAM website and debarment search. We also require an annual verification to be performed for all vendors.
2022-002, 2022-003
FCE did not maintain documentary evidence of the review and approval of either its requests for cash draw downs or its performance reports in accordance with the internal control requirements for the first three quarters in 2023. However, internal controls were implemented during the fourth quarter of 2023 and no issues were noted with approvals in the fourth quarter. In addition, the requests for cash draw downs were not submitted in a timely manner during the year ended December 31, 2023. Cause: Until the fourth quarter of 2023, the review and approval was performed verbally and was not documented. As a result, FCE was not able to provide adequate support to document the review and approval of either its requests for cash draw downs or its performance reports for the first three quarters of 2023. In addition, as FCE was experiencing transition in the finance team, the requests for cash draw downs were not submitted in a timely manner. Effect or Potential Effect: FCE was not able to provide evidence of the implementation of internal controls related to review and approval for cash draw downs and performance reports for the first three quarters of 2023 and FCE did not timely submit its requests for cash draw downs. Questioned Costs: None. Repeat Finding: See Finding 2022-005. Recommendation: FCE should retain documentary evidence of its review and approval process, which should occur prior to submission of the requests for cash draw downs and performance reports. FCE should endeavor to timely submit its requests for cash draw downs.
Show full finding ▾Hide full finding ▴Finding 2023-005: Cash Management and Reporting (Significant Deficiency) Information on the Federal Programs: Both Major Programs Criteria or Specific Requirement: 2 CFR Section 200.303 requires auditees to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: FCE did not maintain documentary evidence of the review and approval of either its requests for cash draw downs or its performance reports in accordance with the internal control requirements for the first three quarters in 2023. However, internal controls were implemented during the fourth quarter of 2023 and no issues were noted with approvals in the fourth quarter. In addition, the requests for cash draw downs were not submitted in a timely manner during the year ended December 31, 2023. Cause: Until the fourth quarter of 2023, the review and approval was performed verbally and was not documented. As a result, FCE was not able to provide adequate support to document the review and approval of either its requests for cash draw downs or its performance reports for the first three quarters of 2023. In addition, as FCE was experiencing transition in the finance team, the requests for cash draw downs were not submitted in a timely manner. Effect or Potential Effect: FCE was not able to provide evidence of the implementation of internal controls related to review and approval for cash draw downs and performance reports for the first three quarters of 2023 and FCE did not timely submit its requests for cash draw downs. Questioned Costs: None. Repeat Finding: See Finding 2022-005. Recommendation: FCE should retain documentary evidence of its review and approval process, which should occur prior to submission of the requests for cash draw downs and performance reports. FCE should endeavor to timely submit its requests for cash draw downs.
Views of Responsible Officials and Action Taken: FCE implemented new internal controls in the fourth quarter of 2023 and has continued to document all draw down requests, review thereof, and approvals.
2022-005
FAC accepted this audit on September 28, 2023 — management decision was due March 28, 2024.
FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy.
Show full finding ▾Hide full finding ▴Finding 2022-002: Procurement Policy (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Condition: FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy.
Finding 2022-002: Procurement Policy (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Condition: FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy. Action Taken: FCE acknowledges the requirements of the Uniform Guidance and the non-compliance implication for Federal awards. FCE is in the process of developing and implementing a procurement policy to ensure proper competitive procedures are followed with respect to its procurements, specifically its vendors. FCE will ensure that proper documentation is maintained in its files in accordance with the policy to be implemented.
For all disbursements tested, FCE could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None Cause: FCE did not require evidence of SAM checks be maintained in its vendor files. As a result, FCE did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: FCE was not in compliance with the procurement documentation requirements of the Uniform Guidance. As a result, FCE could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: FCE should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Show full finding ▾Hide full finding ▴Finding 2022-003: Procurement, Suspension, and Debarment (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: For all disbursements tested, FCE could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None Cause: FCE did not require evidence of SAM checks be maintained in its vendor files. As a result, FCE did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: FCE was not in compliance with the procurement documentation requirements of the Uniform Guidance. As a result, FCE could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: FCE should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Finding 2022-003: Procurement, Suspension, and Debarment (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: For all disbursements tested, FCE could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Cause: FCE did not require evidence of SAM checks be maintained in its vendor files. As a result, FCE did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: FCE was not in compliance with the procurement documentation requirements of the Uniform Guidance. As a result, FCE could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: FCE should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website. Action Taken: FCE acknowledges the importance of proper vetting procedures and shall implement policies and procedures with respect to screening potential vendors. The policy will include the requirement to consult the System for Award Management (SAM) website to ensure a potential vendor is not suspended, debarred, or otherwise excluded from qualification to receive Federal award funds. Proper documentation to support the completion of the required suspension and debarment searches will be maintained in accordance with the policy.
During the year ended December 31, 2022, FCE had seven grants under ALN 19.040, which supported the same projects and programs and which had different periods of performance. We noted that costs totaling less than $25,000 were incurred outside the period of performance for two of the grants under ALN 19.040. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on requirements related to accounting for federal awards in accordance with the Uniform Guidance. Effect or Potential Effect: FCE charged costs outside the period of performance for two grants under ALN 19.040. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards.
Show full finding ▾Hide full finding ▴Finding 2022-004: Period of Performance (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200 defines the period of performance as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per 2 CFR Section 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Condition: During the year ended December 31, 2022, FCE had seven grants under ALN 19.040, which supported the same projects and programs and which had different periods of performance. We noted that costs totaling less than $25,000 were incurred outside the period of performance for two of the grants under ALN 19.040. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on requirements related to accounting for federal awards in accordance with the Uniform Guidance. Effect or Potential Effect: FCE charged costs outside the period of performance for two grants under ALN 19.040. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards.
Finding 2022-004: Period of Performance (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200 defines the period of performance as the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per 2 CFR Section 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Condition: During the year ended December 31, 2022, FCE had seven grants under ALN 19.040, which supported the same projects and programs which had different periods of performance. We noted that costs totaling less than $25,000 were incurred outside the period of performance for two of the grants under ALN 19.040. Cause: FCE has no accounting policies and procedures in place to provide guidance to management on requirements related to accounting for federal awards in accordance with the Uniform Guidance. Effect or Potential Effect: FCE charged costs outside the period of performance for two grants under ALN 19.040. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Action Taken: FCE acknowledges the discrepancy with respect to Period-of-Performance reporting, and the recommendation to develop accounting policies and procedures for proper financial reporting and compliance with Federal awards. FCE will develop and implement formal accounting policies and procedures to correct this deficiency.
FCE did not maintain documentary evidence of the review and approval of either its requests for cash draw downs or its performance reports in accordance with the internal control requirements. Questioned Costs: None Cause: FCE's management team works collaboratively to prepare the requests for cash draw downs and prepare the performance reports prior to submission. Per discussion with management, the review and approval is performed verbally during this process. As a result, FCE was not able to provide adequate support to document the review and approval of either its requests for cash draw downs or its performance reports. Effect or Potential Effect: FCE was not able to provide evidence of the implementation of internal controls related to review and approval for cash draw downs and performance reports. Therefore, these submissions may have been inaccurately prepared. Recommendation: FCE should retain documentary evidence of its review and approval process, which should occur prior to submission of the requests for cash draw downs and performance reports.
Show full finding ▾Hide full finding ▴Finding 2022-005: Cash Management and Reporting (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.303 requires auditees to establish and maintain effective internal control over federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: FCE did not maintain documentary evidence of the review and approval of either its requests for cash draw downs or its performance reports in accordance with the internal control requirements. Questioned Costs: None Cause: FCE's management team works collaboratively to prepare the requests for cash draw downs and prepare the performance reports prior to submission. Per discussion with management, the review and approval is performed verbally during this process. As a result, FCE was not able to provide adequate support to document the review and approval of either its requests for cash draw downs or its performance reports. Effect or Potential Effect: FCE was not able to provide evidence of the implementation of internal controls related to review and approval for cash draw downs and performance reports. Therefore, these submissions may have been inaccurately prepared. Recommendation: FCE should retain documentary evidence of its review and approval process, which should occur prior to submission of the requests for cash draw downs and performance reports.
Finding 2022-005: Cash Management and Reporting (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.303 requires auditees to establish and maintain effective internal control over federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: FCE did not maintain documentary evidence of the review and approval of either its requests for cash drawdowns or its performance reports in accordance with the internal control requirements. Cause: FCE's management team works collaboratively to prepare the requests for cash draw downs and prepare the performance reports prior to submission. Per discussion with management, the review and approval is performed verbally during this process. As a result, FCE was not able to provide adequate support to document the review and approval of either its requests for cash drawdowns or its performance reports. Effect or Potential Effect: FCE was not able to provide evidence of the implementation of internal controls related to review and approval for cash draw downs and performance reports. Therefore, these submissions may have been inaccurately prepared. Recommendation: FCE should retain documentary evidence of its review and approval process, which should occur prior to submission of the requests for cash draw downs and performance reports. Action Taken: FCE acknowledges the importance of documentation to support review and approval of cash drawdowns and performance reports. FCE will develop and implement formal accounting policies and procedures to ensure that it completes and maintains the proper documentation with respect to requests for an advance or reimbursement (Form SF-270) and filing a progress report (SF-PPR).
The schedule of expenditures of federal awards for the year ended December 31, 2022, did not originally include indirect costs totaling $43,632. Questioned Costs: None Cause: FCE's management prepared the schedule of expenditures of federal awards using only direct costs. However, FCE had applied the 10-percent de minimis indirect cost rate when submitting its financial reports. Effect or Potential Effect: The exclusion of indirect costs caused inaccurate amounts to be reported in the SEFA at the start of the audit. This could have caused an inaccurate major program determination. Recommendation: FCE should implement a process for preparing the SEFA that includes comparing amounts reported in the SEFA to amounts included in financial reports of expenditures that are submitted to federal agencies.
Show full finding ▾Hide full finding ▴Finding 2022-006: Federal Financial Reporting Requirements (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: Code of Federal Regulations (CFR) Section 200.303(b) requires non-federal entities to establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. CFR Section 200.502(a) states that the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of federal awards for the year ended December 31, 2022, did not originally include indirect costs totaling $43,632. Questioned Costs: None Cause: FCE's management prepared the schedule of expenditures of federal awards using only direct costs. However, FCE had applied the 10-percent de minimis indirect cost rate when submitting its financial reports. Effect or Potential Effect: The exclusion of indirect costs caused inaccurate amounts to be reported in the SEFA at the start of the audit. This could have caused an inaccurate major program determination. Recommendation: FCE should implement a process for preparing the SEFA that includes comparing amounts reported in the SEFA to amounts included in financial reports of expenditures that are submitted to federal agencies.
Finding 2022-006: Federal Financial Reporting Requirements (Significant Deficiency) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: Code of Federal Regulations (CFR) Section 200.303(b) requires non-federal entities to establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. CFR Section 200.502(a) states that the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of federal awards for the year ended December 31, 2022, did not originally include indirect costs totaling $43,632. Cause: FCE's management prepared the schedule of expenditures of federal awards using only direct costs. However, FCE had applied the 10-percent de minimis indirect cost rate when submitting its financial reports. Effect or Potential Effect: The exclusion of indirect costs caused inaccurate amounts to be reported in the SEFA at the start of the audit. This could have caused an inaccurate major program determination. Recommendation: FCE should implement a process for preparing the SEFA that includes comparing amounts reported in the SEFA to amounts included in financial reports of expenditures that are submitted to federal agencies. Action Taken: FCE acknowledges the importance of proper Federal Financial Reporting. FCE will develop and implement formal accounting policies and procedures to ensure that Federal Financial Requirements are met. These will include the steps to follow for preparation of the SEFA, including comparing amounts reported in the SEFA to amounts included in financial reports of expenditures that are submitted to Federal agencies.
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