EIN: 520808385
UEI: PH8BDKCEREL6
Audited by: Rogers & Company PLLC
Oversight agency: 12 [Department of Defense]
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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 February 9, 2023. 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 August 9, 2023 (1115 days ago).
What is a management decision? →During the 2021 audit, we noted that the Schedule of Expenditures of Federal Awards (SEFA) was not properly prepared by management. We noted that certain expenses were not properly allocated to the correct award period, which resulted in the 2020-2021 award appearing to be underspent by a material amount. Upon further investigation, management had to reallocate funds back to the 2020-2021 grant period to properly reflect spending on the Federal award. Additionally, certain salary expenses were allocated to Management and General when they should have been coded to the Federal award within the General Ledger. Cause: USNSCC's Annual Federal award, generally, does not have over-lapping periods. The award received for the 2020 - 2021 fiscal year was extended, which resulted in there being a period of overlap between May and September 2021 in which USNSCC had two grants operating simultaneously. Expenses were mistakenly allocated to the incorrect award during this time, which resulted in the 2020-2021 award appearing to be underspent. Additionally, USNSCC's time-tracking allocation process was not fully developed, which resulted in the salaries of certain employee's being allocated to Management and General when they should have been coded to the Federal award within the General Ledger. Effect or Potential Effect: The Schedule of Expenditures of Federal Awards was initially understated by approximately $190,000. Additionally, expenses between each grant were not properly determined, which made one award appear underspent. Questioned Costs: None Context: USNSCC failed to properly track and allocate expenses in fiscal year 2021, which resulted in the SEFA not being properly prepared. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC implement policies and procedures to ensure that expenses are appropriately allocated to the appropriate Federal grant agreement so that the SEFA can be prepared to appropriately reflect expenses incurred.
Show full finding ▾Hide full finding ▴Finding 2021-001: Preparation of Schedule of Expenditures of Federal Awards Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement: CFR 200.510 ?Financial Statements? requires recipients of Federal funds to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the recipient's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. Additionally, management is responsible for the preparation and fair presentation of the SEFA. Condition: During the 2021 audit, we noted that the Schedule of Expenditures of Federal Awards (SEFA) was not properly prepared by management. We noted that certain expenses were not properly allocated to the correct award period, which resulted in the 2020-2021 award appearing to be underspent by a material amount. Upon further investigation, management had to reallocate funds back to the 2020-2021 grant period to properly reflect spending on the Federal award. Additionally, certain salary expenses were allocated to Management and General when they should have been coded to the Federal award within the General Ledger. Cause: USNSCC's Annual Federal award, generally, does not have over-lapping periods. The award received for the 2020 - 2021 fiscal year was extended, which resulted in there being a period of overlap between May and September 2021 in which USNSCC had two grants operating simultaneously. Expenses were mistakenly allocated to the incorrect award during this time, which resulted in the 2020-2021 award appearing to be underspent. Additionally, USNSCC's time-tracking allocation process was not fully developed, which resulted in the salaries of certain employee's being allocated to Management and General when they should have been coded to the Federal award within the General Ledger. Effect or Potential Effect: The Schedule of Expenditures of Federal Awards was initially understated by approximately $190,000. Additionally, expenses between each grant were not properly determined, which made one award appear underspent. Questioned Costs: None Context: USNSCC failed to properly track and allocate expenses in fiscal year 2021, which resulted in the SEFA not being properly prepared. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC implement policies and procedures to ensure that expenses are appropriately allocated to the appropriate Federal grant agreement so that the SEFA can be prepared to appropriately reflect expenses incurred.
Views of Responsible Officials and Planned Corrective Actions: Starting in 2022, USNSCC reviewed and recorded expenses very carefully, paying extra close attention to grant expenditures, and the grant period to which they relate. Previous confusion around proper grant period allocation occurred as a result of 2 concurring grants, with overlapping periods. There were no grants with overlapping periods in 2022. Additionally, a new accounting system (Intacct) was implemented in 2022, which allows to more precisely track expenses and allocate them to correct periods, projects and funding sources (grants). Additionally, the training management system is now integrated with the accounting system to ensure that data (including reporting periods), are correctly transferred from one system to another to avoid errors arising from manual data entry. With improved reporting coming out of the accounting system, SEFA preparation will be correct going forward. Anticipated Completion Date: Beginning of FY 2022. Responsible Official: Management and Accounting Team.
In April 2021, we noted that USNSCC changed their payroll allocation process to require timesheets, however, timesheets were not always consistent with allocations in the general ledger. We noted instances in which hours reflected on an employee?s timesheet did not agree to hours allocated for the employee on the labor allocation detail for the general ledger entries. Additionally, we noted that the labor allocation calculations for each employee were not based on that employee?s individual salary, and instead, is done in total for all employees for the month. Given certain employees have significantly different salaries, this approach may cause time to be over or under changed to a specific program, based on the magnitude of the individuals? salary. Cause: USNSCC's allocation methodology is based on the totals Effect or Potential Effect: USNSCC could over or under charge salaries to the grant based on their current allocation methodology. Questioned Costs: Unknown. Context: USNSCC failed to properly allocate employee time based on an individual?s time reporting and individual salary. Identification as a Repeat Finding, if Applicable: 2020-002 Recommendation: We recommend that USNSCC tighten controls on timesheets to ensure hours consistently agree to labor allocation details. We also recommend that USNSCC revise their allocation methodology to allocate the time spent at the individual level, as opposed to total organizational salaries.
Show full finding ▾Hide full finding ▴Finding 2021-002: Time Tracking and Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: In April 2021, we noted that USNSCC changed their payroll allocation process to require timesheets, however, timesheets were not always consistent with allocations in the general ledger. We noted instances in which hours reflected on an employee?s timesheet did not agree to hours allocated for the employee on the labor allocation detail for the general ledger entries. Additionally, we noted that the labor allocation calculations for each employee were not based on that employee?s individual salary, and instead, is done in total for all employees for the month. Given certain employees have significantly different salaries, this approach may cause time to be over or under changed to a specific program, based on the magnitude of the individuals? salary. Cause: USNSCC's allocation methodology is based on the totals Effect or Potential Effect: USNSCC could over or under charge salaries to the grant based on their current allocation methodology. Questioned Costs: Unknown. Context: USNSCC failed to properly allocate employee time based on an individual?s time reporting and individual salary. Identification as a Repeat Finding, if Applicable: 2020-002 Recommendation: We recommend that USNSCC tighten controls on timesheets to ensure hours consistently agree to labor allocation details. We also recommend that USNSCC revise their allocation methodology to allocate the time spent at the individual level, as opposed to total organizational salaries.
Views of Responsible Officials and Planned Corrective Actions: Starting in 2022, all staff are required to complete timesheets in the iSolved system, which is directly linked to the payroll processing system. Payroll is not processed without a completed and approved time sheet. The accounting team records all payroll related expenses in accordance with how staff time is entered on the timesheets, on an individual employee basis. As a result, labor allocations are recorded on an individual basis based on each person?s respective salary amount. Anticipated Completion Date: January 2022. Responsible Official: Management and Accounting Team.
2020-002
We noted per our review that financial information within the FFR reports did not reconcile with internal accounting records. Additionally, we noted that FFRs were submitted late during fiscal year 2021. Cause: This was in part due to transition to a new accounting system, and appropriate procedures were not implemented to track expenses being reported versus any subsequent adjustments made. Late submissions caused by significant turn-over in management personnel during 2021. Effect or Potential Effect: USNSCC misreported its Federal expenditures on its FFRs. USNSCC also was not in compliance with the award agreement's requirement for FFRs to be submitted within 30 days of quarter end. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes. We were unable to verify that FFRs were submitted timely. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend that USNSCC work to establish processes to ensure that the Federal grant can be reconciled and reported within the 30 day time frame. We also recommend that USNSCC ensure that all FFRs are generated and supported by internal financial records.
Show full finding ▾Hide full finding ▴Finding 2021-004: Grant Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): The U.S. Department of Defense requires that USNSCC submit a quarterly Federal Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant agreement, within 30 days following the end of each calendar quarter. Condition: We noted per our review that financial information within the FFR reports did not reconcile with internal accounting records. Additionally, we noted that FFRs were submitted late during fiscal year 2021. Cause: This was in part due to transition to a new accounting system, and appropriate procedures were not implemented to track expenses being reported versus any subsequent adjustments made. Late submissions caused by significant turn-over in management personnel during 2021. Effect or Potential Effect: USNSCC misreported its Federal expenditures on its FFRs. USNSCC also was not in compliance with the award agreement's requirement for FFRs to be submitted within 30 days of quarter end. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes. We were unable to verify that FFRs were submitted timely. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend that USNSCC work to establish processes to ensure that the Federal grant can be reconciled and reported within the 30 day time frame. We also recommend that USNSCC ensure that all FFRs are generated and supported by internal financial records.
Views of Responsible Officials and Planned Corrective Actions: USNSCC previously went through a conversion of accounting systems, during which time some information did not transfer correctly from one system to another. With the implementation of Intacct in 2022, USNSCC is able to track expenditures by grant, and view information in the same format as required to be reported in the FFR reports. Throughout 2022 USNSCC filed accurate and complete quarterly FFR reports on time. The information reported on the FFR reports is now traceable and substantiated with payroll records, training support from the training management system, and other direct expenses that are now tracked in integrated, cloud-based systems like Bill.com and Nexonia. Anticipated Completion Date: Beginning of FY 2022 Responsible Official: Management and Accounting Team.
2020-003
USNSCC does not consistently follow its own internal procurement policy, as we noted multiple instances where there was no supporting documentation as required by their procurement policy. Cause: USNSCC does not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not followed, and thus there lies the potential that USNSCC will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition. Questioned Costs: None identified. Context: USNSCC failed to properly document due diligence with respect to these requirements. Identification as a Repeat Finding, if Applicable: 2020-004 Recommendation: We recommend that USNSCC revise their current procurement policy to be in compliance with Federal requirements. We also continue to recommend that USNSCC enforce compliance with their procurement policy, and retain all required documentation with respect to procurement procedures performed.
Show full finding ▾Hide full finding ▴Finding 2021-005: Procurement Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 "General procurement standards" states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local and tribal laws and regulations, provided that the procurements conform to applicable Federal law and standards. Furthermore, paragraph 219 "Competition" states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: USNSCC does not consistently follow its own internal procurement policy, as we noted multiple instances where there was no supporting documentation as required by their procurement policy. Cause: USNSCC does not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not followed, and thus there lies the potential that USNSCC will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition. Questioned Costs: None identified. Context: USNSCC failed to properly document due diligence with respect to these requirements. Identification as a Repeat Finding, if Applicable: 2020-004 Recommendation: We recommend that USNSCC revise their current procurement policy to be in compliance with Federal requirements. We also continue to recommend that USNSCC enforce compliance with their procurement policy, and retain all required documentation with respect to procurement procedures performed.
Views of Responsible Officials and Planned Corrective Actions: US Naval Sea Cadets Corp. implemented a procurement policy at the beginning of 2022. Both HQ and training contingents are required to adhere to this policy. Anticipated Completion Date: Beginning of FY 2022. Responsible Official: Management.
2020-004
FAC accepted this audit on September 29, 2021 — management decision was due March 29, 2022.
We noted that during 2020, one employee's time was allocated to the federal program at a different rate than what was permitted in the grant agreement, resulting in more time being charged to the grant than should have been allowed. Cause: It is our understanding that this was due to an oversight within the finance department. USNSCC?s current policies require that employee time is allocated based on the approved grant budget submitted to the grantor. This policy was not always followed during fiscal year 2020. Effect or Potential Effect: USNSCC could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None identified. Context: USNSCC failed to properly allocate employee time based on the approved grant budget. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: 2019-002. Recommendation: We recommend that management enforce its current payroll policies and ensure each employee's time is allocated based on the established grant budget. Furthermore, the finance department should prepare and maintain a reconciliation between the program allocations (as documented in the approved timesheets) and the general ledger in order to ensure a full and accurate audit trail of payroll expenditures.
Show full finding ▾Hide full finding ▴Finding 2020-002: Time Tracking and Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: We noted that during 2020, one employee's time was allocated to the federal program at a different rate than what was permitted in the grant agreement, resulting in more time being charged to the grant than should have been allowed. Cause: It is our understanding that this was due to an oversight within the finance department. USNSCC?s current policies require that employee time is allocated based on the approved grant budget submitted to the grantor. This policy was not always followed during fiscal year 2020. Effect or Potential Effect: USNSCC could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None identified. Context: USNSCC failed to properly allocate employee time based on the approved grant budget. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: 2019-002. Recommendation: We recommend that management enforce its current payroll policies and ensure each employee's time is allocated based on the established grant budget. Furthermore, the finance department should prepare and maintain a reconciliation between the program allocations (as documented in the approved timesheets) and the general ledger in order to ensure a full and accurate audit trail of payroll expenditures.
Views of Responsible Officials: With the implementation of the new accounting system, Intacct, and it?s partner timesheet and expense software, Nexonia, beginning with the grant year 2021 (which started April 23rd 2021) all salaries and employee benefit costs will be allocated based on actual time worked and tracked by employees using Nexonia. The monthly allocation will be automated by the Intacct system, preventing any further user error or oversight. This change in allocation application was communicated to our Grantor and accepted in early calendar year 2021 with the 2021 Grant budget. We hope this will remove the comment if not next year, then the following as it was implemented April 23, 2021.
2019-002
We noted per our review that financial information within the FFR reports was based on the data that was available at the time of submission, which did not subsequently reconcile to the adjusted total federal expenditures for that period. Cause: This was in part due to transition to a new accounting system, and appropriate procedures were not implemented to track expenses being reported versus any subsequent adjustments made. Effect or Potential Effect: USNSCC could have misreported its federal expenditures on its FFRs. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes. Identification as a Repeat Finding, if Applicable: 2019-003 Recommendation: We recommend that USNSCC work to establish processes to ensure that the federal grant can be reconciled and reported within the 30 day time frame.
Show full finding ▾Hide full finding ▴Finding 2020-003: Grant Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): The U.S. Department of Defense requires that USNSCC submit a quarterly Federal Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant agreement, within 30 days following the end of each calendar quarter. Condition: We noted per our review that financial information within the FFR reports was based on the data that was available at the time of submission, which did not subsequently reconcile to the adjusted total federal expenditures for that period. Cause: This was in part due to transition to a new accounting system, and appropriate procedures were not implemented to track expenses being reported versus any subsequent adjustments made. Effect or Potential Effect: USNSCC could have misreported its federal expenditures on its FFRs. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes. Identification as a Repeat Finding, if Applicable: 2019-003 Recommendation: We recommend that USNSCC work to establish processes to ensure that the federal grant can be reconciled and reported within the 30 day time frame.
Views of Responsible Officials: Due to the way our training funding and reporting process functions, Sea Cadets recognizes that there is an inherent delay that cannot be removed. To allow for future audit reconciliations the finance department has implemented a new year end procedure that will require all Grant expenses booked back to the prior calendar year after the submission of the Q4 FFR to be tagged to a new dimension that will allow us to report the reconciling items between the Q4 FFR and year end cumulative financials. We expect this to remove the comment in future years.
2019-003
USNSCC does not consistently follow its own internal procurement policy, as we noted multiple instances where there was no supporting documentation as required by their procurement policy. Cause: USNSCC does not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not followed, and thus there lies the potential that USNCC will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of federal expenditures based on lack of fair competition. Questioned Costs: None identified. Context: USNSCC failed to properly document due diligence with respect to these requirements. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC revise their current procurement policy to be in line with Federal requirements, and ensure that all required documentation is retained with respect to any procurement procedures performed.
Show full finding ▾Hide full finding ▴Finding 2020-004: Procurement Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 "General procurement standards" states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local and tribal laws and regulations, provided that the procurements conform to applicable Federal law and standards. Furthermore, paragraph 219 "Competition" states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: USNSCC does not consistently follow its own internal procurement policy, as we noted multiple instances where there was no supporting documentation as required by their procurement policy. Cause: USNSCC does not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year. Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not followed, and thus there lies the potential that USNCC will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of federal expenditures based on lack of fair competition. Questioned Costs: None identified. Context: USNSCC failed to properly document due diligence with respect to these requirements. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC revise their current procurement policy to be in line with Federal requirements, and ensure that all required documentation is retained with respect to any procurement procedures performed.
Views of Responsible Officials: With the appointment of Andrew Lennon as Executive Director in May 2021 Sea Cadets began a full review of all policies and procedures in place at Headquarters and in the Field. This review brought to our attention a lack of historical follow through on the Headquarters side for vendor selection form procedures. As part of our currently underway policy and procedure overhaul we will review our current procurement policies and update them to be in line with the federal guidelines for ease of universal application, a practice we have already been implementing starting with the updated capitalization threshold in February 2020.
FAC accepted this audit on January 14, 2021 — management decision was due July 14, 2021.
We noted numerous instances of payroll transactions which lacked a clear audit trail from the employee timesheet to the program allocations of salaries and related expenses in the general ledger (throughout 2019). Cause: It is our understanding that this was due to high turnover within the finance department during 2019, and proper policies and procedures were not in place at that time. USNSCC?s current policies require employees to complete timesheets for each pay period, which document the time worked per day and an allocation to departments, projects and affiliates, as applicable. Throughout the year, these policies were not followed, or were not followed consistently by USNSCC employees. Effect or Potential Effect: USNSCC could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None identified. Context: USNSCC failed to keep adequate time records to support the amounts charged to the general ledger throughout the year and subsequently had to make significant adjustments to properly state the allocation of personnel costs. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management enforce its current payroll policies, ensure each employee completes a timesheet that pertains to each payroll period and of which documents the allocation of time worked on departments, projects and affiliates (per the policy), and obtain the appropriate approval signatures. Furthermore, the finance department should prepare and maintain a reconciliation between the program allocations (as documented in the approved timesheets) and the general ledger in order to ensure a full and accurate audit trail of payroll expenditures
Show full finding ▾Hide full finding ▴Finding 2019-002: Time Tracking and Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: We noted numerous instances of payroll transactions which lacked a clear audit trail from the employee timesheet to the program allocations of salaries and related expenses in the general ledger (throughout 2019). Cause: It is our understanding that this was due to high turnover within the finance department during 2019, and proper policies and procedures were not in place at that time. USNSCC?s current policies require employees to complete timesheets for each pay period, which document the time worked per day and an allocation to departments, projects and affiliates, as applicable. Throughout the year, these policies were not followed, or were not followed consistently by USNSCC employees. Effect or Potential Effect: USNSCC could inadvertently mischarge salaries and wages to its various programs. Questioned Costs: None identified. Context: USNSCC failed to keep adequate time records to support the amounts charged to the general ledger throughout the year and subsequently had to make significant adjustments to properly state the allocation of personnel costs. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management enforce its current payroll policies, ensure each employee completes a timesheet that pertains to each payroll period and of which documents the allocation of time worked on departments, projects and affiliates (per the policy), and obtain the appropriate approval signatures. Furthermore, the finance department should prepare and maintain a reconciliation between the program allocations (as documented in the approved timesheets) and the general ledger in order to ensure a full and accurate audit trail of payroll expenditures
Views of Responsible Officials: For the duration of the 2020 grant period, Management has utilized Clockify, a cloud based timekeeping software, for all operating employees in order to ensure more accurate timekeeping. In 2021, management will switch over to Intacct for all accounting and financial processes. This includes the Intacct timekeeping module, which will automatically sync with the Dynamic Allocation module in order to automate allocations across departments.
We were informed (and noted per our review) that USNSCC did not submit all the quarterly reports within the time frame required. Additionally, the financial information within the FFR reports was based on the data that is available at the time of submission, which did not subsequently reconcile to the adjusted total federal expenditures for that period. Cause: This was in part due to turnover in the key finance position and proper reconciliations not put in place to track expenses being reported versus any subsequent adjustments made. Effect or Potential Effect: USNSCC could misreported its federal expenditures on its FFRs. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC work to establish processes to ensure that the federal grant can be reconciled and reported within the 30 day time frame.
Show full finding ▾Hide full finding ▴Finding 2019-003: Grant Reporting Information on the Federal Programs: CFDA 12.300 Basic and Applied Scientific Research Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): The U.S. Department of Defense requires that USNSCC submit a quarterly Federal Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant agreement, within 30 days following the end of each calendar quarter. Condition: We were informed (and noted per our review) that USNSCC did not submit all the quarterly reports within the time frame required. Additionally, the financial information within the FFR reports was based on the data that is available at the time of submission, which did not subsequently reconcile to the adjusted total federal expenditures for that period. Cause: This was in part due to turnover in the key finance position and proper reconciliations not put in place to track expenses being reported versus any subsequent adjustments made. Effect or Potential Effect: USNSCC could misreported its federal expenditures on its FFRs. Questioned Costs: None identified. Context: We were unable to verify the completeness and accuracy of the information submitted in the Quarterly FFR's against the amount reported as total grant expenditures and program income for auditing purposes Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that USNSCC work to establish processes to ensure that the federal grant can be reconciled and reported within the 30 day time frame.
Views of Responsible Officials: Due to the inaccuracies reported by Profix, the outsourced accounting firm that preceded the hiring of Katherine Rizzo as the internal Director of Finance, most of 2019 had to be restated. This resulted in the FFRs no longer tying back to the financials. In 2020 and going forward, the Finance and Grant departments will continue working together to ensure timely and accurate closing procedures, with a concentration on completing training audit reviews surrounding the quarterly reports. Additional efforts and updates are being made to Magellan, the online proprietary software used by Management to track and maintain all training data, to automate communications with the field, thus encouraging and enforcing timely reporting of training data to HQ.
FAC accepted this audit on July 15, 2018 — management decision was due January 15, 2019.
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