EIN: 841966957
UEI: HV2MRM9NP7J5
Audited by: Hinkle + Landers, PC
Oversight agency: 12 [Department of Defense]
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Data as of September 2, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on May 21, 2026. 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 November 21, 2026 (79 days from today).
What is a management decision? →Type of Finding: (C) Finding that Does Not Rise to the Level of a Significant Deficiency (Other Matters) Involving Internal Control Over Financial Reporting Condition During our review of personnel documentation, we selected 8 employee personnel files for testing from a population of 8 employees for the year ended December 31, 2023. For 5 of 8 employees selected, management was unable to provide a completed Form I-9 (or evidence of compliant electronic completion/retention) upon request. Criteria Federal regulations require employers to complete and retain Form I-9 for each individual hired for employment in the United States and to make Forms I-9 available for inspection. Forms I-9 must generally be retained for three years after the date of hire or one year after employment is terminated, whichever is later. Effect Not properly completing and retaining Form I-9s may result in noncompliance with federal employment eligibility requirements and could expose the organization to potential fines, penalties, or sanctions. Additionally, inadequate personnel records weaken internal controls over human resources and payroll. Cause Staff responsible for onboarding were not trained on I-9 requirements, and management did not implement compensating review controls. Recommendation Management should implement a documented I-9 compliance process that requires Form I-9 completion within required timeframes for all new hires. Management should also review current personnel records to identify missing I-9s and remediate where permissible, retaining documentation of remediation actions. Views of Responsible Officials and Planned Corrective Action New Space will comply with federal employment eligibility requirements by ensuring a Form I-9 is completed for every employee within three business days of their start date. Employees must provide acceptable documentation as required, and completed forms will be securely maintained and retained for the required period. The Financial Analyst will periodically review personnel files to confirm compliance, and any missing or incomplete forms will be addressed promptly with documentation of corrective actions retained. Policy Owner: Financial Analyst; Implementation Date: January 31, 2024
Show full finding ▾Hide full finding ▴Type of Finding: (C) Finding that Does Not Rise to the Level of a Significant Deficiency (Other Matters) Involving Internal Control Over Financial Reporting Condition During our review of personnel documentation, we selected 8 employee personnel files for testing from a population of 8 employees for the year ended December 31, 2023. For 5 of 8 employees selected, management was unable to provide a completed Form I-9 (or evidence of compliant electronic completion/retention) upon request. Criteria Federal regulations require employers to complete and retain Form I-9 for each individual hired for employment in the United States and to make Forms I-9 available for inspection. Forms I-9 must generally be retained for three years after the date of hire or one year after employment is terminated, whichever is later. Effect Not properly completing and retaining Form I-9s may result in noncompliance with federal employment eligibility requirements and could expose the organization to potential fines, penalties, or sanctions. Additionally, inadequate personnel records weaken internal controls over human resources and payroll. Cause Staff responsible for onboarding were not trained on I-9 requirements, and management did not implement compensating review controls. Recommendation Management should implement a documented I-9 compliance process that requires Form I-9 completion within required timeframes for all new hires. Management should also review current personnel records to identify missing I-9s and remediate where permissible, retaining documentation of remediation actions. Views of Responsible Officials and Planned Corrective Action New Space will comply with federal employment eligibility requirements by ensuring a Form I-9 is completed for every employee within three business days of their start date. Employees must provide acceptable documentation as required, and completed forms will be securely maintained and retained for the required period. The Financial Analyst will periodically review personnel files to confirm compliance, and any missing or incomplete forms will be addressed promptly with documentation of corrective actions retained. Policy Owner: Financial Analyst; Implementation Date: January 31, 2024
Response: Management concurs with the finding. Corrective Action Plan: NewSpace Nexus will comply with federal employment eligibility requirements by ensuring a Form I-9 is completed for every employee within three business days of their start date. Employees must provide acceptable documentation as required, and completed forms will be securely maintained and retained for the required period. The Financial Analyst will periodically review personnel files to confirm compliance, and any missing or incomplete forms will be addressed promptly with documentation of corrective actions retained. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst by: January 31st, 2024
2022-001
Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting Condition During our audit, we noted that New Space has not established comprehensive, formalized written policies and procedures governing key financial and compliance areas. While certain processes appear to be performed in practice, they are not documented in a consistent or formal manner, nor do they explicitly incorporate requirements outlined in the Uniform Guidance. Criteria In accordance with the Uniform Guidance (2 CFR Part 200), non-federal entities are required to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes the development and implementation of formal, written policies and procedures that incorporate applicable requirements of the Uniform Guidance. Effect Without formalized policies and procedures that incorporate Uniform Guidance requirements, there is an increased risk of inconsistent practices, noncompliance with federal regulations, and errors in financial reporting or grant administration. Additionally, the absence of documented controls may hinder continuity in operations and training of personnel. Cause Policies and procedures were not formally designed, approved, and maintained; responsibility for maintaining compliance documentation was not assigned and monitored. Recommendation We recommend that management develop, document, and implement comprehensive written policies and procedures over financial management and federal award compliance. These policies should be aligned with the requirements of the Uniform Guidance and address, at a minimum: • Allowable costs and cost principles • Procurement standards • Cash management • Subrecipient monitoring (if applicable) • Reporting and record retention • Internal controls over compliance • Management should also ensure these policies are communicated to relevant personnel and reviewed periodically for updates and compliance with current regulations. Views of Responsible Officials and Planned Corrective Action New Space will maintain written financial and grants management policies to support consistent operations and compliance with Uniform Guidance (2 CFR Part 200). These policies will cover key areas including allowable costs, procurement, cash management, subrecipient monitoring, reporting, record retention, and internal controls. The Financial Analyst will be responsible for maintaining and updating these policies, with oversight from the Executive Director, and policies will be reviewed at least annually and updated as needed. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Show full finding ▾Hide full finding ▴Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting Condition During our audit, we noted that New Space has not established comprehensive, formalized written policies and procedures governing key financial and compliance areas. While certain processes appear to be performed in practice, they are not documented in a consistent or formal manner, nor do they explicitly incorporate requirements outlined in the Uniform Guidance. Criteria In accordance with the Uniform Guidance (2 CFR Part 200), non-federal entities are required to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes the development and implementation of formal, written policies and procedures that incorporate applicable requirements of the Uniform Guidance. Effect Without formalized policies and procedures that incorporate Uniform Guidance requirements, there is an increased risk of inconsistent practices, noncompliance with federal regulations, and errors in financial reporting or grant administration. Additionally, the absence of documented controls may hinder continuity in operations and training of personnel. Cause Policies and procedures were not formally designed, approved, and maintained; responsibility for maintaining compliance documentation was not assigned and monitored. Recommendation We recommend that management develop, document, and implement comprehensive written policies and procedures over financial management and federal award compliance. These policies should be aligned with the requirements of the Uniform Guidance and address, at a minimum: • Allowable costs and cost principles • Procurement standards • Cash management • Subrecipient monitoring (if applicable) • Reporting and record retention • Internal controls over compliance • Management should also ensure these policies are communicated to relevant personnel and reviewed periodically for updates and compliance with current regulations. Views of Responsible Officials and Planned Corrective Action New Space will maintain written financial and grants management policies to support consistent operations and compliance with Uniform Guidance (2 CFR Part 200). These policies will cover key areas including allowable costs, procurement, cash management, subrecipient monitoring, reporting, record retention, and internal controls. The Financial Analyst will be responsible for maintaining and updating these policies, with oversight from the Executive Director, and policies will be reviewed at least annually and updated as needed. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Response: Management concurs with the finding. Corrective Action Plan: NewSpace Nexus will maintain written financial and grants management policies to support consistent operations and compliance with Uniform Guidance (2 CFR Part 200). These policies will cover key areas including allowable costs, procurement, cash management, subrecipient monitoring, reporting, record retention, and internal controls. The Financial Analyst will be responsible for maintaining and updating these policies, with oversight from the Executive Director, and policies will be reviewed at least annually and updated as needed. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst, by March 31st, 2024
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition For the year ended December 31, 2023, we reviewed required reporting for the award. Of 4 required quarterly Federal Financial Reports (FFR, SF-425), 1 was submitted after the required due date (reporting period: Q2]; due date: 30 days after end of quarter; submitted: 9/14/2023). Of 4 quarterly Technical Progress Reports tested, 1 was submitted late (periods: 1; due: 30 days after end of quarter; submitted: 6/1/2023). The 3 remaining Technical Progress Report had no evidence of submission. Required annual reports (Annual Performance Progress Report and SAM.gov annual financial assistance representations/certifications, were not submitted to AFRL as of 12/31/2023. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified financial and performance/technical reports by the 30th calendar day after the end of each reporting period, and require specified annual reports. Additionally, Uniform Guidance includes requirements addressing financial and performance reporting as applicable to the award. Effect Late or missing reporting reduces AFRL/DoD’s ability to timely monitor award performance and compliance and increases the risk of delayed identification of performance or financial issues requiring corrective action. Cause Reporting calendar control not established; responsibilities not assigned; supervisory review not performed; staff turnover; unclear interpretation of award terms. Recommendation All status reports should be prepared on time and reviewed before submission to AFRL. Management should implement a documented reporting control that (1) maps each required report to due dates, (2) assigns preparation/review/approval responsibilities (titles), (3) retains evidence of review and submission, and (4) performs periodic supervisory monitoring of on-time submission (e.g., quarterly checklist). Views of Responsible Officials and Planned Corrective Action New Space will ensure all required financial and programmatic reports are prepared and submitted on time in accordance with grant requirements. A centralized reporting calendar will track deadlines, and responsibilities for preparation, review, and submission will be clearly assigned. Program reports will be prepared by the VP Programs Manager, reviewed by the Executive Director, and documentation of submission will be retained. Financial reports will be prepared by the Financial Analyst, reviewed by the Executive Director, and documentation of submission will be retained. Periodic checks will be performed to ensure compliance, and any issues will be addressed promptly. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition For the year ended December 31, 2023, we reviewed required reporting for the award. Of 4 required quarterly Federal Financial Reports (FFR, SF-425), 1 was submitted after the required due date (reporting period: Q2]; due date: 30 days after end of quarter; submitted: 9/14/2023). Of 4 quarterly Technical Progress Reports tested, 1 was submitted late (periods: 1; due: 30 days after end of quarter; submitted: 6/1/2023). The 3 remaining Technical Progress Report had no evidence of submission. Required annual reports (Annual Performance Progress Report and SAM.gov annual financial assistance representations/certifications, were not submitted to AFRL as of 12/31/2023. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified financial and performance/technical reports by the 30th calendar day after the end of each reporting period, and require specified annual reports. Additionally, Uniform Guidance includes requirements addressing financial and performance reporting as applicable to the award. Effect Late or missing reporting reduces AFRL/DoD’s ability to timely monitor award performance and compliance and increases the risk of delayed identification of performance or financial issues requiring corrective action. Cause Reporting calendar control not established; responsibilities not assigned; supervisory review not performed; staff turnover; unclear interpretation of award terms. Recommendation All status reports should be prepared on time and reviewed before submission to AFRL. Management should implement a documented reporting control that (1) maps each required report to due dates, (2) assigns preparation/review/approval responsibilities (titles), (3) retains evidence of review and submission, and (4) performs periodic supervisory monitoring of on-time submission (e.g., quarterly checklist). Views of Responsible Officials and Planned Corrective Action New Space will ensure all required financial and programmatic reports are prepared and submitted on time in accordance with grant requirements. A centralized reporting calendar will track deadlines, and responsibilities for preparation, review, and submission will be clearly assigned. Program reports will be prepared by the VP Programs Manager, reviewed by the Executive Director, and documentation of submission will be retained. Financial reports will be prepared by the Financial Analyst, reviewed by the Executive Director, and documentation of submission will be retained. Periodic checks will be performed to ensure compliance, and any issues will be addressed promptly. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Response: Management concurs with the finding. Corrective Action Plan: NewSpace Nexus will ensure all required financial and programmatic reports are prepared and submitted on time in accordance with grant requirements. A centralized reporting calendar will track deadlines, and responsibilities for preparation, review, and submission will be clearly assigned. Program reports will be prepared by the VP Programs Manager, reviewed by the Executive Director, and documentation of submission will be retained. Financial reports will be prepared by the Financial Analyst, reviewed by the Executive Director, and documentation of submission will be retained. Periodic checks will be performed to ensure compliance, and any issues will be addressed promptly. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst, by March 31st, 2024
2022-004
Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards (H) Instance of Material Non-Compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Procurement Award Period: 06/01/2021-05/31/2026 Questioned Costs: $419,036 Condition We tested 12 noncompetitive/sole-source procurement(s) from a population of 15 procurement transactions charged to the award during 2023, totaling $628,722. For 10 of 12 procurement files (totaling $419,036), the files did not include (a) documentation supporting the rationale for using a noncompetitive method and (b) documentation of approvals required by New Space policy and/or award terms. New Space provided a sole-source justification during inquiry; however, it was not retained in the procurement file at the time of our testing. Criteria Management is responsible for establishing and maintaining internal controls to ensure procurement activities are conducted in accordance with applicable requirements and that sufficient documentation is maintained to support procurement decisions, including the use of noncompetitive procurement methods. Recipients/subrecipients must maintain procurement records sufficient to detail the history of each procurement transaction, including the rationale for the procurement method, contractor selection/rejection, and the basis for the contract price. Noncompetitive procurement may be used only under specific circumstances (e.g., single source; emergency; written Federal/PTE approval when required; inadequate competition after solicitation). Recipients/subrecipients must establish, document, and maintain effective internal control over the Federal award. Effect Without adequate documentation supporting sole-source procurements, New Space cannot demonstrate that procurement decisions were appropriate or compliant. This increases the risk of noncompliance with procurement requirements, limits transparency, and may result in questioned costs or disallowed expenditures. Cause Procurement policy lacked a required checklist/control for documenting sole-source basis and retaining approvals; or control not operating due to training/turnover. Recommendation Management should implement a documented sole-source procurement control requiring: (1) pre-award written justification tying to an allowable noncompetitive circumstance, (2) documented price/cost basis, (3) documented required approvals, and (4) retention in the procurement file; assign ownership to the financial analyst and require periodic file quality reviews. Management should also review existing procurement files to identify and remediate missing documentation and provide training to staff responsible for procurement activities. Views of Responsible Officials and Planned Corrective Action New Space will follow federal procurement requirements in accordance with 2 CFR 200 to ensure all purchases are properly documented and supported. All purchases must be necessary, reasonable, and allowable. For sole-source procurements, a written justification, price or cost support, and required approvals must be completed prior to purchase and retained in the procurement file. The Financial Analyst will ensure documentation is complete before payment, and the Executive Director will perform periodic reviews. Existing files will be reviewed and updated as needed. Policy Owner: Financial Analyst; Implementation Date: January 31, 2024
Show full finding ▾Hide full finding ▴Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards (H) Instance of Material Non-Compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Procurement Award Period: 06/01/2021-05/31/2026 Questioned Costs: $419,036 Condition We tested 12 noncompetitive/sole-source procurement(s) from a population of 15 procurement transactions charged to the award during 2023, totaling $628,722. For 10 of 12 procurement files (totaling $419,036), the files did not include (a) documentation supporting the rationale for using a noncompetitive method and (b) documentation of approvals required by New Space policy and/or award terms. New Space provided a sole-source justification during inquiry; however, it was not retained in the procurement file at the time of our testing. Criteria Management is responsible for establishing and maintaining internal controls to ensure procurement activities are conducted in accordance with applicable requirements and that sufficient documentation is maintained to support procurement decisions, including the use of noncompetitive procurement methods. Recipients/subrecipients must maintain procurement records sufficient to detail the history of each procurement transaction, including the rationale for the procurement method, contractor selection/rejection, and the basis for the contract price. Noncompetitive procurement may be used only under specific circumstances (e.g., single source; emergency; written Federal/PTE approval when required; inadequate competition after solicitation). Recipients/subrecipients must establish, document, and maintain effective internal control over the Federal award. Effect Without adequate documentation supporting sole-source procurements, New Space cannot demonstrate that procurement decisions were appropriate or compliant. This increases the risk of noncompliance with procurement requirements, limits transparency, and may result in questioned costs or disallowed expenditures. Cause Procurement policy lacked a required checklist/control for documenting sole-source basis and retaining approvals; or control not operating due to training/turnover. Recommendation Management should implement a documented sole-source procurement control requiring: (1) pre-award written justification tying to an allowable noncompetitive circumstance, (2) documented price/cost basis, (3) documented required approvals, and (4) retention in the procurement file; assign ownership to the financial analyst and require periodic file quality reviews. Management should also review existing procurement files to identify and remediate missing documentation and provide training to staff responsible for procurement activities. Views of Responsible Officials and Planned Corrective Action New Space will follow federal procurement requirements in accordance with 2 CFR 200 to ensure all purchases are properly documented and supported. All purchases must be necessary, reasonable, and allowable. For sole-source procurements, a written justification, price or cost support, and required approvals must be completed prior to purchase and retained in the procurement file. The Financial Analyst will ensure documentation is complete before payment, and the Executive Director will perform periodic reviews. Existing files will be reviewed and updated as needed. Policy Owner: Financial Analyst; Implementation Date: January 31, 2024
Response: Management concurs with the finding. Corrective Action Plan: NewSpace Nexus will follow federal procurement requirements in accordance with 2 CFR 200 to ensure all purchases are properly documented and supported. All purchases must be necessary, reasonable, and allowable. For sole-source procurements, a written justification, price or cost support, and required approvals must be completed prior to purchase and retained in the procurement file. The Financial Analyst will ensure documentation is complete before payment, and the Executive Director will perform periodic reviews. Existing files will be reviewed and updated as needed. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst, by January 31st, 2024
2022-006
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Subrecipient Monitoring Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition We tested 2 grant subrecipients of New Space from a population of 2 subrecipients awarded during 2023, totaling $110,721. For 2 of 2 subrecipient files (totaling $110,721), the files did not include (a) documentation supporting submission of subaward contract to FSRF (now SAM.gov at time of testing) (b) documentation supporting submission of subrecipient monitoring and management plan to AFRL (c) documentation supporting submission of subrecipient agreement including scope of work to AFRL. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified subaward information by the end of the month following the month the award was made, and require specified subrecipient monitoring reports be submitted no later than 90 days after the award date. Additionally, Uniform Guidance includes requirements addressing subrecipient financial and performance reporting as applicable to the award. Effect Failure to report subawards may result in noncompliance with grant requirements, reduced transparency, and increased risk that subrecipients are not properly monitored. This could lead to questioned costs, potential repayment of funds, or jeopardize future funding. Cause Subaward setup and reporting responsibilities were not assigned and tracked via a standardized checklist; supervisory review and documentation retention controls were not in place. Recommendation New Space should implement formal policies and procedures to ensure all subawards are properly documented and reported to the grantor and related federal online system in accordance with grant requirements. This should include assigning responsibility, implementing tracking mechanisms, conducting periodic reviews for compliance, and maintaining documentation of submission of required information to all sources. Views of Responsible Officials and Planned Corrective Action New Space will implement procedures to ensure subrecipients are properly documented, reported, and monitored in accordance with grant requirements. Each subaward will include a formal agreement and defined scope of work, and required information will be submitted within established timelines. Documentation of submissions and monitoring activities will be maintained, and a tracking process will be used to ensure compliance. The Financial Analyst will manage subrecipient monitoring, with oversight from the Executive Director, and periodic reviews will be conducted. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Subrecipient Monitoring Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition We tested 2 grant subrecipients of New Space from a population of 2 subrecipients awarded during 2023, totaling $110,721. For 2 of 2 subrecipient files (totaling $110,721), the files did not include (a) documentation supporting submission of subaward contract to FSRF (now SAM.gov at time of testing) (b) documentation supporting submission of subrecipient monitoring and management plan to AFRL (c) documentation supporting submission of subrecipient agreement including scope of work to AFRL. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified subaward information by the end of the month following the month the award was made, and require specified subrecipient monitoring reports be submitted no later than 90 days after the award date. Additionally, Uniform Guidance includes requirements addressing subrecipient financial and performance reporting as applicable to the award. Effect Failure to report subawards may result in noncompliance with grant requirements, reduced transparency, and increased risk that subrecipients are not properly monitored. This could lead to questioned costs, potential repayment of funds, or jeopardize future funding. Cause Subaward setup and reporting responsibilities were not assigned and tracked via a standardized checklist; supervisory review and documentation retention controls were not in place. Recommendation New Space should implement formal policies and procedures to ensure all subawards are properly documented and reported to the grantor and related federal online system in accordance with grant requirements. This should include assigning responsibility, implementing tracking mechanisms, conducting periodic reviews for compliance, and maintaining documentation of submission of required information to all sources. Views of Responsible Officials and Planned Corrective Action New Space will implement procedures to ensure subrecipients are properly documented, reported, and monitored in accordance with grant requirements. Each subaward will include a formal agreement and defined scope of work, and required information will be submitted within established timelines. Documentation of submissions and monitoring activities will be maintained, and a tracking process will be used to ensure compliance. The Financial Analyst will manage subrecipient monitoring, with oversight from the Executive Director, and periodic reviews will be conducted. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024
Response: Management concurs with the finding. Corrective Action Plan: NewSpace Nexus will implement procedures to ensure subrecipients are properly documented, reported, and monitored in accordance with grant requirements. Each subaward will include a formal agreement and defined scope of work, and required information will be submitted within established timelines. Documentation of submissions and monitoring activities will be maintained, and a tracking process will be used to ensure compliance. The Financial Analyst will manage subrecipient monitoring, with oversight from the Executive Director, and periodic reviews will be conducted. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst, March 31st, 2024
FAC accepted this audit on February 11, 2026 — management decision was due August 11, 2026.
Type of Finding: (C) Finding that Does Not Rise to the Level of a Significant Deficiency (Other Matters) Involving Internal Control Over Financial Reporting Condition During our review of personnel documentation, we selected 5 employee personnel files for testing from a population of 8 employees for the year ended December 31, 2022. For 5 of 5 employees selected, management was unable to provide a completed Form I-9 (or evidence of compliant electronic completion/retention) upon request. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 37 Criteria Federal regulations require employers to complete and retain Form I-9 for each individual hired for employment in the United States and to make Forms I-9 available for inspection. Forms I-9 must generally be retained for three years after the date of hire or one year after employment is terminated, whichever is later. Effect Not properly completing and retaining Form I-9s may result in noncompliance with federal employment eligibility requirements and could expose the organization to potential fines, penalties, or sanctions. Additionally, inadequate personnel records weaken internal controls over human resources and payroll. Cause Staff responsible for onboarding were not trained on I-9 requirements, and management did not implement compensating review controls. Recommendation Management should implement a documented I-9 compliance process that requires Form I-9 completion within required timeframes for all new hires. Management should also review current personnel records to identify missing I-9s and remediate where permissible, retaining documentation of remediation actions. Views of Responsible Officials and Planned Corrective Action Management concurs and will implement a documented employee onboarding process requiring timely completion and retention of Form I-9 for all new hires. Existing personnel files will be reviewed and missing I-9s will be remediated where permissible. Management will retain evidence of completion and periodic compliance review. Owned by: Financial Analyst By: January 31, 2023.
Show full finding ▾Hide full finding ▴Type of Finding: (C) Finding that Does Not Rise to the Level of a Significant Deficiency (Other Matters) Involving Internal Control Over Financial Reporting Condition During our review of personnel documentation, we selected 5 employee personnel files for testing from a population of 8 employees for the year ended December 31, 2022. For 5 of 5 employees selected, management was unable to provide a completed Form I-9 (or evidence of compliant electronic completion/retention) upon request. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 37 Criteria Federal regulations require employers to complete and retain Form I-9 for each individual hired for employment in the United States and to make Forms I-9 available for inspection. Forms I-9 must generally be retained for three years after the date of hire or one year after employment is terminated, whichever is later. Effect Not properly completing and retaining Form I-9s may result in noncompliance with federal employment eligibility requirements and could expose the organization to potential fines, penalties, or sanctions. Additionally, inadequate personnel records weaken internal controls over human resources and payroll. Cause Staff responsible for onboarding were not trained on I-9 requirements, and management did not implement compensating review controls. Recommendation Management should implement a documented I-9 compliance process that requires Form I-9 completion within required timeframes for all new hires. Management should also review current personnel records to identify missing I-9s and remediate where permissible, retaining documentation of remediation actions. Views of Responsible Officials and Planned Corrective Action Management concurs and will implement a documented employee onboarding process requiring timely completion and retention of Form I-9 for all new hires. Existing personnel files will be reviewed and missing I-9s will be remediated where permissible. Management will retain evidence of completion and periodic compliance review. Owned by: Financial Analyst By: January 31, 2023.
Response: Management concurs with the finding. Corrective Action Plan: Management will implement and document a formal employee onboarding procedure that requires timely completion and retention of Form I-9 for all new hires. Existing personnel files will be reviewed for completeness and missing I-9 forms will be remediated where permissible. Management will retain evidence of completion and conduct periodic compliance reviews to ensure ongoing adherence. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst — by January 31, 2023.
Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 38 Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition During our audit, we identified errors and inconsistencies in the Schedule of Expenditures of Federal Awards (SEFA). Specifically, the SEFA was not prepared accurately and did not fully reconcile to the underlying accounting records. In addition, the SEFA was prepared without evidence of an independent review to ensure completeness and accuracy prior to submission. Criteria New Space must prepare a SEFA for the period covered by the financial statements and include total federal awards expended as determined under 2 CFR 200.502. New Space must establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with statutes, regulations, and award terms. Effect SEFA inaccuracies increase the risk of material misstatement in required supplementary information and may contribute to improper major federal program selection under the risk-based approach, resulting in a substandard Single Audit. Cause New Space does not have documented SEFA preparation processes and no independent review control assigned to a separate reviewer. Recommendation New Space management should implement a documented SEFA process that (1) prepares the SEFA from the general ledger and grant support, (2) performs and retains a line-by- NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 39 line reconciliation, and (3) requires an independent reviewer (title) to evidence review/approval before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action Management concurs and will implement a documented SEFA preparation process that prepares the SEFA directly from the general ledger and grant support schedules. A line-by-line reconciliation will be performed independently by the financial advisor and reviewed prior to finalization by the executive director, with documentation retained to support accuracy and completeness. Owned by: Financial Analyst By: December 31, 2023
Show full finding ▾Hide full finding ▴Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 38 Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition During our audit, we identified errors and inconsistencies in the Schedule of Expenditures of Federal Awards (SEFA). Specifically, the SEFA was not prepared accurately and did not fully reconcile to the underlying accounting records. In addition, the SEFA was prepared without evidence of an independent review to ensure completeness and accuracy prior to submission. Criteria New Space must prepare a SEFA for the period covered by the financial statements and include total federal awards expended as determined under 2 CFR 200.502. New Space must establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with statutes, regulations, and award terms. Effect SEFA inaccuracies increase the risk of material misstatement in required supplementary information and may contribute to improper major federal program selection under the risk-based approach, resulting in a substandard Single Audit. Cause New Space does not have documented SEFA preparation processes and no independent review control assigned to a separate reviewer. Recommendation New Space management should implement a documented SEFA process that (1) prepares the SEFA from the general ledger and grant support, (2) performs and retains a line-by- NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 39 line reconciliation, and (3) requires an independent reviewer (title) to evidence review/approval before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action Management concurs and will implement a documented SEFA preparation process that prepares the SEFA directly from the general ledger and grant support schedules. A line-by-line reconciliation will be performed independently by the financial advisor and reviewed prior to finalization by the executive director, with documentation retained to support accuracy and completeness. Owned by: Financial Analyst By: December 31, 2023
2022‐002—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) Response: Management concurs with the finding. Corrective Action Plan: Management will implement a documented SEFA preparation process that derives the SEFA directly from the general ledger and supporting grant schedules. A line-by-line reconciliation will be performed by the financial advisor and independently reviewed prior to finalization by the Executive Director. Documentation supporting the reconciliation and final SEFA will be retained to demonstrate accuracy and completeness. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst — by December 31, 2023.
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Equipment and Real Property Management Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition During our testing of New Space Nexus’ fixed assets, for the year ended December 31, 2022, we examined the sole equipment item purchased with DoD funds, totaling $225,505. We noted this item did not display a tag/label identifying the equipment as federally funded in accordance with PROP Article II. Criteria 2 CFR 200.303 requires the recipient/subrecipient to establish, document, and maintain effective internal control over the federal award. Additionally, 2 CFR 200.313 requires management controls over equipment acquired under a federal award (e.g., a control NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 40 system safeguarding and tracking equipment). The award’s Department of Defense Research and Development General Terms and Conditions, Property (PROP) Article II, requires equipment purchased with DoD funds to be labeled/identified as federally funded. Effect Untagged federally funded equipment increases the risk that New Space cannot readily demonstrate funding source and federal interest, potentially resulting in noncompliance in equipment tracking, inventory, and disposition requirements. Cause Policies/procedures did not specify a tagging requirement for federally funded equipment and management did not perform periodic supervisory review of tagging completeness. Recommendation Management should (1) update written property procedures to require tagging upon receipt, (2) assign a property custodian (title) responsible for tagging and maintaining the property record, (3) perform and document a periodic (at least annual) supervisory review of tagging completeness, and (4) remediate existing items by tagging all identified federally funded equipment. Views of Responsible Officials and Planned Corrective Action Management concurs and will update written property and equipment procedures to require tagging of all federally funded equipment upon receipt. Management will require the Innovation Program Manager responsible for tagging, maintaining property records, and performing at least annual inventory and tagging reviews. All existing federally funded equipment will be reviewed and appropriately tagged. This policy will also be taken upon with the current equipment that is already in use in our facility, including the TVAC machine. Owned by: Innovation Program Manager By: January 30, 2023.
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Equipment and Real Property Management Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition During our testing of New Space Nexus’ fixed assets, for the year ended December 31, 2022, we examined the sole equipment item purchased with DoD funds, totaling $225,505. We noted this item did not display a tag/label identifying the equipment as federally funded in accordance with PROP Article II. Criteria 2 CFR 200.303 requires the recipient/subrecipient to establish, document, and maintain effective internal control over the federal award. Additionally, 2 CFR 200.313 requires management controls over equipment acquired under a federal award (e.g., a control NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 40 system safeguarding and tracking equipment). The award’s Department of Defense Research and Development General Terms and Conditions, Property (PROP) Article II, requires equipment purchased with DoD funds to be labeled/identified as federally funded. Effect Untagged federally funded equipment increases the risk that New Space cannot readily demonstrate funding source and federal interest, potentially resulting in noncompliance in equipment tracking, inventory, and disposition requirements. Cause Policies/procedures did not specify a tagging requirement for federally funded equipment and management did not perform periodic supervisory review of tagging completeness. Recommendation Management should (1) update written property procedures to require tagging upon receipt, (2) assign a property custodian (title) responsible for tagging and maintaining the property record, (3) perform and document a periodic (at least annual) supervisory review of tagging completeness, and (4) remediate existing items by tagging all identified federally funded equipment. Views of Responsible Officials and Planned Corrective Action Management concurs and will update written property and equipment procedures to require tagging of all federally funded equipment upon receipt. Management will require the Innovation Program Manager responsible for tagging, maintaining property records, and performing at least annual inventory and tagging reviews. All existing federally funded equipment will be reviewed and appropriately tagged. This policy will also be taken upon with the current equipment that is already in use in our facility, including the TVAC machine. Owned by: Innovation Program Manager By: January 30, 2023.
2022-003—EQUIPMENT MANAGEMENT (EQUIPMENT IDENTIFICATION/TAGGING) Response: Management concurs with the finding. Corrective Action Plan: Management will update written property and equipment procedures to require tagging of all federally funded equipment upon receipt. The Innovation Program Manager will be responsible for tagging equipment, maintaining property records, and performing at least annual inventory and tagging reviews. All existing federally funded equipment currently in use, including the TVAC machine, will be reviewed and appropriately tagged. Designation of Employee Position Responsible for Meeting Deadline: Innovation Program Manager — by January 31, 2023.
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 41 Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition For the year ended December 31, 2022, we reviewed required reporting for the award. Of 4 required quarterly Federal Financial Reports (FFR, SF-425), 3 were submitted after the required due date (reporting periods: Q1–Q3]; due dates: 30 days after end of quarter; submitted: 1/5/2023). Of 2 quarterly Technical Progress Reports tested, 1 was submitted late (periods: 1; due: 30 days after end of quarter; submitted: 1/5/2023). Required annual reports (Annual Performance Progress Report and SAM.gov annual financial assistance representations/certifications, were not submitted to AFRL as of 12/31/2022. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified financial and performance/technical reports by the 30th calendar day after the end of each reporting period, and require specified annual reports. Additionally, Uniform Guidance includes requirements addressing financial and performance reporting as applicable to the award. Effect Late or missing reporting reduces AFRL/DoD’s ability to timely monitor award performance and compliance and increases the risk of delayed identification of performance or financial issues requiring corrective action. Cause Reporting calendar control not established; responsibilities not assigned; supervisory review not performed; staff turnover; unclear interpretation of award terms. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 42 Recommendation All status reports should be prepared on time and reviewed before submission to AFRL. Management should implement a documented reporting control that (1) maps each required report to due dates, (2) assigns preparation/review/approval responsibilities (titles), (3) retains evidence of review and submission, and (4) performs periodic supervisory monitoring of on-time submission (e.g., quarterly checklist). Views of Responsible Officials and Planned Corrective Action Management concurs and will implement documented reporting procedures that clearly define required financial, technical, and annual reports, assign preparation and review responsibilities, and establish internal review and approval prior to submission. Reviews of reports and submission will be done by the financial analyst along with the executive director in a timely manner, and management will perform periodic monitoring to ensure reports are submitted timely and in accordance with award requirements. SF- 425s are to be susubmitted to AFRL when the Part 2 invoice of the last month of the quarter are submitted by the financial advisor. Owned by: Financial Analyst By: March 31, 2023.
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 41 Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted Condition For the year ended December 31, 2022, we reviewed required reporting for the award. Of 4 required quarterly Federal Financial Reports (FFR, SF-425), 3 were submitted after the required due date (reporting periods: Q1–Q3]; due dates: 30 days after end of quarter; submitted: 1/5/2023). Of 2 quarterly Technical Progress Reports tested, 1 was submitted late (periods: 1; due: 30 days after end of quarter; submitted: 1/5/2023). Required annual reports (Annual Performance Progress Report and SAM.gov annual financial assistance representations/certifications, were not submitted to AFRL as of 12/31/2022. Criteria The terms and conditions of Award No. FA9453-21-3-1001 require submission of specified financial and performance/technical reports by the 30th calendar day after the end of each reporting period, and require specified annual reports. Additionally, Uniform Guidance includes requirements addressing financial and performance reporting as applicable to the award. Effect Late or missing reporting reduces AFRL/DoD’s ability to timely monitor award performance and compliance and increases the risk of delayed identification of performance or financial issues requiring corrective action. Cause Reporting calendar control not established; responsibilities not assigned; supervisory review not performed; staff turnover; unclear interpretation of award terms. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 42 Recommendation All status reports should be prepared on time and reviewed before submission to AFRL. Management should implement a documented reporting control that (1) maps each required report to due dates, (2) assigns preparation/review/approval responsibilities (titles), (3) retains evidence of review and submission, and (4) performs periodic supervisory monitoring of on-time submission (e.g., quarterly checklist). Views of Responsible Officials and Planned Corrective Action Management concurs and will implement documented reporting procedures that clearly define required financial, technical, and annual reports, assign preparation and review responsibilities, and establish internal review and approval prior to submission. Reviews of reports and submission will be done by the financial analyst along with the executive director in a timely manner, and management will perform periodic monitoring to ensure reports are submitted timely and in accordance with award requirements. SF- 425s are to be susubmitted to AFRL when the Part 2 invoice of the last month of the quarter are submitted by the financial advisor. Owned by: Financial Analyst By: March 31, 2023.
Response: Management concurs with the finding. Corrective Action Plan: Management will implement documented reporting procedures that clearly define all required financial, technical, and annual reports; assign preparation and review responsibilities; and establish an internal review and approval process prior to submission. The Financial Analyst and Executive Director will review reports for accuracy and timeliness. Management will conduct periodic monitoring to ensure reports are submitted in accordance with award requirements. SF-425 reports will be submitted to AFRL at the same time as the Part 2 invoice for the last month of each quarter. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst — by March 31, 2023.
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting (Financial Reporting) Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 43 Condition We reviewed all quarterly SF-425 reports for the award for the year 2022. All reports contained amounts that did not agree to the underlying accounting records. The total absolute difference noted across the reports tested was $4,426,176, primarily related to [e.g., misclassification of expenditures, timing, drawdowns vs expenditures. Criteria Uniform Guidance requires recipients/subrecipients to maintain records that adequately identify the source and application of federal funds and that are supported by source documentation. The recipient/subrecipient must establish, document, and maintain effective internal control over the federal award to provide reasonable assurance of compliance with statutes, regulations, and award terms. The Federal agency’s financial reporting uses OMB-approved government-wide data elements, which at publication consist of the Federal Financial Report (SF-425). Additionally, the award/Partnership Intermediary Agreement requires submission of quarterly SF-425 reports for the award (cite clause/paragraph). Effect AFRL did not receive reliable financial information for monitoring and federal reporting purposes, increasing the risk of incorrect oversight decisions and delayed identification of award issues. Cause No documented reconciliation of SF-425 lines to the general ledger and no independent supervisory review prior to submission. Recommendation New Space should implement a documented SF-425 preparation and review control that (1) reconciles each reported line to the general ledger/supporting schedules, (2) requires an independent reviewer (title) to evidence review and approval before submission, and (3) retains the reconciliation and approval with the submitted report for audit trail purposes. Views of Responsible Officials and Planned Corrective Action Management concurs and will establish a documented SF-425 preparation procedure requiring reconciliation of all reported amounts to the general ledger and supporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 44 schedules. The financial analyst will prepare the report based on the monitored running budget and the executive director will review and approve each report prior to submission to AFRL. Owned by: Financial Analyst By: March 31, 2023.
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Reporting (Financial Reporting) Award Period: 06/01/2021-05/31/2026 Questioned Costs: None Noted NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 43 Condition We reviewed all quarterly SF-425 reports for the award for the year 2022. All reports contained amounts that did not agree to the underlying accounting records. The total absolute difference noted across the reports tested was $4,426,176, primarily related to [e.g., misclassification of expenditures, timing, drawdowns vs expenditures. Criteria Uniform Guidance requires recipients/subrecipients to maintain records that adequately identify the source and application of federal funds and that are supported by source documentation. The recipient/subrecipient must establish, document, and maintain effective internal control over the federal award to provide reasonable assurance of compliance with statutes, regulations, and award terms. The Federal agency’s financial reporting uses OMB-approved government-wide data elements, which at publication consist of the Federal Financial Report (SF-425). Additionally, the award/Partnership Intermediary Agreement requires submission of quarterly SF-425 reports for the award (cite clause/paragraph). Effect AFRL did not receive reliable financial information for monitoring and federal reporting purposes, increasing the risk of incorrect oversight decisions and delayed identification of award issues. Cause No documented reconciliation of SF-425 lines to the general ledger and no independent supervisory review prior to submission. Recommendation New Space should implement a documented SF-425 preparation and review control that (1) reconciles each reported line to the general ledger/supporting schedules, (2) requires an independent reviewer (title) to evidence review and approval before submission, and (3) retains the reconciliation and approval with the submitted report for audit trail purposes. Views of Responsible Officials and Planned Corrective Action Management concurs and will establish a documented SF-425 preparation procedure requiring reconciliation of all reported amounts to the general ledger and supporting NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 44 schedules. The financial analyst will prepare the report based on the monitored running budget and the executive director will review and approve each report prior to submission to AFRL. Owned by: Financial Analyst By: March 31, 2023.
Response: Management concurs with the finding. Corrective Action Plan: Management will establish a documented SF-425 preparation procedure requiring reconciliation of all reported amounts to the general ledger and supporting schedules. The Financial Analyst will prepare the SF-425 based on the monitored running budget, and the Executive Director will review and approve each report prior to submission to AFRL. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst — by March 31, 2023.
Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Procurement Award Period: 06/01/2021-05/31/2026 Questioned Costs: $1,058,526 Condition We tested 6 noncompetitive/sole-source procurement(s) from a population of 22 procurement transactions charged to the award during 2022, totaling $1,142,531. For 6 of 6 procurement files (totaling $1,058,526), the files did not include (a) documentation supporting the rationale for using a noncompetitive method and (b) documentation of approvals required by New Space policy and/or award terms. New Space provided a sole-source justification during inquiry; however, it was not retained in the procurement file at the time of our testing. Criteria Management is responsible for establishing and maintaining internal controls to ensure procurement activities are conducted in accordance with applicable requirements and that sufficient documentation is maintained to support procurement decisions, including the use of noncompetitive procurement methods. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 45 Recipients/subrecipients must maintain procurement records sufficient to detail the history of each procurement transaction, including the rationale for the procurement method, contractor selection/rejection, and the basis for the contract price. Noncompetitive procurement may be used only under specific circumstances (e.g., single source; emergency; written Federal/PTE approval when required; inadequate competition after solicitation). Recipients/subrecipients must establish, document, and maintain effective internal control over the Federal award. Effect Without adequate documentation supporting sole-source procurements, New Space cannot demonstrate that procurement decisions were appropriate or compliant. This increases the risk of noncompliance with procurement requirements, limits transparency, and may result in questioned costs or disallowed expenditures. Cause Procurement policy lacked a required checklist/control for documenting sole-source basis and retaining approvals; or control not operating due to training/turnover. Recommendation Management should implement a documented sole-source procurement control requiring: (1) pre-award written justification tying to an allowable noncompetitive circumstance, (2) documented price/cost basis, (3) documented required approvals, and (4) retention in the procurement file; assign ownership to the financial analyst and require periodic file quality reviews. Management should also review existing procurement files to identify and remediate missing documentation and provide training to staff responsible for procurement activities. Views of Responsible Officials and Planned Corrective Action Management concurs and will update procurement procedures to require pre-award sole-source justification, documented price or cost analysis, documented approvals, and retention of all required documentation in the procurement file. The executive director will review existing files for completeness, remediate missing documentation where possible, and provide training to staff, subcontractors, and vendors involved in procurement. Owned by: Financial Analyst By: January 31, 2023.
Show full finding ▾Hide full finding ▴Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-compliance related to Federal Awards Federal Award Information Funding Agency: U.S. Department of Defense, passed through the Air Force Research Laboratory Title: New Space New Mexico Small Satellite Manufacturing and Innovation Hub (iHub) AL #: 12.599 Award #: FA9453-21-3-1001 Compliance Requirement: Procurement Award Period: 06/01/2021-05/31/2026 Questioned Costs: $1,058,526 Condition We tested 6 noncompetitive/sole-source procurement(s) from a population of 22 procurement transactions charged to the award during 2022, totaling $1,142,531. For 6 of 6 procurement files (totaling $1,058,526), the files did not include (a) documentation supporting the rationale for using a noncompetitive method and (b) documentation of approvals required by New Space policy and/or award terms. New Space provided a sole-source justification during inquiry; however, it was not retained in the procurement file at the time of our testing. Criteria Management is responsible for establishing and maintaining internal controls to ensure procurement activities are conducted in accordance with applicable requirements and that sufficient documentation is maintained to support procurement decisions, including the use of noncompetitive procurement methods. NEW SPACE NEXUS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2022 45 Recipients/subrecipients must maintain procurement records sufficient to detail the history of each procurement transaction, including the rationale for the procurement method, contractor selection/rejection, and the basis for the contract price. Noncompetitive procurement may be used only under specific circumstances (e.g., single source; emergency; written Federal/PTE approval when required; inadequate competition after solicitation). Recipients/subrecipients must establish, document, and maintain effective internal control over the Federal award. Effect Without adequate documentation supporting sole-source procurements, New Space cannot demonstrate that procurement decisions were appropriate or compliant. This increases the risk of noncompliance with procurement requirements, limits transparency, and may result in questioned costs or disallowed expenditures. Cause Procurement policy lacked a required checklist/control for documenting sole-source basis and retaining approvals; or control not operating due to training/turnover. Recommendation Management should implement a documented sole-source procurement control requiring: (1) pre-award written justification tying to an allowable noncompetitive circumstance, (2) documented price/cost basis, (3) documented required approvals, and (4) retention in the procurement file; assign ownership to the financial analyst and require periodic file quality reviews. Management should also review existing procurement files to identify and remediate missing documentation and provide training to staff responsible for procurement activities. Views of Responsible Officials and Planned Corrective Action Management concurs and will update procurement procedures to require pre-award sole-source justification, documented price or cost analysis, documented approvals, and retention of all required documentation in the procurement file. The executive director will review existing files for completeness, remediate missing documentation where possible, and provide training to staff, subcontractors, and vendors involved in procurement. Owned by: Financial Analyst By: January 31, 2023.
Response: Management concurs with the finding. Corrective Action Plan: Management will update procurement procedures to require pre-award sole-source justification, documented price or cost analysis, documented approvals, and retention of all required documentation in the procurement file. The Executive Director will review existing procurement files for completeness, remediate missing documentation where possible, and provide training to staff, subcontractors, and vendors involved in procurement. Designation of Employee Position Responsible for Meeting Deadline: Financial Analyst — by January 31, 2023.
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