Santa Fe Institute

Control Deficiency ? Suspension and Debarment (Repeated and Modified)Condition: During our testwork over Suspension and Debarment, we noted 1 of 6 covered transactions tested for which SFI did not confirm the vendor was not suspended or debarred prior to entering into the transaction. Criteria or specific requirement: According to ?200.303 Internal controls of 2 CFR Part 200, the non- Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 180.300 outlines the requirements to verify that covered individuals are not excluded or disqualified. Questioned costs: None Context: The prior year corrective action plan had a planned completion date of December 31, 2022, and this covered transaction originated in 2021. Management performed a check at the beginning of 2023, and noted the vendor was not suspended or debarred, but could not substantiate this check retroactively. Cause: Transitions in personnel/management oversight. Effect: Without appropriate controls in place the organization may entered into an agreement with a covered person or entity that is not eligible. Repeat Finding: Yes Recommendation: We recommend management follow internal processes to ensure that checks are performed to conform with 180.300 of the CFR prior to entering into covered transactions. Views of responsible officials: Management agrees with the finding and has strengthened internal controls to meet the requirement. Management has discussed the requirements with all necessary parties and has instituted the new controls for setting up sub-contracts. Explanation of disagreement with audit finding: There is no disagreement with the audit finding.Actions planned in response to finding: Management has implemented additional controls to be performed by the Sponsored Research department and VP of Administration office to better monitor and track sub-contractor debarment status prior to their being brought onboard for work with SFI. Additionally, a list of all vendors that needed Suspension and Debarment from the previous year will be reviewed in January of the following year as SFI utilizes vendors over multiple years due to limited availability of vendors to provide necessary services. Responsible party: Suzette A. Fronk, Chief Financial Officer Planned completion date for corrective action plan: September 1, 2023 Plan to monitor completion of corrective action plan: In conjunction with the VP of Administration, Sponsored Research Office, and the Chief Financial Officer, SFI?s Finance Committee will monitor the completion of the corrective action plan.

Management has implemented additional controls to be performed by the Sponsored Research department and VP of Administration office to better monitor and track sub-contractor debarment status prior to their being brought onboard for work with SFI. Additionally, a list of all vendors that needed Suspension and Debarment from the previous year will be reviewed in January of the following year as SFI utilizes vendors over multiple years due to limited availability of vendors to provide necessary services.Responsible party: Suzette A. Fronk, Chief Financial Officer Planned completion date for corrective action plan: September 1, 2023 Plan to monitor completion of corrective action plan: In conjunction with the VP of Administration, Sponsored Research Office, and the Chief Financial Officer, SFI?s Finance Committee will monitor the completion of the corrective action plan.

2021-002

"Control Deficiency – Suspension and Debarment (Repeated and Modified)Condition: During our testwork over Suspension and Debarment, we noted 1 of 6 covered transactions tested for which SFI did not confirm the vendor was not suspended or debarred prior to entering into the transaction. Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 180.300 outlines the requirements to verify that covered individuals are not excluded or disqualified. Questioned costs: None Context: The prior year corrective action plan had a planned completion date of December 31, 2022, and this covered transaction originated in 2021. Management performed a check at the beginning of 2023, and noted the vendor was not suspended or debarred, but could not substantiate this check retroactively. Cause: Transitions in personnel/management oversight. Effect: Without appropriate controls in place the organization may entered into an agreement with a covered person or entity that is not eligible. Repeat Finding: Yes Recommendation: We recommend management follow internal processes to ensure that checks are performed to conform with 180.300 of the CFR prior to entering into covered transactions. Views of responsible officials: Management agrees with the finding and has strengthened internal controls to meet the requirement. Management has discussed the requirements with all necessary parties and has instituted the new controls for setting up sub-contracts. Explanation of disagreement with audit finding: There is no disagreement with the audit finding.Actions planned in response to finding: Management has implemented additional controls to be performed by the Sponsored Research department and VP of Administration office to better monitor and track sub-contractor debarment status prior to their being brought onboard for work with SFI. Additionally, a list of all vendors that needed Suspension and Debarment from the previous year will be reviewed in January of the following year as SFI utilizes vendors over multiple years due to limited availability of vendors to provide necessary services. Responsible party: Suzette A. Fronk, Chief Financial Officer Planned completion date for corrective action plan: September 1, 2023 Plan to monitor completion of corrective action plan: In conjunction with the VP of Administration, Sponsored Research Office, and the Chief Financial Officer, SFI’s Finance Committee will monitor the completion of the corrective action plan. "

"Management has implemented additional controls to be performed by the Sponsored Research department and VP of Administration office to better monitor and track sub-contractor debarment status prior to their being brought onboard for work with SFI. Additionally, a list of all vendors that needed Suspension and Debarment from the previous year will be reviewed in January of the following year as SFI utilizes vendors over multiple years due to limited availability of vendors to provide necessary services.Responsible party: Suzette A. Fronk, Chief Financial Officer Planned completion date for corrective action plan: September 1, 2023

2021-002

2021?002 ? Control Deficiency ? Suspension and Debarment Federal agency: National Science Foundation Federal program title: Research and Development (R&D) Cluster CFDA Number: 45.169 47.049, 47.070, 47.074, 47.075 Award Period: Various Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance Condition: During our testwork over Suspension and Debarment we noted the following conditions: ? We noted one contractor for which SFI did not confirm that the covered entity was not suspended or debarred. ? We noted that four of the six tested subrecipients did not have a check performed prior to entering into subrecipient agreement during 2021. Criteria or specific requirement: According to ?200.303 Internal controls of 2 CFR Part 200, the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Part 180.300 outlines the requirements to verify that covered individuals are not excluded or disqualified. Questioned costs: None Context: SFI entered into five covered transactions that required applicable checks for suspension and debarment. The first was for a contractor that was initially intended to be an employee. No check was performed prior to approval of the contract. The four new subrecipients did not have documentation of a check being performed prior to executing the agreement within the files. The latter is a violation of SFI's own policy. Cause: Transitions in personnel/management oversight. Effect: Without appropriate controls in place the organization may entered into an agreement with a covered person or entity that is not eligible. Repeat Finding: No Recommendation: Auditor recommends management revise existing policies to ensure vendors are checked for suspension and debarment consistent with 200 CFR 180.300. Views of responsible officials: Management agrees with the finding and will strengthen internal controls to meet the requirement. Management will institute the new control prior to setting up sub-contracts. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Actions planned in response to finding: Management will implement an additional control from the Sponsored Research department that better monitors and tracks sub-contractor debarment status prior to their being brought onboard for work with SFI, instead of concurrently to their entry within the finance team?s accounting records. SFI is currently looking to procure a suspension/debarment software program that can be used in conjunction with the SAM debarment database. Responsible party: Matthew Bechtel, Director of Finance Planned completion date for corrective action plan: December 31, 2022. Plan to monitor completion of corrective action plan: Santa Fe Institute?s Finance Committee will monitor the completion of the corrective action plan.

National Science Foundation Santa Fe Institute respectfully submits the following corrective action plan for the year ended December 31, 2021. Audit period: January 1, 2021 ? December 31, 2021. The findings from the schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDINGS?FINANCIAL STATEMENT AUDIT 2021-001 FINDINGS?FEDERAL AWARD PROGRAMS AUDITS National Science Foundation 2021-002 Research and Development (R&D) Cluster ALN 45.169, 47.049, 47.070, 47.074, and 47.075. Recommendation: Auditor recommends management revise existing policies to ensure vendors are checked for suspension and debarment consistent with 200 CFR 180.300. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management will implement an additional control from the Sponsored Research department that better monitors and tracks sub-contractor debarment status prior to their being brought onboard for work with SFI, instead of concurrently to their entry within the finance team?s accounting records. SFI is currently looking to procure a suspension/debarment software program that can be used in conjunction with the SAM debarment database. Name(s) of the contact person(s) responsible for corrective action: Matthew Bechtel Planned completion date for corrective action plan: December 31, 2022 If the National Science Foundation has questions regarding this plan, please call Matt Bechtel, Director of Finance at (505) 946-2790.

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