EIN: 990161603
UEI: K1NNZ8NJRD55
Audited by: N&K CPAs, Inc.
Oversight agency: 19 [Department of State]
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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 June 30, 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 December 30, 2026 (123 days from today).
What is a management decision? →During our audit, we noted one (1) instance in which a draw of $5,570,800 was requested and executed, which represented the remaining balance of the grant award near fiscal year end. The drawdown was made in anticipation of a potential federal government shutdown. Management was aware that the drawdown would exceed the Center’s immediate cash requirements, however the Center was concerned that access to federal funds could be delayed or unavailable during the shutdown period, potentially impacting program operations and reimbursement of allowable costs. Cause: The Center drew down the remaining funds in anticipation of a potential government shutdown and to mitigate the risk of delayed or unavailable access to federal funding during the shutdown period. Additionally, the Center did not have a formal protocol in place for addressing situations in which regulatory requirements may conflict with operational risks from events such as a potential government shutdown.Effect: Federal funds were received in advance of the Center’s immediate cash needs, which is inconsistent with the timing requirements of 2 CFR §200.305(b). Although the funds were drawn based on guidance from the awarding agency and in anticipation of a potential government shutdown, the timing of the advance did not minimize the time between receipt and disbursement. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should ensure its cash management policies and procedures fully adhere to 2 CFR §200.305. Specifically, the Center should formalize protocol for addressing situations in which operational risks, such as a potential government shutdown, may conflict with Uniform Guidance requirements or other applicable federal regulations. In such circumstances, the Center should continue to comply with Uniform Guidance requirements unless formal regulatory exception from the awarding agency is obtained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
Show full finding ▾Hide full finding ▴02 Cash Management - Significant Deficiency Federal agency: Department of State Assistance Listing Number: 19.015 Program: Cultural, Technical and Educational Centers Criteria: Per 2 CFR §200.305(b), recipients must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient regardless of whether the payment is made by electronic funds transfer or by other means. Per 2 CFR §200.305(b)(1), advance payments to the recipient must be limited to the minimum amounts needed and should be timed with the actual, immediate cash requirements of the recipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During our audit, we noted one (1) instance in which a draw of $5,570,800 was requested and executed, which represented the remaining balance of the grant award near fiscal year end. The drawdown was made in anticipation of a potential federal government shutdown. Management was aware that the drawdown would exceed the Center’s immediate cash requirements, however the Center was concerned that access to federal funds could be delayed or unavailable during the shutdown period, potentially impacting program operations and reimbursement of allowable costs. Cause: The Center drew down the remaining funds in anticipation of a potential government shutdown and to mitigate the risk of delayed or unavailable access to federal funding during the shutdown period. Additionally, the Center did not have a formal protocol in place for addressing situations in which regulatory requirements may conflict with operational risks from events such as a potential government shutdown.Effect: Federal funds were received in advance of the Center’s immediate cash needs, which is inconsistent with the timing requirements of 2 CFR §200.305(b). Although the funds were drawn based on guidance from the awarding agency and in anticipation of a potential government shutdown, the timing of the advance did not minimize the time between receipt and disbursement. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should ensure its cash management policies and procedures fully adhere to 2 CFR §200.305. Specifically, the Center should formalize protocol for addressing situations in which operational risks, such as a potential government shutdown, may conflict with Uniform Guidance requirements or other applicable federal regulations. In such circumstances, the Center should continue to comply with Uniform Guidance requirements unless formal regulatory exception from the awarding agency is obtained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
View of Responsible Officials: Management is cognizant of federal regulations surrounding cash management and has procedures in place to minimize the time elapsing between the transfer of funds from the awarding agency and the disbursement of the funds. In this particular case, management received direction from relevant stakeholders recommending the advance drawdown of cash. • Management met with board members in September 2025 to discuss the impact of a potential government shutdown and received strategic guidance from the board to draw down the remaining funds to ensure that funding would be available for staff salaries. The Center’s staff union requires the Center to provide 120 days’ notice prior to layoff and the board wanted to ensure that funding would be available for the 120-day period, if necessary. • Management met with contracted financial advisors who encouraged management to draw down the remaining funds. The advisors are certified public accountants, well versed in regulations regarding federal funds. • Management received an email from the awarding agency representative recommending drawdown of the remaining funds; the agency provided the wording for the Center to use to justify the advance drawdown. A confirmation email was sent to the awarding agency after the draw was performed. 25 Corrective Action Plan: In the event of another government shutdown jeopardizing immediate funding, the Center will ensure that written guidance is received by the awarding agency, the Board of Governors, or the Center President, prior to initiating the drawdown. Contact Person: Chief Operating Officer Anticipated Completion Date: May 2026
During our audit, we noted that the ratio of United States participants to international participants was 1.4:1. Cause: Due to uncertainty regarding the availability of federal funding during Spring 2025, the Center proceeded with student enrollment using non-federal funding sources for participants selected to begin in Fall 2025. When federal funds later became available near the end of fiscal year 2025, these students could not be converted to federally funded participants as they had already commenced their programs and in some cases, entered under visa types that restricted their eligibility for federal funding. Effect: The Center did not comply with the eligibility requirements specified in the program agreement, which may impact the Center’s ability to meet program objectives. $ -- Identification as a Repeat Finding, if applicable: Not applicableRecommendation: The Center should strengthen it procedures to ensure compliance with participant eligibility requirements outlined in the program agreement. The Center should implement a process to monitor the composition of participants on an ongoing basis to ensure that the ratio of United States to international participants remains in alignment with program requirements. Additionally, the Center should incorporate funding availability and program requirements into its participant selection and funding decisions to ensure that enrollment timing, funding source, and participant eligibility are appropriately aligned. The Center should also evaluate the impact of visa classifications and other eligibility constraints prior to enrollment to ensure participants can be supported with federal funds when required. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
Show full finding ▾Hide full finding ▴2025-03 Eligibility - Significant Deficiency Federal agency: Department of State Assistance Listing Number: 19.015 Program: Cultural, Technical and Educational Centers Criteria: Eligibility under the program requires that the ratio of scholarships and grants provided from funds made available under the appropriation should be approximately one participant from the United States to one participant from elsewhere in the Asia Pacific region. The Center is responsible for establishing and maintaining effective internal controls to ensure compliance with eligibility requirements, including adherence to participant ratio provisions outlined in the agreement. Condition: During our audit, we noted that the ratio of United States participants to international participants was 1.4:1. Cause: Due to uncertainty regarding the availability of federal funding during Spring 2025, the Center proceeded with student enrollment using non-federal funding sources for participants selected to begin in Fall 2025. When federal funds later became available near the end of fiscal year 2025, these students could not be converted to federally funded participants as they had already commenced their programs and in some cases, entered under visa types that restricted their eligibility for federal funding. Effect: The Center did not comply with the eligibility requirements specified in the program agreement, which may impact the Center’s ability to meet program objectives. $ -- Identification as a Repeat Finding, if applicable: Not applicableRecommendation: The Center should strengthen it procedures to ensure compliance with participant eligibility requirements outlined in the program agreement. The Center should implement a process to monitor the composition of participants on an ongoing basis to ensure that the ratio of United States to international participants remains in alignment with program requirements. Additionally, the Center should incorporate funding availability and program requirements into its participant selection and funding decisions to ensure that enrollment timing, funding source, and participant eligibility are appropriately aligned. The Center should also evaluate the impact of visa classifications and other eligibility constraints prior to enrollment to ensure participants can be supported with federal funds when required. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
View of Responsible Officials: Management agrees with the finding and recommendation. Corrective Action Plan: East-West Center will designate the International Programs Specialist (coordinator of the Graduate Degree Fellowships) to prepare the list of selected students to be offered scholarships demonstrating clearly that the selections meet the ratio requirement. The Dean of the Education Program will be required to sign off on the list, checking to ensure that the ratio of students meets our designated mandate. If students decline our initial offer, each alternate also will be vetted by the Dean to ensure the balance is maintained. If there is funding uncertainty up until the date required to send invitations, and a different funding source is used as an alternative or backstop, the program will bring these students on a J-visa so that they are able to shift to Federal funds at a later date to ensure that the ratio is maintained. 27 Contact Person: Director and Dean of Professional Development and Education Programs Anticipated Completion Date: May 2026 28
During our audit, we noted that benefit charges were not consistent with approved benefit rates. Of the forty (40) payroll samples selected for testing, there was one (1) instance in which the approved benefit rates per the employee records did not agree to the amounts allocated and charged to the federal program. Cause: During an update to benefit rates in the payroll system, the revised long-term disability rate was inadvertently entered as the life insurance rate, and the long-term disability rate was not updated. Effect: Payroll related benefit costs charged to the appropriation were not based on approved rates, resulting in an overcharge for life insurance benefits and an undercharge for long-term disability benefits. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should strengthen its controls over payroll and benefit rate updates to ensure that changes are accurately entered and applied within the payroll system. The Center should implement a review and verification process whereby all updates to benefit rates are independently reviewed and reconciled to approved rates prior to processing payroll. Additionally, the Center should perform periodic monitoring of payroll calculations and benefit allocations to confirm that amounts charged to federal programs are consistent with approved rates and supporting documentation. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
Show full finding ▾Hide full finding ▴2025-04 Activities Allowed or Unallowed, Allowable Costs/Cost Principles - Significant Deficiency Federal agency: Department of State Assistance Listing Number: 19.015 Program: Cultural, Technical and Educational Centers Criteria: Per 2 CFR §200.430(g)(1)(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our audit, we noted that benefit charges were not consistent with approved benefit rates. Of the forty (40) payroll samples selected for testing, there was one (1) instance in which the approved benefit rates per the employee records did not agree to the amounts allocated and charged to the federal program. Cause: During an update to benefit rates in the payroll system, the revised long-term disability rate was inadvertently entered as the life insurance rate, and the long-term disability rate was not updated. Effect: Payroll related benefit costs charged to the appropriation were not based on approved rates, resulting in an overcharge for life insurance benefits and an undercharge for long-term disability benefits. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should strengthen its controls over payroll and benefit rate updates to ensure that changes are accurately entered and applied within the payroll system. The Center should implement a review and verification process whereby all updates to benefit rates are independently reviewed and reconciled to approved rates prior to processing payroll. Additionally, the Center should perform periodic monitoring of payroll calculations and benefit allocations to confirm that amounts charged to federal programs are consistent with approved rates and supporting documentation. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
View of Responsible Officials: Management agrees with the finding and recommendation. Corrective Action Plan: Problem The financial audit conducted by N&K identified that there were two (2) incorrect deduction amounts that were entered into the HRIS system, resulting in an overcharge to the employee. Upon investigation, it was determined that the HR Administrator updated the wrong benefits deduction entry, which caused an incorrect overcharge for the employee’s life insurance deduction and an incorrect undercharge to their long-term disability insurance deduction. The incorrect charges occurred over a span of 15 months to a total overage of $913.59, for which the employee was not reimbursed. Root Cause The error occurred during the organization’s benefits carrier switch from Prudential Financial to The Standard. Their existing process—where the Administrator inputs changes and the Assistant performs a post-entry review—failed to detect the error, resulting in a finding within the auditor’s report. The issue appears to stem from a combination of process and control weaknesses: • Manual data entry error by the Administrator • Ineffective secondary manual review, likely due to: o Lack of a standardized checklist or validation criteria o Insufficient sampling or inconsistent spot-check methodology • Lack a system-based validation controls within the HRIS system (e.g., thresholds, alerts) • Limited accountability clarity for final verification • Lack of periodic audits in case errors are missed Immediate actions to address the current issue and mitigate employee impact • Calculate and process reimbursement for the overcharged employee (completed) • Communicate transparently with the affected employee regarding: o Nature of the error o Correction made o Reimbursement payment • Conduct a targeted audit of recent deduction changes to identify any similar errors (completed) Corrective Action Plan (Preventive Controls) To prevent future occurrences from happening, unit will implement the following changes to its administrative procedures: 1. Standardized Data Entry Protocol The unit will utilize its HR Action Form as a standard processing mechanism for benefit deduction changes made within the HRIS, including:• Source documentation verification (e.g., enrollment forms, carrier files) • Confirmation of deduction amount and effective date This will require both the processor and the reviewer to initial and certify that the change was accurately completed, thus strengthening its review process. 2. Enhancing review procedure for multiple changes done at the same time The unit will replace its previous “spot check” review process with a structured verification process that mirrors its semi-monthly timesheet report for payroll. This new report will include: • The processor documenting all deductions or changes made • The processor including supporting documentation • The auditor completing a 100% review to confirm work accuracy and cross-verification against source documents • The Director providing a final spot-check and sign-off It is important to acknowledge that these enhanced controls may introduce some operational trade-offs. In the short term, the shift to 100% review and additional dual-verification tasks will likely increase processing time and workload redundancy for both the Administrator and Assistant. There is also a risk of workflow bottlenecks, particularly during high-volume periods such as open enrollment or payroll cutoffs. Closing The implementation of new corrective and preventive measures will establish a more disciplined and reliable control environment around the East-West Center’s benefits administration. By formalizing data entry protocols, strengthening independent review, and introducing layered validation controls, the unit can significantly reduce the likelihood of this occurrence (or other-related HRIS data entry errors) while improving overall data integrity and employee trust. The proposed changes will enhance audit readiness and operational transparency for the Human Resources team.Contact Person: Human Resources Director Anticipated Completion Date: Procedures have been implemented as of report issuance date 32
FAC accepted this audit on April 29, 2025 — management decision was due October 29, 2025.
FAC accepted this audit on June 25, 2024 — management decision was due December 25, 2024.
Questioned Cost $ 5,174 Finding No. 2023 002: Activities Allowed and Unallowed (Control Deficiency) Allowable Costs and Cost Principles (Control Deficiency) Federal Agency: U.S. Department of State Assistance Listing Number and Title: 19.015 – Cultural, Technical and Educational Centers Condition During our audit, we noted the following instances of noncompliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles Due to the application of an incorrect allocation rate, we noted salaries and wages were inaccurately allocated to the Cultural, Technical and Educational Centers program for 2 out of 26 individuals selected for testing. Furthermore, at the end of the fiscal year, management recorded an adjustment in an attempt to correct the error, however, the amounts calculated in the adjustment were inaccurate. Criteria Activities Allowed and Unallowed / Allowable Costs and Cost Principles Section 200.403 – Factors affecting allowability of costs of Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, states “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles… (g) Be adequately documented.” Cause Activities Allowed and Unallowed / Allowable Costs and Cost Principles We were informed by management that the inaccurate allocation of amounts to the Cultural, Technical and Educational Centers program may be due to the untimely updating of level of effort allocation percentages on the individual’s “Personnel Budget Form.” The inaccurate calculation of amounts included in the correcting adjustment may be attributed to general management oversight. Effect Activities Allowed and Unallowed / Allowable Costs and Cost Principles Failure to adhere to the allowable cost principles of Title 2 U.S. CFR Part 200 exposes the Center to an undue risk of misuse of federal funds. Furthermore, the inaccurate calculation of amounts included in the correcting adjustment resulted in the following: • An overstatement of $5,174 in expenditures allocated to the Cultural, Technical and Educational Centers grant. • An overstatement of $5,032 in expenditures allocated to a non Federal grant. • An overstatement of $24 in expenditures allocated to the U.S. Agency for International Development – Foreign Assistance for Program Overseas grant. • An understatement of $10,229 in expenditures allocated to the U.S. Department of State – Public Diplomacy Programs grant. Context Activities Allowed and Unallowed / Allowable Costs and Cost Principles A sample of 26 salaries and wages related expenditures totaling approximately $117,000 were selected for audit from a population of approximately $14,020,000 in salaries and wages related expenditures. Our test found two instances in which salaries and wages were erroneously recorded under the Cultural, Technical and Educational Centers program. Our sample is a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Center perform the following to ensure compliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles Ensure the level of effort allocation percentages on an individual’s “Personnel Budget Form” are updated in an accurate and timely manner. Also, ensure that correcting adjustments, as necessary, are calculated in an accurate manner. Cause and View of Responsible Officials Activities Allowed and Unallowed / Allowable Costs and Cost Principles New payroll allocation procedures were implemented during fiscal 2023 in an effort to streamline the allocation process. Starting in fiscal 2024, management has reverted to the fiscal 2022 payroll allocation procedures to ensure that the proper percentages are used in calculating charges to its contracts and grants. The procedures used in fiscal 2022 and prior resulted in clean audit opinions and can be trusted to allocate payroll properly. The allocation errors noted during the audit were corrected in the subsequent fiscal year.
Show full finding ▾Hide full finding ▴Questioned Cost $ 5,174 Finding No. 2023 002: Activities Allowed and Unallowed (Control Deficiency) Allowable Costs and Cost Principles (Control Deficiency) Federal Agency: U.S. Department of State Assistance Listing Number and Title: 19.015 – Cultural, Technical and Educational Centers Condition During our audit, we noted the following instances of noncompliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles Due to the application of an incorrect allocation rate, we noted salaries and wages were inaccurately allocated to the Cultural, Technical and Educational Centers program for 2 out of 26 individuals selected for testing. Furthermore, at the end of the fiscal year, management recorded an adjustment in an attempt to correct the error, however, the amounts calculated in the adjustment were inaccurate. Criteria Activities Allowed and Unallowed / Allowable Costs and Cost Principles Section 200.403 – Factors affecting allowability of costs of Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, states “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles… (g) Be adequately documented.” Cause Activities Allowed and Unallowed / Allowable Costs and Cost Principles We were informed by management that the inaccurate allocation of amounts to the Cultural, Technical and Educational Centers program may be due to the untimely updating of level of effort allocation percentages on the individual’s “Personnel Budget Form.” The inaccurate calculation of amounts included in the correcting adjustment may be attributed to general management oversight. Effect Activities Allowed and Unallowed / Allowable Costs and Cost Principles Failure to adhere to the allowable cost principles of Title 2 U.S. CFR Part 200 exposes the Center to an undue risk of misuse of federal funds. Furthermore, the inaccurate calculation of amounts included in the correcting adjustment resulted in the following: • An overstatement of $5,174 in expenditures allocated to the Cultural, Technical and Educational Centers grant. • An overstatement of $5,032 in expenditures allocated to a non Federal grant. • An overstatement of $24 in expenditures allocated to the U.S. Agency for International Development – Foreign Assistance for Program Overseas grant. • An understatement of $10,229 in expenditures allocated to the U.S. Department of State – Public Diplomacy Programs grant. Context Activities Allowed and Unallowed / Allowable Costs and Cost Principles A sample of 26 salaries and wages related expenditures totaling approximately $117,000 were selected for audit from a population of approximately $14,020,000 in salaries and wages related expenditures. Our test found two instances in which salaries and wages were erroneously recorded under the Cultural, Technical and Educational Centers program. Our sample is a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Center perform the following to ensure compliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles Ensure the level of effort allocation percentages on an individual’s “Personnel Budget Form” are updated in an accurate and timely manner. Also, ensure that correcting adjustments, as necessary, are calculated in an accurate manner. Cause and View of Responsible Officials Activities Allowed and Unallowed / Allowable Costs and Cost Principles New payroll allocation procedures were implemented during fiscal 2023 in an effort to streamline the allocation process. Starting in fiscal 2024, management has reverted to the fiscal 2022 payroll allocation procedures to ensure that the proper percentages are used in calculating charges to its contracts and grants. The procedures used in fiscal 2022 and prior resulted in clean audit opinions and can be trusted to allocate payroll properly. The allocation errors noted during the audit were corrected in the subsequent fiscal year.
Activities Allowed and Unallowed / Allowable Costs and Cost Principles New payroll allocation procedures were implemented during fiscal 2023 in an effort to streamline the allocation process. Starting in fiscal 2024, management has reverted to the fiscal 2022 payroll allocation procedures to ensure that the proper percentages are used in calculating charges to our contracts and grants. The procedures used in fiscal 2022 and prior resulted in clean audit opinions and can be trusted to allocate payroll properly. The allocation errors noted during the audit were corrected in the subsequent fiscal year.
$4,521 Finding No. 2023 003: Activities Allowed and Unallowed (Control Deficiency) Allowable Costs and Cost Principles (Control Deficiency) Reporting (Control Deficiency) Subrecipient Monitoring (Control Deficiency) Federal Agency: U.S. Department of Commerce U.S. Department of the Interior U.S. Agency for International Development Assistance Listing Number and Title: 11.431 – Climate and Atmospheric Research 11.468 – Applied Meteorological Research 15.820 – National and Regional Climate Adaptation on Science Centers 98.001 – Foreign Assistance for Programs Overseas Condition During our audit, we noted the following instances of noncompliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles We noted the following with regards to salaries and wages expenditures selected for testing: Due to the application of an incorrect allocation rate, we noted salaries and wages were inaccurately allocated to the Research and Development Cluster (“R&D Cluster”) program for 4 out of 16 individuals selected for testing. We noted that at the end of the fiscal year management recorded an adjustment in an attempt to correct the error, however, for two of the impacted individuals the amounts calculated in the adjustment were inaccurate. For the remaining two individuals, the amounts calculated in the adjustment were accurate, however the program accounts to which such costs were approved to be allocated as stated per the individual’s “Personnel Budget Form” did not agree to the actual program accounts to which the expenses were recorded in the Center’s general ledger. In addition to the samples selected for testing, we noted salaries and wages were inaccurately allocated to the R&D Cluster program for one individual due to the application of an incorrect allocation rate. We noted the following with regards to non-salaries and wages expenditures selected for testing: We noted that for 3 out of 24 non salaries and wages expenditures selected for testing, we were unable to obtain documentation evidencing Fiscal Officer approval of the expenditure. Reporting We noted two instances in which the Center did not complete the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and Transparency Act (“FFATA”) for subgrants made during 2023. Subrecipient Monitoring We noted an instance in which the Center did not properly communicate the federal assistance listing number to a subrecipient upon execution of the subaward agreement. Criteria Activities Allowed and Unallowed / Allowable Costs and Cost Principles Section 200.403 – Factors affecting allowability of costs of Title 2 U.S. CFR Part 200, states “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles… (g) Be adequately documented.” Reporting Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally-awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA also specifies the data elements to be included by an entity in their reporting submission. Subrecipient Monitoring Section 200.332 – Requirements for pass-through entities of Title 2 U.S. CFR Part 200, states “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement;” Cause Activities Allowed and Unallowed / Allowable Costs and Cost Principles For the identified instances of noncompliance associated with salaries and wages expenditures, we were informed by management that the inaccurate allocation of amounts to the R&D Cluster program may be due to the untimely updating of level of effort allocation percentages on the individual’s “Personnel Budget Form.” The inaccurate calculation of amounts included in the correcting adjustment and the recordation of amounts to inaccurate program accounts within the Center’s general ledger may be attributed to general management oversight. For the identified instances of noncompliance associated with non salaries and wages expenditures, we were informed by management that although the Fiscal Officer has the ability to electronically approve transactions within the general ledger, the historical retention of such information is an additional service which management did not elect to activate. Reporting The lack of FFATA reporting may be attributed to general management oversight. Subrecipient Monitoring We were informed by management that an outdated template which did not include a field for the federal assistance listing number was utilized when executing the subaward agreement. Effect Activities Allowed and Unallowed / Allowable Costs and Cost Principles Failure to adhere to the allowable cost principles of Title 2 U.S. CFR Part 200 exposes the Center to an undue risk of misuse of federal funds. Furthermore, the inaccurate calculation of salaries and wages expenditures included in the correcting adjustment resulted in the following: • An overstatement of $24 in expenditures allocated to the U.S. Agency for International Development – Foreign Assistance for Program Overseas grant within the R&D Cluster grant. • An understatement of $24 in expenditures allocated to the Cultural, Technical and Educational Centers grant. Reporting Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of Title 2 U.S. CFR Part 200. Subrecipient Monitoring Failure to communicate the required information to subrecipients exposes the Center to an undue risk of misuse of federal funds. Context Activities Allowed and Unallowed / Allowable Costs and Cost Principles A sample of 16 salaries and wages expenditures totaling approximately $57,000 were selected for audit from a population of approximately $402,000 in salaries and wages expenditures. Our test found four instances in which salaries and wages were erroneously recorded under the R&D Cluster program. Our sample is a statistically valid sample. A sample of 24 non salaries and wages related expenditures totaling approximately $98,000 were selected for audit from a population of approximately $601,000 in non salaries and wages related expenditures. Our test found three instances in which documentation of the Fiscal Officer approval of the non salaries and wages related expenditures were not properly retained. Our sample is a statistically valid sample. Reporting A sample of two subawards totaling approximately $129,000 were selected for audit from a population of two subawards totaling approximately $129,000. Our test found two instances in which the FFATA reports were not completed in a timely manner. Our sample is a statistically valid sample. Subrecipient Monitoring A sample of one subaward totaling approximately $92,000 was selected for audit from a population of two subawards totaling approximately $129,000. Our test found one instance in which the federal assistance listing number was not properly communicated to the subrecipient upon execution of the subaward agreement. Our sample is a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Center perform the following to ensure compliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles With regards to salaries and wages expenditures, ensure the level of effort allocation percentages on an individual’s “Personnel Budget Form” are updated in an accurate and timely manner. Also, ensure that correcting adjustments, as necessary, are calculated and recorded within the general ledger in an accurate manner. With regards to non salaries and wages expenditures, ensure that documentation is maintained evidencing Fiscal Officer approval of the expenditure. Reporting Ensure that required FFATA reports are completed in a timely and accurate manner. Subrecipient Monitoring Ensure that information required pursuant to Section 200.332 – Requirements for pass-through entities of Title 2 U.S. CFR Part 200 is properly communicated to subrecipients upon execution of a subaward agreement. Cause and View of Responsible Officials Activities Allowed and Unallowed / Allowable Costs and Cost Principles New payroll allocation procedures were implemented during fiscal 2023 in an effort to streamline the allocation process. Starting in fiscal 2024, management has reverted to the fiscal 2022 payroll allocation procedures to ensure that the proper percentages are used in calculating charges to its contracts and grants. The procedures used in fiscal 2022 and prior resulted in clean audit opinions and can be trusted to allocate payroll properly. The allocation errors noted during the audit were corrected in the subsequent fiscal year. Reporting The FFATA report was filed in fiscal 2024. Procedures were modified to ensure that necessary information is requested from Center subaward recipients to assist in preparing the FFATA reports. Furthermore, the subaward agreement template was revised to make reference to the need for filing FFATA reports. Subrecipient Monitoring Management has revised procedures to ensure that the subaward recipients are notified of the federal assistance listing number. In addition, Finance staff have been reminded of the necessity to communicate the assistance number to our subaward recipients.
Show full finding ▾Hide full finding ▴$4,521 Finding No. 2023 003: Activities Allowed and Unallowed (Control Deficiency) Allowable Costs and Cost Principles (Control Deficiency) Reporting (Control Deficiency) Subrecipient Monitoring (Control Deficiency) Federal Agency: U.S. Department of Commerce U.S. Department of the Interior U.S. Agency for International Development Assistance Listing Number and Title: 11.431 – Climate and Atmospheric Research 11.468 – Applied Meteorological Research 15.820 – National and Regional Climate Adaptation on Science Centers 98.001 – Foreign Assistance for Programs Overseas Condition During our audit, we noted the following instances of noncompliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles We noted the following with regards to salaries and wages expenditures selected for testing: Due to the application of an incorrect allocation rate, we noted salaries and wages were inaccurately allocated to the Research and Development Cluster (“R&D Cluster”) program for 4 out of 16 individuals selected for testing. We noted that at the end of the fiscal year management recorded an adjustment in an attempt to correct the error, however, for two of the impacted individuals the amounts calculated in the adjustment were inaccurate. For the remaining two individuals, the amounts calculated in the adjustment were accurate, however the program accounts to which such costs were approved to be allocated as stated per the individual’s “Personnel Budget Form” did not agree to the actual program accounts to which the expenses were recorded in the Center’s general ledger. In addition to the samples selected for testing, we noted salaries and wages were inaccurately allocated to the R&D Cluster program for one individual due to the application of an incorrect allocation rate. We noted the following with regards to non-salaries and wages expenditures selected for testing: We noted that for 3 out of 24 non salaries and wages expenditures selected for testing, we were unable to obtain documentation evidencing Fiscal Officer approval of the expenditure. Reporting We noted two instances in which the Center did not complete the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and Transparency Act (“FFATA”) for subgrants made during 2023. Subrecipient Monitoring We noted an instance in which the Center did not properly communicate the federal assistance listing number to a subrecipient upon execution of the subaward agreement. Criteria Activities Allowed and Unallowed / Allowable Costs and Cost Principles Section 200.403 – Factors affecting allowability of costs of Title 2 U.S. CFR Part 200, states “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles… (g) Be adequately documented.” Reporting Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally-awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA also specifies the data elements to be included by an entity in their reporting submission. Subrecipient Monitoring Section 200.332 – Requirements for pass-through entities of Title 2 U.S. CFR Part 200, states “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (xii) Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement;” Cause Activities Allowed and Unallowed / Allowable Costs and Cost Principles For the identified instances of noncompliance associated with salaries and wages expenditures, we were informed by management that the inaccurate allocation of amounts to the R&D Cluster program may be due to the untimely updating of level of effort allocation percentages on the individual’s “Personnel Budget Form.” The inaccurate calculation of amounts included in the correcting adjustment and the recordation of amounts to inaccurate program accounts within the Center’s general ledger may be attributed to general management oversight. For the identified instances of noncompliance associated with non salaries and wages expenditures, we were informed by management that although the Fiscal Officer has the ability to electronically approve transactions within the general ledger, the historical retention of such information is an additional service which management did not elect to activate. Reporting The lack of FFATA reporting may be attributed to general management oversight. Subrecipient Monitoring We were informed by management that an outdated template which did not include a field for the federal assistance listing number was utilized when executing the subaward agreement. Effect Activities Allowed and Unallowed / Allowable Costs and Cost Principles Failure to adhere to the allowable cost principles of Title 2 U.S. CFR Part 200 exposes the Center to an undue risk of misuse of federal funds. Furthermore, the inaccurate calculation of salaries and wages expenditures included in the correcting adjustment resulted in the following: • An overstatement of $24 in expenditures allocated to the U.S. Agency for International Development – Foreign Assistance for Program Overseas grant within the R&D Cluster grant. • An understatement of $24 in expenditures allocated to the Cultural, Technical and Educational Centers grant. Reporting Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of Title 2 U.S. CFR Part 200. Subrecipient Monitoring Failure to communicate the required information to subrecipients exposes the Center to an undue risk of misuse of federal funds. Context Activities Allowed and Unallowed / Allowable Costs and Cost Principles A sample of 16 salaries and wages expenditures totaling approximately $57,000 were selected for audit from a population of approximately $402,000 in salaries and wages expenditures. Our test found four instances in which salaries and wages were erroneously recorded under the R&D Cluster program. Our sample is a statistically valid sample. A sample of 24 non salaries and wages related expenditures totaling approximately $98,000 were selected for audit from a population of approximately $601,000 in non salaries and wages related expenditures. Our test found three instances in which documentation of the Fiscal Officer approval of the non salaries and wages related expenditures were not properly retained. Our sample is a statistically valid sample. Reporting A sample of two subawards totaling approximately $129,000 were selected for audit from a population of two subawards totaling approximately $129,000. Our test found two instances in which the FFATA reports were not completed in a timely manner. Our sample is a statistically valid sample. Subrecipient Monitoring A sample of one subaward totaling approximately $92,000 was selected for audit from a population of two subawards totaling approximately $129,000. Our test found one instance in which the federal assistance listing number was not properly communicated to the subrecipient upon execution of the subaward agreement. Our sample is a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Center perform the following to ensure compliance: Activities Allowed and Unallowed / Allowable Costs and Cost Principles With regards to salaries and wages expenditures, ensure the level of effort allocation percentages on an individual’s “Personnel Budget Form” are updated in an accurate and timely manner. Also, ensure that correcting adjustments, as necessary, are calculated and recorded within the general ledger in an accurate manner. With regards to non salaries and wages expenditures, ensure that documentation is maintained evidencing Fiscal Officer approval of the expenditure. Reporting Ensure that required FFATA reports are completed in a timely and accurate manner. Subrecipient Monitoring Ensure that information required pursuant to Section 200.332 – Requirements for pass-through entities of Title 2 U.S. CFR Part 200 is properly communicated to subrecipients upon execution of a subaward agreement. Cause and View of Responsible Officials Activities Allowed and Unallowed / Allowable Costs and Cost Principles New payroll allocation procedures were implemented during fiscal 2023 in an effort to streamline the allocation process. Starting in fiscal 2024, management has reverted to the fiscal 2022 payroll allocation procedures to ensure that the proper percentages are used in calculating charges to its contracts and grants. The procedures used in fiscal 2022 and prior resulted in clean audit opinions and can be trusted to allocate payroll properly. The allocation errors noted during the audit were corrected in the subsequent fiscal year. Reporting The FFATA report was filed in fiscal 2024. Procedures were modified to ensure that necessary information is requested from Center subaward recipients to assist in preparing the FFATA reports. Furthermore, the subaward agreement template was revised to make reference to the need for filing FFATA reports. Subrecipient Monitoring Management has revised procedures to ensure that the subaward recipients are notified of the federal assistance listing number. In addition, Finance staff have been reminded of the necessity to communicate the assistance number to our subaward recipients.
Activities Allowed and Unallowed / Allowable Costs and Cost Principles Please reference Finding 2023-002 for new procedures implemented during fiscal 2024 to ensure that payroll costs are allocated properly. In reference to the non-payroll costs, the finding arose because the Center’s participant database did not store an audit trail of the on-line approvals once the award was processed. In the current fiscal year, the Center’s software consultant worked with our software provider to update our participant database to include an audit feature which provides the full approval history for awards that are completed. Reporting The FFATA report was filed in fiscal 2024. Procedures were modified to ensure that necessary information is requested from Center subaward recipients to assist in preparing the FFATA reports. Furthermore, the subaward agreement template was revised to make reference to the need for filing FFATA reports. Subrecipient Monitoring Management has revised procedures to ensure that the subaward recipients are notified of the federal assistance listing number. In addition, Finance staff have been reminded of the necessity to communicate the assistance number to our subaward recipients.
FAC accepted this audit on June 20, 2023 — management decision was due December 20, 2023.
FAC accepted this audit on June 19, 2022 — management decision was due December 19, 2022.
FAC accepted this audit on April 13, 2021 — management decision was due October 13, 2021.
FAC accepted this audit on May 11, 2020 — management decision was due November 11, 2020.
FAC accepted this audit on March 26, 2019 — management decision was due September 26, 2019.
FAC accepted this audit on March 13, 2018 — management decision was due September 13, 2018.
FAC accepted this audit on May 24, 2017 — management decision was due November 24, 2017.
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