Sept. 30, 2016 —
We conducted a quality control review of the Dixon Hughes Goodman LLP (DHG) FY 2014 single audit of Logistics Management Institute (LMI) to determine whether the single audit was conducted in accordance with auditing standards and the requirements of the Office of Management and Budget Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”
The DHG single audit contained quality deficiencies that affect the reliability of the audit results and require corrective action before Federal agencies can rely on the overall opinion on LMI’s compliance with requirements for the research and development cluster. The DHG auditors:
• did not perform internal control and compliance testing sufficient to meet the audit objective for the procurement, suspension, and debarment compliance requirement;
• did not review LMI’s internal control over the cash management and reporting compliance requirements, as required; and
• did not perform adequate audit procedures to support the conclusion that the subrecipient monitoring compliance requirement was not direct and material to the audit.
The DHG auditors should also improve compliance testing for the allowable costs/cost principles compliance requirement to ensure the review of indirect costs is adequately performed and documented.
We recommend that the Partner, DHG:
• perform additional audit procedures to determine the adequacy of LMI’s internal control over and compliance with the procurement, suspension, and debarment compliance requirement and of LMI’s internal control over cash management and reporting compliance requirements.
• perform additional audit procedures to determine whether the sub recipient monitoring compliance requirement is direct and material to the Federal program.
• improve the documentation of audit procedures in future audits to verify whether LMI properly charged indirect costs to Federal awards.
Management Comments and Our Response
Comments from the Partner, DHG, addressed all specifics of the recommendations, and no further comments are required. Please see the recommendations Table on the back of this page.
This report is a result of Project No. D2016-DAPOSA-0078.000.