July 2, 2020 —
Publicly Released: July 7, 2020
Objective
The objective of this quality control review was to determine whether Tate & Tryon, P.C. (Tate & Tryon) performed the FY 2016 single audit of the American Society for Engineering Education (ASEE) in accordance with auditing standards and Federal requirements.
Background
Public Law 104‑156 (the Single Audit Act) was enacted to promote sound financial management of Federal awards administered by non‑Federal entities and to establish uniform requirements for audits of Federal awards. The Uniform Guidance in the Code of Federal Regulations sets forth the standards for obtaining consistency and uniformity among Federal agencies for the audit of non‑Federal entities expending Federal awards.
The ASEE was founded in 1893 for the purpose of expanding and improving education in engineering and engineering technology. The ASEE spent $71.6 million on four major programs in FY 2016, including $66.2 million in DoD awards. The four major programs consist of the Air Force National Defense Science and Engineering Graduate Fellowship Program; the Science, Mathematics and Research for Transformation Defense Scholarship Program; the Basic and Applied Scientific Research Program; and the Research and Development Cluster. The ASEE engaged Tate & Tryon to perform the ASEE’s FY 2016 single audit.
On January 1, 2020, RSM US LLP (RSM) acquired Tate & Tryon. Tate & Tryon’s clients continue to work with the same staff; however, the Tate & Tryon staff are now part of RSM. As a result, although our report focuses on the work the Tate & Tryon auditors performed, we addressed our recommendations to RSM.
Findings
The Tate & Tryon auditors did not comply with auditing standards in performing the FY 2016 single audit of ASEE because Tate & Tryon auditors did not:
• perform sufficient procedures to form a conclusion on ASEE’s compliance with the Program Income, Eligibility, and Allowable Cost compliance requirements;
• document the basis for determining which compliance requirements were not direct and material to the major programs being audited; and
• report audit findings consistent with the audit documentation.
As a result, additional audit procedures need to be performed before Federal agencies can rely on the FY 2016 ASEE single audit report. Furthermore, we obtained additional information and concluded that the ASEE did not comply with the Program Income compliance requirement on one major program because it did not use the income generated by the program to reduce the allowable expenses before requesting reimbursement from the Government.
Finally, as required by auditing standards, Tate & Tryon also did not adequately document:
• the audit sampling methodology for testing the internal controls over, and compliance with, Federal requirements; and
• the audit procedures planned and performed when testing the operating effectiveness of ASEE’s internal control over compliance with Federal requirements.
We had to obtain additional explanations from the Tate & Tryon auditors and perform further analyses to verify that the audit sampling and audit procedures on internal control testing resulted in sufficient evidence to support the audit conclusions.
Recommendations
For the FY 2016 single audit, we recommend that the RSM Partner:
• perform and document additional audit procedures for the review of the Program Income, Eligibility, and Allowable Cost compliance requirements;
• perform and document audit procedures to determine whether those compliance requirements that were identified as not direct and material in the FY 2016 single audit were properly excluded, and perform any additional audit work necessary; and
• review and update the FY 2016 single audit report to include all reportable conditions that are supported by the audit documentation and to reflect additional audit procedures performed.
We recommend that the ASEE Chief Financial Officer coordinate with the National Science Foundation for instructions on how to proceed with any remaining program income.
For future single audits, we recommend that the RSM Partner prepare audit documentation that clearly describes:
• the sampling methodology, including the definition of the population, the sampling unit, the consideration of completeness of the population, and the levels of risk associated with the sample size; and
• the planned internal control testing and the audit procedures performed, including evidence reviewed, to form a conclusion on the operating effectiveness of internal controls over compliance with Federal requirements.
Management Comments and Our Response
The RSM Partner agreed with our recommendations and stated that RSM will perform the additional audit procedures for the FY 2016 single audit and make the necessary updates to the FY 2016 single audit report. In addition, for the next single audit of ASEE, the RSM Partner agreed to enhance audit documentation in the areas noted in our finding and recommendations. Comments from the RSM Partner addressed the specifics of the recommendations; therefore, the recommendations are resolved but remain open. We will close the recommendations once we perform followup procedures to verify that RSM’s corrective actions fully address our recommendations.
The ASEE Chief Financial Officer agreed with our recommendation and stated that ASEE has either refunded the remaining program income to the National Science Foundation or immediately used the program income against program expenses. Comments from the ASEE Chief Financial Officer addressed the specifics of the recommendation. We verified that ASEE used program income or refunded the Government for the program income that was not used against program expenses. As a result, we closed this recommendation.
This report is the product of Proj. No. D2020-DEV0SO-0018.000