We conducted a quality control review of the Grant Thornton LLP (Grant Thornton) FY 2017 single audit of Concurrent Technologies Corporation (CTC) to determine whether the single audit was conducted in accordance with auditing standards and the requirements of Title 2 Code of Federal Regulations Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance).
Public Law 104-156, “Single Audit Act Amendments of 1996,” 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 sets forth the standards for the single audit of non-Federal entities expending Federal awards and requires a single audit reporting package to be submitted to the Federal Audit Clearinghouse. Further, Appendix XI to the Uniform Guidance (Compliance Supplement) provides guidance to assist auditors in determining compliance requirements relevant to the audit, audit objectives, and suggested audit procedures.
CTC is a nonprofit corporation that provides innovative management and technology-based solutions through research and development. During FY 2017, CTC expended $81.4 million in Federal awards on one program, the research and development cluster. Of the $81.4 million, $68.5 million was expended from DoD awards. CTC engaged Grant Thornton to perform the FY 2017 single audit.
Grant Thornton is the U.S. member firm of Grant Thornton International Ltd and provides a wide array of business services, including audit, tax, and advisory services. The Grant Thornton office in Arlington, Virginia, performed CTC’s FY 2017 single audit.
Grant Thornton generally complied with auditing standards and Uniform Guidance requirements when performing the FY 2017 single audit of CTC. However, Grant Thornton’s review of the Reporting and Cash Management compliance requirements was not adequate to achieve the audit objectives identified in the Compliance Supplement. Grant Thornton did not:
- review financial reports to support conclusions on the Reporting compliance requirement, and
- document audit procedures that were sufficient to support conclusions that CTC requested reimbursement in compliance with the Federal Acquisition Regulation for the Cash Management compliance requirement.
We performed additional analysis to verify and accept Grant Thornton’s conclusions that CTC complied with the Reporting and Cash Management compliance requirements. Therefore, Grant Thornton does not need to perform additional audit work on the FY 2017 single audit, but the deficiencies should be corrected in future single audits.
We recommend that, in future audits, the Grant Thornton Partner:
- review financial reports to determine whether the financial reports include all activity that occurred during the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements to support Grant Thornton’s conclusions on the Reporting compliance requirement, and
- document audit procedures sufficient to support Grant Thornton’s conclusion that CTC requested reimbursement in compliance with the Federal Acquisition Regulation for the Cash Management compliance requirement.
Management Comments and Our Response
Grant Thornton agreed with our recommendations and stated that it will incorporate the testing of financial reports, including CTC’s requests for reimbursement, in the review of the Reporting compliance requirement. Further, Grant Thornton stated that it will document a review of the timing of CTC’s payment of incurred costs and whether CTC was delinquent in paying costs of contract performance as part of the review of the Cash Management requirement. Grant Thornton also stated that it implemented corrective actions when performing the FY 2018 single audit of CTC.
We verified that the actions taken on the FY 2018 single audit addressed our recommendations to include the testing of financial reports in the review of the Reporting compliance requirement and documenting whether CTC complied with applicable Federal Acquisition Regulation provisions for the Cash Management compliance requirement. Therefore, these recommendations are closed.
This report is a result of Project No. D2018-DAPOSA-0132.000.