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Report | Sept. 1, 2022

Quality Control Review of the Clark Nuber P.S. FY 2020 Single Audit of The Geneva Foundation (DODIG-2022-123)

Evaluation

Objective

The objective of this quality control review was to determine whether Clark Nuber P.S. (Clark Nuber) performed the FY 2020 single audit of The Geneva Foundation (the Foundation) in accordance with generally accepted government auditing standards (GAGAS) and Federal requirements for single audits.

 

Background

Non-Federal entities that expend Federal funds of $750,000 or more in a year are subject to Public Law 104-156, “Single Audit Act Amendments of 1996,” (the Single Audit Act) and Title 2, Code of Federal Regulations, part 200 (Uniform Guidance) audit requirements. 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 establishes the standards for obtaining consistency and uniformity among Federal agencies for the audit of non-Federal entities expending Federal awards.

The Foundation is a not‐for‐profit corporation established to provide medical research and educational activities in military medical facilities and Federal laboratories. In FY 2020, the Geneva Foundation spent approximately $53 million in Federal awards on one major program, the Research and Development Cluster. Of this amount, the Foundation spent $49 million on DoD awards. The Foundation engaged Clark Nuber to perform its FY 2020 single audit.

 

Finding

The Clark Nuber auditors did not comply with GAGAS and Uniform Guidance requirements when they reviewed the Special Tests and Provisions compliance requirement. Specifically, the Clark Nuber auditors identified key personnel requirements as a special test and provision that they planned to test. However, the Clark Nuber audit documentation did not include evidence of the audit procedures the auditors performed to test the Foundation’s compliance with key personnel requirements as required by GAGAS and Uniform Guidance requirements. As a result of the lack of documentation, we concluded that the Clark Nuber auditors did not support their conclusion on compliance with key personnel requirements. Therefore, the Clark Nuber auditors need to perform additional audit procedures before users of the single audit report can rely on the auditors’ conclusion that the Foundation complied with key personnel requirements. Except for Clark Nuber’s review of the Special Tests and Provisions compliance requirement, the FY 2020 single audit of the Foundation complied with GAGAS and Uniform Guidance requirements.

 

Recommendations

We recommend that the Clark Nuber Shareholder:

  • Perform and document additional audit procedures for the FY 2020 single audit to test the Foundation’s compliance with key personnel requirements.
  • Update the FY 2020 single audit report of The Geneva Foundation, as necessary, for the results of the additional audit procedures.

 

Management Comments and Our Response

The Clark Nuber Shareholder agreed with our recommendations and stated that Clark Nuber started to perform additional audit procedures and will update the single audit report, as necessary. Comments from the Clark Nuber Shareholder 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 Clark Nuber’s corrective actions fully address our recommendations.

 

This report is the result of Project No. D2022-DEV0SO-0083-000.