January 3, 2017
Audit Coverage of Cost Allowability for Jefferson Science Associates LLC During Fiscal Years 2011 - 2014 Under Department of Energy Contract No. DE-AC05-06OR23177
Jefferson Science Associates, LLC (JSA) has managed and operated Thomas Jefferson National Accelerator Facility (Jefferson Lab) since April 2006. JSA is a partnership between Southeastern Universities Research Association and PAE Applied Technologies that contracts with the Department of Energy. Jefferson Lab, part of the Department’s Office of Science, provides a nuclear physics user facility to enable the international user community to conduct scientific research. During fiscal years (FYs) 2011 through 2014, JSA incurred and claimed costs of $709,106,083.54.
JSA is required by its contract to account for all funds advanced by the Department annually on its Statement of Costs Incurred and Claimed, to safeguard assets in its care, and to claim only allowable costs. The Department’s Cooperative Audit Strategy (Strategy) makes efficient use of available audit resources while ensuring that the Department’s contractors claim only allowable costs. The Strategy places reliance on the contractors’ internal audit function (Internal Audit) to provide audit coverage of the allowability of incurred costs that are claimed by contractors.
Based on our assessment, nothing came to our attention to indicate that the allowable cost-related audit work performed by JSA’s Internal Audit could not be relied upon. We did not identify any material control weaknesses with the cost allowability audits, which generally met Institute of Internal Auditors. We noted improvements in Internal Audit’s work on engagement planning, work paper documentation, and supervision issues identified in our previous assessment. Additionally, we found that JSA generally arranged for audits of subcontractors when costs incurred were a factor in determining the amount payable to a subcontractor. Specifically, JSA had 16 active cost-reimbursable subcontracts valued at approximately $11 million during our review. We found that JSA arranged for an audit of 1 commercial subcontract and obtained results for audits conducted under Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, for the remaining 15 cost reimbursable subcontracts with universities. Finally, JSA’s Internal Audit identified $26,672.23 in questioned costs as part of its allowable cost audits and other reviews in FYs 2011 through 2014, of which $5,031 identified during the audit of the commercial subcontract had not been resolved. Therefore, we are questioning this amount.
Topic: Management & Administration
