Assessment Report: DOE-OIG-20-39

April 29, 2020

Audit Coverage of Cost Allowability for Alliance for Sustainable Energy, LLC from October 1, 2013, to September 30, 2018, Under Department of Energy Contract No. DE-AC36-08G028308

Alliance for Sustainable Energy, LLC (Alliance) has managed and operated the National Renewable Energy Laboratory under contract with the Department of Energy since 2008.  The National Renewable Energy Laboratory supports the research, development, commercialization, and deployment of renewable energy and energy efficiency technologies.  Consistent with the Department of Energy’s Cooperative Audit Strategy, Alliance is required by its contract to maintain an internal audit activity (Internal Audit) with the responsibility for conducting audits, including audits of the allowability of incurred costs.  In addition, Alliance is required to conduct or arrange for audits of its subcontractors when costs incurred are a factor in determining the amount payable to the subcontractor.  The objectives of this assessment for fiscal years 2014 through 2018 were to determine, based on our limited sampling, whether (1) Alliance’s Internal Audit conducted cost allowability audits that complied with professional standards and could be relied upon, (2) Alliance conducted or arranged for audits of its subcontractors when costs incurred were a factor in determining the amount payable to a subcontractor, and (3) Alliance resolved questioned costs and internal control weaknesses affecting allowable costs that were identified in prior audits and reviews.

During our assessment, nothing came to our attention to indicate that allowable cost-related audit work performed by Internal Audit for fiscal years 2014 through 2018 could not be relied upon.  We also found that Alliance generally provided audit coverage of its subcontracts for which costs incurred were a factor in determining the amount payable to the subcontractors.  However, we identified three labor-hour subcontracts totaling approximately $12.6 million that had been closed without receiving a closeout audit.  Alliance did not include labor-hour subcontracts in its population of cost-type subcontracts requiring closeout audits.  Labor-hour subcontracts should be included in the universe of subcontracts requiring closeout audits because, with labor-hour subcontracts, costs incurred are a factor in determining the amount payable to a subcontractor.  Therefore, we made one recommendation to ensure that Internal Audit provides adequate closeout audit coverage to labor-hour subcontracts.

Although we determined that we could rely on Internal Audit’s work for this assessment period, we found instances in which we could not verify continuing professional education hours with applicable certificates for calendar years 2014 and 2015.  The absence of certificates primarily occurred because training records were not retained for Internal Audit personnel that separated from Alliance.  The Internal Audit Director noted that Internal Audit now retains training certificates for individuals that separate from the organization, as evidenced by the minimal issues identified with calendar years 2016 through 2018 training documentation.  Because Internal Audit corrected this records retention issue in more recent years, we did not make any formal recommendations in this report regarding training documentation.