March 11, 2016

Audit Coverage of Cost Allowability for Alliance for Sustainable Energy LLC During Fiscal Years 2012 and 2013 Under Department of Energy Contract No. DE AC36 08GO28308

Since October 1, 2008, the Alliance for Sustainable Energy LLC (Alliance) has managed and operated the National Renewable Energy Laboratory (NREL) under contract with the Department of Energy (Department).  NREL supports the Department’s research and development initiatives.  During fiscal years (FYs) 2012 and 2013, Alliance expended and claimed $887,876,835.64.  

Alliance 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.  A Cooperative Audit Strategy was implemented to make efficient use of available audit resources while ensuring that the Department’s contractors claim only allowable costs.  This strategy places reliance on the contractors’ internal audit function (Internal Audit) to provide audit coverage of the allowability of incurred costs claimed by contractors.

Based on our assessment, nothing came to our attention to indicate that allowable cost-related audit work performed by Alliance’s Internal Audit could not be relied upon.  We did not identify any material internal control weaknesses with the cost allowability audits, which generally met the International Standards for the Professional Practice of Internal Auditing prescribed by the Institute of Internal Auditors.  During FYs 2012 and 2013, Internal Audit, Defense Contract Audit Agency, and Alliance’s subcontract audit function identified a total of $196,023 in questioned costs, all of which had been resolved.  In addition, in response to the findings and recommendations identified in our previous report Assessment of Audit Coverage of Cost Allowability for National Renewable Energy Laboratory During Fiscal Years 2009 Through 2011 Under Department of Energy Contract No. DE-AC36-08GO28308 (OAS-V-14-03, November 2013), we found that Alliance had resolved costs pending audit, generally addressed subcontract audit strategy concerns, and partially recovered costs previously determined to be unallowable.  Further, the Department had resolved the account discrepancies between NREL and the Department’s accounting systems.

Topic: Management & Administration