MARCH 31, 2008 

QUALITY CONTROL REVIEW REPORT

REPORT NO. IG-08-015 (ASSIGNMENT NO. A-08-007-00) 

OFFICE OF AUDITS

QUALITY CONTROL REVIEW OF THE MAYER, HOFFMAN,

MCCANN, P.C., OFFICE OF MANAGEMENT AND 

BUDGET CIRCULAR A-133 AUDIT OF THE FLORIDA 

ATLANTIC UNIVERSITY RESEARCH CORPORATION FOR 

FISCAL YEAR ENDED JUNE 30, 2005 

OFFICE OF INSPECTOR GENERAL

National Aeronautics and 

Space Administration 

 
Acronyms 

AICPA American Institute of Certified Public Accountants 

FY Fiscal Year 

GAGAS Generally Accepted Government Auditing Standards 

MHM Mayer, Hoffman, McCann, P.C. 

OMB Office of Management and Budget 

SEC Securities and Exchange Commission 

REPORT NO. IG-08-015 
RESULTS

National Aeronautics and 

Space Administration 

Office of Inspector General 

Washington, DC 20546-0001 

 March 31, 2008 

Mr. Michael Fahndrich, Shareholder 

Mayer, Hoffman, McCann, P.C. 

Mr. Jack Ludin, Secretary 

Florida Atlantic University Research Corporation 

SUBJECT: Quality Control Review of Mayer, Hoffman, McCann, P.C., Office of 

Management and Budget Circular A-133 Audit of the Florida Atlantic 

University Research Corporation for Fiscal Year Ended June 30, 2005 

(Report No. IG-08-015, Assignment No. A-08-007-00) 

We are providing this report for your information and use. The audit firm Mayer, 

Hoffman, McCann, P.C. (MHM), located in Boca Raton, Florida, performed a single 

audit of the Florida Atlantic University Research Corporation (the Corporation) for the 

fiscal year ended June 30, 2005 (FY 2005). Office of Management and Budget (OMB) 

Circular No. A-133, “Audits of States, Local Governments, and Non-Profit 

Organizations,” requires these audits. 

Background. The Corporation, a nonprofit, is a university direct-support organization 

established by the Florida Atlantic University (the University) in 1990. The Corporation 

was organized to promote, encourage, and provide assistance to the research activities of 

the University’s faculty, staff, and students. The Corporation has been granted rights and 

responsibilities for the development, protection, and commercial application of defined 

and selected intellectual property. In consideration of the Corporation’s efforts, it is 

entitled to a portion of royalties, license fees, and other revenues. 

Quality Control Review Objectives. As the oversight audit agency for the Corporation, 

the NASA Office of Inspector General (OIG) performed a quality control review of the 

MHM audit of the Corporation for FY 2005. The objectives of our quality control review 

were to determine whether MHM had conducted the audit in accordance with generally 

accepted government auditing standards (GAGAS) and the auditing and reporting 

requirements of OMB Circular A-133 and its related Compliance Supplement (the 

Supplement). OMB issued the Supplement to assist auditors in meeting the requirements 

of OMB Circular A-133. Enclosure 1 contains details of the scope and methodology of 

our review, requirements for single audits, and the latest peer review of MHM. 

Enclosure 2 contains the results of the MHM audit of the Corporation for FY 2005. 

Review Results. MHM’s audit work complied with GAGAS general standards, the 

fieldwork standards for financial audits, and the reporting standards for financial audits 

REPORT NO. IG-08-015 1 
RESULTS

and OMB Circular A-133 reporting requirements with no exceptions. MHM issued an 

unqualified opinion on the financial statements, Schedule of Expenditures of Federal 

Awards, and major program compliance. MHM noted no matters involving internal 

controls relating to financial statements or the major program that were considered 

material weaknesses for FY 2005. 

We appreciate the courtesies extended to the audit staff. For additional information on 

this report, please contact Mr. Mark Jenson, Financial Statement Audits Director, at 

202-358-0629. See Enclosure 3 for the report distribution. The review team members 

are listed inside the back cover of this report. 

 signed 

Evelyn R. Klemstine 

Assistant Inspector General for Auditing 

3 Enclosures 

2 REPORT NO. IG-08-015 
ENCLOSURE 1 

QUALITY CONTROL

REVIEW PROCESS

Scope and Methodology 

We conducted a quality control review of the MHM audit of the Corporation for FY 2005 

and of the resulting reporting package submitted to the Federal Audit Clearinghouse. We 

performed our review February 18–21, 2008, at the Boca Raton, Florida, office of MHM. 

For FY 2005, the Corporation reported total Federal expenditures of $1,464,841, all 

attributable to NASA. 

As the oversight audit agency responsible for performing the review, we focused the 

review on six areas: 

• reporting, 

• auditor qualifications, 

• planning, 

• conduct of the audit work, 

• audit work relating to the Schedule of Expenditures of Federal Awards, and 

• supervision. 

In conducting our review, we assessed the audit documentation prepared by MHM. We 

also discussed the audit with MHM audit personnel. We emphasized the areas that are of 

major concern to the Federal Government, such as determining and auditing major 

program compliance and internal controls. 

Single Audit Requirements 

The Single Audit Act (the Act), Public Law 98-502, as amended, and OMB 

Circular A-133 are designed to improve the financial management of State and local 

governments and nonprofit organizations. The Act and OMB Circular A-133 establish 

uniform auditing and reporting requirements for all Federal award recipients who are 

required to obtain a single audit. OMB Circular A-133 establishes policies that guide 

implementation of the Act and provide an administrative foundation for uniform 

requirements of non-Federal entities administering Federal awards. OMB Circular A-133 

applies to all Federal departments and agencies that make awards to non-Federal entities. 

Entities that expend $500,000 or more of Federal awards in a fiscal year are subject to the 

Act and the audit requirements in OMB Circular A-133 and, therefore, must have an 

annual single or program-specific audit performed in accordance with GAGAS. 

REPORT NO. IG-08-015 3 
ENCLOSURE 1 

To meet the requirements of the Act and OMB Circular A-133, the auditee submits to the 

Federal Audit Clearinghouse a complete reporting package on each single audit. The 

submission includes the following: 

• a data collection form certified by the auditee and auditor that the audit was 

completed in accordance with the Circular; 

• financial statements and related opinion; 

• a Schedule of Expenditures of Federal Awards and related opinion; 

• a report on compliance and internal controls over financial reporting; 

• a report on internal control over compliance for major programs; 

• a report on compliance with requirements for major programs and related opinion; 

• a schedule of findings and questioned costs; 

• a summary schedule of prior audit findings, when appropriate; and 

• a corrective action plan, when appropriate. 

The Supplement assists auditors in identifying the compliance requirements that the 

Federal Government expects to be considered as part of the single audit. For each 

compliance requirement, the Supplement describes the related audit objectives for the 

auditor to consider in each audit conducted in compliance with OMB Circular A-133 as 

well as suggested audit procedures. The Supplement also describes the objectives of 

internal controls and characteristics that, when present and operating effectively, help 

ensure compliance with requirements. The following 14 compliance requirements 

identified in the Supplement may be material to a major program that is audited: 

1. Activities Allowed or Unallowed 

2. Allowable Costs/Cost Principles 

3. Cash Management 

4. Davis-Bacon Act 

5. Eligibility 

6. Equipment and Real Property Management 

7. Matching, Level of Effort, Earmarking 

8. Period of Availability of Federal Funds 

9. Procurement and Suspension and Debarment 

10. Program Income 

11. Real Property Acquisition and Relocation Assistance 

12. Reporting 

13. Subrecipient Monitoring 

14. Special Tests and Provisions 

The American Institute of Certified Public Accountants (AICPA) Audit Guide, 

“Government Auditing Standards and Circular A-133 Audits,” May 2003, provides 

guidance on auditor responsibilities for conducting audits according to the Act and OMB 

Circular A-133. In general, the Audit Guide provides auditors with an understanding of 

4 REPORT NO. IG-08-015 
ENCLOSURE 1 

the unique planning, performance, and reporting considerations for single audits 

performed in compliance with GAGAS. In addition, the Audit Guide uses summary 

tables and detailed discussions to provide the auditor with an understanding of the 

additional GAGAS general, fieldwork, and reporting requirements, including the 

additional standards relating to quality control systems, continuing professional 

education, workpapers, audit follow-up, and reporting. 

The Audit Guide emphasizes that, when planning an audit to meet the requirements of 

OMB Circular A-133, several factors should be considered in addition to those ordinarily 

associated with an audit of financial statements in accordance with generally accepted 

auditing standards and GAGAS. The factors include, but are not limited to, the 

following: 

• Determining that the Schedule of Expenditures of Federal Awards is presented 

fairly in relation to the financial statements taken as a whole. 

• Determining major programs for audit using a risk-based approach. 

• Determining compliance requirements. 

• Gaining an understanding of internal control over compliance for major Federal 

programs. 

• Testing internal control over compliance for major programs. 

• Determining compliance with laws, regulations, and the provisions of contracts or 

grant agreements pertaining to Federal awards that have a direct and material 

effect on each major program. 

• Satisfying the additional requirements of the Act and OMB Circular A-133 for 

audit documentation, audit follow-up, and reporting. 

Latest Peer Review 

We reviewed the most recent peer review report on MHM, prepared by Davis, Kinard & 

Company, P.C., for the year ended June 30, 2005. The report, issued November 18, 

2005, stated that the system of quality control for the accounting and auditing practice 

applied by MHM to the audits of non-SEC issuers of financial statements was designed to 

meet the requirements of the quality control standards for an accounting and auditing 

practice established by the AICPA. The peer review found that the MHM had complied 

with the quality control standards during the year ended June 30, 2005, providing the firm 

with reasonable assurance of complying with applicable professional standards. The peer 

review report identified no deficiencies in MHM’s system of quality control. 

REPORT NO. IG-08-015 5 
ENCLOSURE 2 

RESULTS OF THE MHM AUDIT OF 

THE CORPORATION FOR 

FY 2005 

MHM Audit Report 

MHM issued its report, dated January 11, 2006, on the financial statements and the 

Schedule of Expenditures of Federal Awards, for the Corporation. MHM reported that it 

had performed the audit in accordance with generally accepted auditing standards and the 

standards applicable to financial audits contained in “Government Auditing Standards,” 

issued by the Comptroller General of the United States. It further stated that the financial 

statements presented fairly, in all material respects, the financial position of the 

Corporation as of June 30, 2005, and 2004, and the results of its operations and its cash 

flows for the years then ended. MHM also stated the opinion that the information 

contained in the Schedule of Expenditures of Federal Awards is fairly stated, in all 

material respects, in relation to the basic financial statements taken as a whole. 

MHM Audit Report on Internal Control and Compliance and 

Other Matters 

MHM’s “Report on Internal Control over Financial Reporting and on Compliance and 

Other Matters Based on an Audit of Financial Statements Performed in Accordance with 

Government Auditing Standards,” January 11, 2006, stated that MHM “noted no matters 

involving the internal control over financial reporting and [the Corporation’s] operation 

that we consider to be material weaknesses [and] no instances of noncompliance or other 

matters that are required to be reported under Government Auditing Standards.” 

However, MHM reported that it noted certain other matters that were reported to 

management in a separate letter dated January 20, 2006. 

MHM Audit Report on Major Program Compliance and 

Internal Control 

MHM’s “Report on Compliance with Requirements Applicable to Each Major Program 

and on Internal Control over Compliance in Accordance with OMB Circular A-133,” 

January 11, 2006, stated MHM’s opinion that the Corporation complied, in all material 

respects, with the requirements applicable to each of its major programs for the year 

ended June 30, 2005. The report also stated that MHM noted no matters involving the 

internal control over compliance and its operation that MHM considered to be material 

weaknesses. 

6 REPORT NO. IG-08-015 
ENCLOSURE 3 

REPORT DISTRIBUTION

Independent Audit Firm 

Mayer, Hoffman, McCann, P.C. 

Mr. Michael Fahndrich, Shareholder 

Audited Organization 

Mr. Jack Ludin, Secretary, Florida Atlantic University Research Corporation 

NASA Headquarters 

Deputy Administrator 

Chief of Staff 

Chief Financial Officer 

Assistant Administrator for Procurement 

Assistant Administrator for Internal Controls and Management Systems 

Non-NASA Federal Organizations 

Office of Management and Budget 

Deputy Associate Director, Energy and Science Division 

 Branch Chief, Science and Space Programs Branch 

Technical Manager, Office of Federal Financial Management 

Government Accountability Office 

Director, NASA Issues, Office of Acquisition and Sourcing Management 

Federal Audit Clearinghouse 

Congressional Committees and Subcommittees, Chairman and 

Ranking Member 

Senate Committee on Appropriations 

Senate Subcommittee on Commerce, Justice, Science, and Related Agencies 

Senate Committee on Commerce, Science, and Transportation 

Senate Subcommittee on Space, Aeronautics, and Related Sciences 

Senate Committee on Homeland Security and Governmental Affairs 

House Committee on Appropriations 

House Subcommittee on Commerce, Justice, Science, and Related Agencies 

House Committee on Oversight and Government Reform 

House Subcommittee on Government Management, Organization, and Procurement 

House Committee on Science and Technology 

House Subcommittee on Investigations and Oversight 

House Subcommittee on Space and Aeronautics 

REPORT NO. IG-08-015 7 

Major Contributors to the Report: 

Mark Jenson, Director, Financial Statement Audits 

David Gandrud, Project Manager 

John Pacious, Auditor 

REPORT NO. IG-08-015 9 
MARCH 31, 2008 

REPORT No. IG-08-015 

OFFICE OF AUDITS

OFFICE OF INSPECTOR GENERAL

ADDITIONAL COPIES

Visit www.hq.nasa.gov/office/oig/hq/audits/reports/FY08/index.html to obtain additional copies of this 

report, or contact the Assistant Inspector General for Auditing at 202-358-1232. 

COMMENTS ON THIS REPORT

In order to help us improve the quality of our products, if you wish to comment on the quality or 

usefulness of this report, please send your comments to Ms. Jacqueline White, Director of Quality 

Assurance, at Jacqueline.White@nasa.gov or call 202-358-0203. 

SUGGESTIONS FOR FUTURE AUDITS

To suggest ideas for or to request future audits, contact the Assistant Inspector General for Auditing. 

Ideas and requests can also be mailed to: 

Assistant Inspector General for Auditing 

NASA Headquarters 

Washington, DC 20546-0001 

NASA HOTLINE

To report fraud, waste, abuse, or mismanagement, contact the NASA OIG Hotline at 800-424-9183 or 

800-535-8134 (TDD). You may also write to the NASA Inspector General, P.O. Box 23089, L’Enfant 

Plaza Station, Washington, DC 20026, or use http://www.hq.nasa.gov/office/oig/hq/hotline.html#form. 

The identity of each writer and caller can be kept confidential, upon request, to the extent permitted 

by law.