Audit 289430

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.

Finding No. 2023-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: All Federal Program: All Assistance Listing Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations Part 200 establishes cost principles for determining costs applicable to federal awards. These principles include the requirement that cost allocation methodologies be reasonable and documented and that all expenses charged to federal awards are appropriately supported. Condition: HEDCO, Inc. does not have a documented cost allocation plan and operating expenditures reported on submitted grant reports did not consistently reconcile directly back to the underlying accounting records. Context: Payroll expenses and other operating expenses (for example, occupancy) charged to federal award programs were not always supported by actual documented time and effort. Cause: Management was not aware of the requirement to have a formalized cost allocation plan. In most cases, payroll and operating costs charged to grants were based on the program budget. Effect: Payroll and other operating costs that were allocated to the federal awards were made based on allocation methodologies that could not be readily traced back to the underlying accounting records. Questioned Costs: Unknown Repeat Finding: No Recommendation: We recommend that management develop a written cost allocation plan to allocate costs in accordance with Title 2 U.S. Code of Federal Regulations Part 200 which is reviewed and approved by the board of directors annually. There should also be a formal review of allocations to the federal awards to ensure that expenses are in line with the cost allocation plan. Management’s Response/View of Responsible Officials: Management concurs with the finding and has outlined its resulting actions in a separately issued Corrective Action Plan.