Audit 292188

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.

Inadequate Controls Over Expenditure Allocations Condition: Expenditures allocated to federal awards were not based on rational and consistent allocation methodologies. Criteria: Expenditures charged to federal award programs should be reasonable and necessary. Those costs that are allocated should include documentation of the specific allocation methodologies used.Cause: The Organization obtained their first federal funding as a result of the COVID-19 pandemic. The Organization did not have an internal control system in place to meet the criteria required under the more robust internal control framework provided by the Uniform Guidance. As a result, even though audited allocated expenses appeared reasonable, a documented methodology was not in writing. Effect: Of the expenditures tested, most were initially allocated within the general ledger under a different methodology than was eventually expensed under the federal grant awards. Additionally, audit time and bookkeeping time was incurred to reconcile between the two allocation methodologies, and, in most cases, there was no documentation of the eventual allocation methodology. Many of the allocations reviewed relied on oral assertions of expenditures applicable to different Organization functions and federal award programs. In addition, although the allocations charged to the grants appeared to be consistent within a range, the initial assessment appeared to be based on budgetary concerns rather the use. Recommendation: Indirect costs, such as overhead and other split expenses, should be based on a written allocation methodology. For example, overhead expenses such as rent and utilities could be based on the square footage occupied by employees that provide services to specific Organization functions. Other expenses such as the purchase of supplies should be charged directly to the function or program utilizing the supplies or over rational basis of use if utilized under many functions or programs. Employee time should be allocated specifically based on the hours in the date spent towards achieving the goals of the Organization’s functions or programs. As a further recommendation, the Organization should obtain training to gain a full understanding of the internal control requirements under the Uniform Guidance internal control framework. Management’s Response: See management’s corrective action plan.