Audit 303656

Condition: During our audit, we noted the Organization’s methodology for allocating administrative expenditures to the grant did not align with the requirements in the SSVF Program Guide. Criteria: SSVF Program Guide, Section VIII, Subsection C. Eligible Expenses, states: “Grantees electing to participate in either the traditional method for charging administrative costs or the MACA method, must have a written policy that highlights the grantee’s approach to be: 1) reasonable and consistently applied; 2) supported by accurate and current data; 3) appropriate to the particular cost being distributed; 4) one which results in an accurate measure of the benefits provided to each activity of the organization; and 5) update in the event of significant changes in operational or fiscal environment that the MACA will be re-evaluated to ensure existing drivers and calculations remain relevant.” Cause: The Organization used a combination of time spent on administrative tasks and the percentage of overall SSVF transactions administered as allocation factors for administrative expenditures charged to SSVF. However, due to a lack of established controls, timesheets were not maintained for some of the administrative staff to substantiate the accuracy of the cost allocation basis. Effect: While the Organization’s allocation methodology ensured it did not exceed the maximum 10% cap on administrative costs, some administrative costs charged to the SSVF grant were not adequately supported by appropriate supporting documentation. Context: A sample of 40 disbursements were selected for testing. 6 out of the 40 related to allocated administrative costs, which did not have adequate supporting documentation. Recommendation: We recommend that management implement an appropriate allocation methodology that complies with the SSVF Program Guide. Management’s Response: We are in the process of implementing the MACA method for allocating administrative costs going forward. As part of this process, we completed the MACA worksheet provided by SSVF using fiscal year 2023 data. The resulting allowable administrative costs were actually higher than the actual amounts charged to the grant for fiscal year 2023. We will continue to work with the Veterans Administration to ensure the allocation methodology complies with the SSVF Program Guide.

Condition: During our audit, we noted the Organization’s methodology for allocating administrative expenditures to the grant did not align with the requirements in the SSVF Program Guide. Criteria: SSVF Program Guide, Section VIII, Subsection C. Eligible Expenses, states: “Grantees electing to participate in either the traditional method for charging administrative costs or the MACA method, must have a written policy that highlights the grantee’s approach to be: 1) reasonable and consistently applied; 2) supported by accurate and current data; 3) appropriate to the particular cost being distributed; 4) one which results in an accurate measure of the benefits provided to each activity of the organization; and 5) update in the event of significant changes in operational or fiscal environment that the MACA will be re-evaluated to ensure existing drivers and calculations remain relevant.” Cause: The Organization used a combination of time spent on administrative tasks and the percentage of overall SSVF transactions administered as allocation factors for administrative expenditures charged to SSVF. However, due to a lack of established controls, timesheets were not maintained for some of the administrative staff to substantiate the accuracy of the cost allocation basis. Effect: While the Organization’s allocation methodology ensured it did not exceed the maximum 10% cap on administrative costs, some administrative costs charged to the SSVF grant were not adequately supported by appropriate supporting documentation. Context: A sample of 40 disbursements were selected for testing. 6 out of the 40 related to allocated administrative costs, which did not have adequate supporting documentation. Recommendation: We recommend that management implement an appropriate allocation methodology that complies with the SSVF Program Guide. Management’s Response: We are in the process of implementing the MACA method for allocating administrative costs going forward. As part of this process, we completed the MACA worksheet provided by SSVF using fiscal year 2023 data. The resulting allowable administrative costs were actually higher than the actual amounts charged to the grant for fiscal year 2023. We will continue to work with the Veterans Administration to ensure the allocation methodology complies with the SSVF Program Guide.