Finding 2024-002: Unallowable costs over the NIH salary cap
Cluster Name: Research and Development
Federal Awarding Agency: Department of Health and Human Services
Award Name: Alzheimer's Clinical Trial Consortium
Award Number: 5U24AG057437-07
Award Years: 2023-2025
Assistance Listing Title: Aging Research
Assistance Listing Number: 93.866
Pass-through entities: Not applicable
Criteria
The terms and conditions of the annual Consolidated Appropriations Act restrict the amount of direct salary chargeable to a grant under the National Institutes of Health (NIH) to an Executive Level II amount as defined by the Federal Executive pay scale. For the 2023 budget period (January 1 – December 31), this amount was $212,100. Effective January 1, 2024, the salary limitation for Executive Level II was $221,900.
Condition
In fiscal year 2024, a sample of 19 employees' monthly salaries were tested to assess compliance with the NIH salary cap requirements. Of the samples tested, 2 exceptions (both related to the same award) were identified where employees had amounts charged to NIH grants above the required salary cap. The total amount inappropriately charged to the grant above the salary cap requirement was $18,222.
Cause
As part of the University's grant management process, sub-grants may be established under a master grant within the financial reporting system to enable more precise budget management and expense tracking across various departments participating in a research project. In this instance, although the master grant included the necessary NIH salary cap restrictions, the individual responsible for manually setting up the sub-grant was unaware of these restrictions and failed to apply them during the sub-grant setup process.
Effect
The University overcharged the NIH award for amounts above the required salary cap, resulting in unallowable costs.
Questioned Costs
Total questioned costs identified through our testing were $18,222. Refer management’s analysis and response to this finding as reported within “Management’s Views and Corrective Action Plan” for further details over the extent of the exception identified.
Recommendation
We recommend management institute additional controls over the sub-grant set-up process to ensure the University complies with the NIH salary cap requirements.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-003: Unallowable costs – Cost transfers based on budgeted amounts
Cluster Name: Research and Development
Federal Awarding Agency: Department of Health and Human Services
Award Name: Leveraging natural phenotypic variations of heterogenous ALS populations-in-a-dish to enable scalable drug discovery
Award Number: 5R01NS131409-03
Award Years: 2022-2025
Assistance Listing Title: Extramural Research Programs in the Neurosciences and Neurological Disorders
Assistance Listing Number: 93.853
Pass-through entities: Not applicable
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must be determined in accordance with generally accepted accounting principles (GAAP), reflecting actual expenses incurred and must be supported by adequate documentation to ensure compliance with federal requirements.
Condition
In fiscal year 2024, a sample of 25 cost transfers totaling $1,368,397 were tested to evaluate compliance with the relevant federal requirements. Of the samples tested, 1 exception was noted totaling $42,115 where budgeted expenditures were charged to a federal grant through a cost transfer before the actual expenditures were incurred by the University.
Cause
The error occurred due to a lack of proper training of the grant administrator who processed the cost transfer. Instead of verifying the underlying support and understanding the actual expenses incurred, they relied on budgeted figures to complete the transactions.
Effect
The incorrect cost transfer led to an overstatement of expenses on the receiving grant, resulting in unallowable and unsupported costs being charged to the federal award.
Questioned Costs
Total questioned costs were $42,115.
Recommendation
We recommend that management reinforce its existing policies regarding documentation and support for allowability of cost transfers to all members of the Department.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-002: Unallowable costs over the NIH salary cap
Cluster Name: Research and Development
Federal Awarding Agency: Department of Health and Human Services
Award Name: Alzheimer's Clinical Trial Consortium
Award Number: 5U24AG057437-07
Award Years: 2023-2025
Assistance Listing Title: Aging Research
Assistance Listing Number: 93.866
Pass-through entities: Not applicable
Criteria
The terms and conditions of the annual Consolidated Appropriations Act restrict the amount of direct salary chargeable to a grant under the National Institutes of Health (NIH) to an Executive Level II amount as defined by the Federal Executive pay scale. For the 2023 budget period (January 1 – December 31), this amount was $212,100. Effective January 1, 2024, the salary limitation for Executive Level II was $221,900.
Condition
In fiscal year 2024, a sample of 19 employees' monthly salaries were tested to assess compliance with the NIH salary cap requirements. Of the samples tested, 2 exceptions (both related to the same award) were identified where employees had amounts charged to NIH grants above the required salary cap. The total amount inappropriately charged to the grant above the salary cap requirement was $18,222.
Cause
As part of the University's grant management process, sub-grants may be established under a master grant within the financial reporting system to enable more precise budget management and expense tracking across various departments participating in a research project. In this instance, although the master grant included the necessary NIH salary cap restrictions, the individual responsible for manually setting up the sub-grant was unaware of these restrictions and failed to apply them during the sub-grant setup process.
Effect
The University overcharged the NIH award for amounts above the required salary cap, resulting in unallowable costs.
Questioned Costs
Total questioned costs identified through our testing were $18,222. Refer management’s analysis and response to this finding as reported within “Management’s Views and Corrective Action Plan” for further details over the extent of the exception identified.
Recommendation
We recommend management institute additional controls over the sub-grant set-up process to ensure the University complies with the NIH salary cap requirements.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-003: Unallowable costs – Cost transfers based on budgeted amounts
Cluster Name: Research and Development
Federal Awarding Agency: Department of Health and Human Services
Award Name: Leveraging natural phenotypic variations of heterogenous ALS populations-in-a-dish to enable scalable drug discovery
Award Number: 5R01NS131409-03
Award Years: 2022-2025
Assistance Listing Title: Extramural Research Programs in the Neurosciences and Neurological Disorders
Assistance Listing Number: 93.853
Pass-through entities: Not applicable
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must be determined in accordance with generally accepted accounting principles (GAAP), reflecting actual expenses incurred and must be supported by adequate documentation to ensure compliance with federal requirements.
Condition
In fiscal year 2024, a sample of 25 cost transfers totaling $1,368,397 were tested to evaluate compliance with the relevant federal requirements. Of the samples tested, 1 exception was noted totaling $42,115 where budgeted expenditures were charged to a federal grant through a cost transfer before the actual expenditures were incurred by the University.
Cause
The error occurred due to a lack of proper training of the grant administrator who processed the cost transfer. Instead of verifying the underlying support and understanding the actual expenses incurred, they relied on budgeted figures to complete the transactions.
Effect
The incorrect cost transfer led to an overstatement of expenses on the receiving grant, resulting in unallowable and unsupported costs being charged to the federal award.
Questioned Costs
Total questioned costs were $42,115.
Recommendation
We recommend that management reinforce its existing policies regarding documentation and support for allowability of cost transfers to all members of the Department.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.
Finding 2024-004: Review over cost transfers of subrecipient expenditures
Cluster Name: Research and Development
Federal Awarding Agency: Various
Award Name: Various
Award Number: Various
Award Years: Various
Assistance Listing Title: Various
Assistance Listing Number: Various
Pass-through entities: Various
Criteria
In accordance with 2 CFR Part 200, Appendix XI guidelines, cost transfers must adhere to the principles of allowability, allocability, and reasonableness. Specifically, 2 CFR §200.403 stipulates that costs must conform to any limitations or exclusions set forth in the guidance or in the Federal award as to types or amount of cost items.
Additionally, the University’s indirect costs are to be charged according to federally negotiated rates as specified in their federal government rate agreement. This agreement mandates that each indirect cost rate be applied to the modified total direct costs (MTDC). The agreement stipulates that only the first $25,000 of each subaward can be included in the MTDC base for calculating indirect costs.
Condition
In connection with procedures performed to understand the design and implementation of internal controls over compliance, it was identified that the University lacked effective internal controls over the processing of indirect costs associated with subrecipient expenditures transferred between awards. Specifically, there was no control in place to ensure that the indirect costs being charged against the subrecipient expenditures complied with the $25,000 MTDC limit. This gap in controls was identified through our testing of indirect costs, where out of a sample of 25 indirect costs, 1 selection was identified related to a subaward expense. This was subsequently determined to have been misclassified by the University as a subaward and thus did not result in any questioned costs, but through understanding this transaction, a gap in the University’s controls was identified.
Cause
The University’s cost transfer process lacks a review procedure to verify that indirect cost rate limits are correctly programmed into the receiving grant's parameters before processing a cost transfer. As such, the University’s grant administrators may fail to identify indirect costs charged to the grant in excess of the allowed limits for subrecipient expenditures. Additionally, the grant administrator failed to properly apply the University’s policy for classification of subawards versus direct expenditures.
Effect
A lack of adequate controls in the process could result in unallowable indirect costs in excess of the $25,000 subaward limit being charged to federal awards. Additionally, a lack of review of expenditures for appropriate classification could result in the schedule of expenditures of federal awards being misstated.
Questioned Costs
None noted.
Recommendation
We recommend that management implement additional controls over the subrecipient cost transfer process to ensure appropriate reviews are conducted before the approval of a cost transfer to a federal grant. This process should include verifying that the indirect cost rate limits are correctly programmed into grant parameters before approving any subrecipient cost transfers to a grant. Additionally, we recommend that management reinforce its policies related to the classification of subawards versus direct expenditures.
Management’s Corrective Action Plan
Management’s response is reported on “Management’s Views and Corrective Action Plan” at the end of this report.