Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal agency: U.S. Department of Health and Human Services Pass-through entity: Council of Medical Specialty Societies Assistance listing number: 93.083 Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Award number: 1NH231P922656-01-00 Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies Award year: 9/30/2021 – 9/30/2026 Criteria – The Uniform Guidance in 2 CFR Appendix IV to Part 200 contains the requirements for development of indirect cost rates for nonprofit organizations in accordance with federal regulations. The guidance defines a provisional rate as a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards. Provisional rates must be actualized and upward or downward adjustments made based on the actual allowable costs incurred for the period involved. In addition to the above, costs charged to federal awards, including indirect costs, must conform to the allowability of cost principles in 2 CFR Part 200, Subpart E. Specifically, 2 CFR §200.403 states that costs must be necessary, reasonable, and allocable to the federal award, and must conform to any limitations or exclusions set forth in the cost principles or in the federal award as to types or amounts of cost items. Condition – The College continued to apply indirect costs to the major federal program using provisional rates established for fiscal year 2016, which were formalized in a written agreement with the cognizant agency on February 25, 2014. In both 2023 and 2024, the College did not calculate the actual indirect costs incurred and compare them to the indirect costs charged using the provisional rates to determine necessary adjustments, as required under 2 CFR Part 200. Management calculated a preliminary final rate for 2024 during 2025 and continues to refine the actual rates for 2024. Until those rates are actualized, the College continues to request reimbursement using the provisional rate. Although corrective action was initiated after the finalization of the 2023 audit, this deficiency persisted throughout the 2024 audit period. Cause – The College's existing policies, procedures, and internal controls were inadequate to effectively manage and ensure compliance with the Uniform Guidance requirements pertaining to indirect costs, as specified in the aforementioned criteria. This hindered the College's ability to properly oversee and adhere to the established guidelines, leading to stated non-compliance. Questioned Costs – Questioned costs for 2024 are currently indeterminable, as management is still in the process of finalizing the indirect cost rate calculations for the year. Until the final rates are established, management is unable to estimate whether actual costs exceed provisional billings or if provisional billings exceed actual cost. Context – This is a condition identified per review of the College’s compliance with the allowable costs/cost principles provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Effect – The College did not actualize its provisional rate, or properly calculate and adjust actual indirect costs for 2024. Inadequate documentation and verification increased the risk of unallowable costs being charged to federal awards, which may result in noncompliance, questioned costs, potential disallowance or repayment of federal funding, and an inability to fully demonstrate compliance with Uniform Guidance requirements. Repeat Finding – This is a repeat finding; however, during the audit period, the College took steps to address the deficiency, including engaging external experts to assist with the indirect cost calculation. The finding is repeated to allow the College additional time to refine its methodology and calculation to ensure full compliance with federal regulations. Recommendation – Establish and implement robust policies, procedures, and controls to manage and monitor indirect costs. Regularly review and update indirect cost rates to ensure they reflect actual costs and comply with 2 CFR Part 200, Subpart E. Ensure proper identification, documentation, and verification of accounts in the indirect cost pool and base, and routinely review costs for allowability with adequate supporting documentation. Views of Responsible Officials – During 2025, the College developed a preliminary actual rate for 2024 and is continuing to refine the actual rates for that year. Following the finalization of the 2023 audit, the College implemented formal policies and procedures for identifying, documenting, and verifying accounts in the indirect cost pool and base. Management has assigned responsibility for reviewing the allowability of costs and will actualize the indirect cost rate once the calculations are complete.