Audit 401199

Compliance Requirement: A/B Condition: I noted that an indirect rate of 17.5% percent was charged to federal awards instead of the 10% rate approved in the grant awards during part of the year. Criteria: 2 CFR 200.414, Indirect Costs, require non-Federal entities to apply the negotiated indirect cost rate, or the de minimis rate of 10% of modified total direct costs (MTDC) if elected and applicable, consistently to all eligible federal awards. Cause and effect: The application of the incorrect indirect cost rate has resulted in unallowable charges to the federal award. This issue was corrected mid-year, but not retrospectively. Recommendation: I recommend management ensure that the proper indirect cost rate is properly applied in accordance with the Uniform Guidance and ensures that appropriate costs are charged to the awards consistent with their federally approved budgets. Views of Responsible Officials: Upon receiving results of the FY21 audit (completed in FY24), TAS’ Director of Finance was informed that the inclusion of the Biological Expertise line item on federal billing records (approximately 7.5% additional uplift) was not allowable as it was being calculated. TAS is allowed a 10% de minimis rate on noted FY22 Federal awards, some of which also included a Biological Expertise line item that is budgeted as an hourly rate. TAS had been calculating uplift amounts owed by simply adding the Biological Expertise (7.5%) to the de minimis rate (10%) for a total uplift of 17.5%. This was done at the direction and approval of our federal partners. However, due to Biological Expertise being entered in the federal and approved budgets as an hourly line item and not a percentage TAS was considered out of compliance by using this method of calculation. After the presentation of this finding in mid-2024, TAS adjusted federal billing for administrative expenses to the de minimis rate (10%) as a percentage, unless otherwise noted in the agreement. Moving forward TAS will be billing the de minimus rate (10%) as a percentage, unless otherwise noted in the agreement.