Audit 406656

INTERNAL CONTROL OVER COST ALLOCATION - The Council did not follow their policy to charge direct costs and use appropriate cost allocation methods as required under Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) when reporting activity to the Illinois Department of Human Services on their monthly cost reimbursement reports. Professional standards require that we report this weakness. When reviewing direct costs and cost allocations retroactively applied to support funding related to federal funding received, some allocations assigned were not reasonably apportioned to the grants referenced in the questioned costs. A number of category/program expenditures were charged monthly by taking 1/12 of the approved budget as an estimate of the expenditures supporting the program. The Council was unable to provide cost allocation supported by appropriate documentation for those costs in question. The organization's programs overall are focused on an interrelated mission of substance abuse prevention and treatment. Organization-wide costs maintaining this overall responsibility more than exceeded the funding received. Effective efforts should be engaged to document the allocation of such costs assigned to these similar programs. RECOMMENDATION: We recommend that the Council follow its fiscal policy to report direct costs and apply appropriate cost allocations to ensure adequate support for reporting.