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.