2 CFR 200 § 200.449

Findings Citing § 200.449

Interest.

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About this section
Section 200.449 states that interest costs on borrowed funds or the recipient's own funds are generally unallowable for federal awards, but interest on financing for capital assets is allowable under specific conditions. This affects recipients and subrecipients of federal funds, requiring them to follow guidelines for allowable costs, ensure transactions are at fair market value, and limit claims to the least expensive financing options.
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FY End: 2024-06-30
Cayuga Home for Children, Inc. D/b/a Cayuga Centers
Compliance Requirement: B
Finding: Unallowable administrative costs charged as direct expenses. Criteria: Allowable Costs/ Cost Principles (Non-profit Organization) Per the Code of Federal Regulations § 75.467 Selling and marketing costs., costs of selling and marketing any products or services of the non-Federal entity (unless allowed under § 75.421) are unallowable, except as direct costs, with prior approval by the HHS awarding agency when necessary for the performance of the Federal award. Per the Code of Federal Reg...

Finding: Unallowable administrative costs charged as direct expenses. Criteria: Allowable Costs/ Cost Principles (Non-profit Organization) Per the Code of Federal Regulations § 75.467 Selling and marketing costs., costs of selling and marketing any products or services of the non-Federal entity (unless allowed under § 75.421) are unallowable, except as direct costs, with prior approval by the HHS awarding agency when necessary for the performance of the Federal award. Per the Code of Federal Regulations § 200.449 Interest, costs incurred for interest on borrowed capital, temporary use of endowment funds, or the use of the recipient's or subrecipient's own funds are unallowable. Condition and Context, and Cause: During our audit, we identified unallowable marketing and financing expenditures allocated to the UC grants. See discussion above at 2024-006 for background on failure to track allowable costs. Result: Amounts identified as unallowable costs per the compliance guidance have been included in the contract liability as disclosed in Note 12. See the Summary of Unallowable Costs and Questioned Costs tables for detail on page 56. Recommendation: The auditors recommend the Organization re-implement internal controls to track allowable expenditures and reconcile qualifying costs with cash draws.