Finding 1055747 (2023-004)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2024-07-24
Audit: 315826
Organization: Colorado Legal Services, INC (CO)

AI Summary

  • Core Issue: Inconsistent allocation of medical insurance costs to LSC grants, violating federal regulations on uniform cost application.
  • Impacted Requirements: Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) require consistent accounting policies for both LSC and non-LSC funded activities.
  • Recommended Follow-Up: Update the employee benefit cost allocation methodology to minimize manual adjustments and ensure consistent, automated calculations.

Finding Text

2023 – 004: Cost Allocation of Fringe Benefits to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Native American Grant Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1630.5 and 2 CFR 200.403) state that expenditures are allowable under an LSC (or federal) grant or contract only if the recipient can demonstrate that the cost was consistent with accounting policies and procedures that apply uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Condition: During our testing we noted that 100% of medical insurance for a specific location was allocated to the grant. However, we noted that medical insurance for other pay periods and locations were allocated on a trimester basis using an allocation base of total grant hours for the period divided by total general fund hours. As such, the fringe benefit cost mentioned above was allocated in an inconsistent manner to other grant fringe benefit costs was not fully representative of the employees’ time and effort. However, management noted that these costs were allocated in a manner to comply with 45 CFR 1630.5(g) which allows LSC award recipients to allocate proportional share of another funding source’s share of an indirect cost to LSC funds. Questioned costs: None. Context: This single instance was noted during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s employee benefit cost allocation methodology is primarily based on a periodic calculation of grant hours versus general fund hours multiplied by period costs, but it often includes manual adjustments based on review of individual expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s employee benefit cost allocation methodology could cause costs to be allocated to grants in a manner where costs are not applied uniformly to both LSC (or, federal)-funded and non-LSC (of, federal) -funded activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its employee benefit cost allocation methodology and process to reduce the frequency of manual adjustments based on review of expense data and maximize the use of automated allocations that are calculated in a consistent manner that ensure costs are applied uniformly to respective benefited activities. Views of responsible officials: There is no disagreement with the audit finding

Categories

Allowable Costs / Cost Principles Significant Deficiency

Other Findings in this Audit

  • 479294 2023-003
    Material Weakness
  • 479295 2023-004
    Significant Deficiency
  • 479296 2023-005
    Significant Deficiency
  • 479297 2023-006
    Material Weakness
  • 479298 2023-007
    Material Weakness
  • 479299 2023-003
    Material Weakness
  • 479300 2023-004
    Significant Deficiency
  • 479301 2023-005
    Significant Deficiency
  • 479302 2023-006
    Material Weakness
  • 479303 2023-007
    Material Weakness
  • 479304 2023-003
    Material Weakness
  • 479305 2023-004
    Significant Deficiency
  • 479306 2023-005
    Significant Deficiency
  • 479307 2023-006
    Material Weakness
  • 479308 2023-007
    Material Weakness
  • 479309 2023-003
    Material Weakness
  • 479310 2023-004
    Significant Deficiency
  • 479311 2023-005
    Significant Deficiency
  • 479312 2023-006
    Material Weakness
  • 479313 2023-007
    Material Weakness
  • 479314 2023-008
    Material Weakness
  • 479315 2023-008
    Material Weakness
  • 479316 2023-008
    Material Weakness
  • 479317 2023-008
    Material Weakness
  • 479318 2023-008
    Material Weakness
  • 479319 2023-008
    Material Weakness
  • 479320 2023-008
    Material Weakness
  • 479321 2023-008
    Material Weakness
  • 479322 2023-008
    Material Weakness
  • 479323 2023-008
    Material Weakness
  • 479324 2023-008
    Material Weakness
  • 479325 2023-008
    Material Weakness
  • 479326 2023-008
    Material Weakness
  • 479327 2023-009
    Material Weakness
  • 479328 2023-010
    Significant Deficiency
  • 479329 2023-009
    Material Weakness
  • 479330 2023-010
    Significant Deficiency
  • 479331 2023-009
    Material Weakness
  • 479332 2023-010
    Significant Deficiency
  • 1055736 2023-003
    Material Weakness
  • 1055737 2023-004
    Significant Deficiency
  • 1055738 2023-005
    Significant Deficiency
  • 1055739 2023-006
    Material Weakness
  • 1055740 2023-007
    Material Weakness
  • 1055741 2023-003
    Material Weakness
  • 1055742 2023-004
    Significant Deficiency
  • 1055743 2023-005
    Significant Deficiency
  • 1055744 2023-006
    Material Weakness
  • 1055745 2023-007
    Material Weakness
  • 1055746 2023-003
    Material Weakness
  • 1055748 2023-005
    Significant Deficiency
  • 1055749 2023-006
    Material Weakness
  • 1055750 2023-007
    Material Weakness
  • 1055751 2023-003
    Material Weakness
  • 1055752 2023-004
    Significant Deficiency
  • 1055753 2023-005
    Significant Deficiency
  • 1055754 2023-006
    Material Weakness
  • 1055755 2023-007
    Material Weakness
  • 1055756 2023-008
    Material Weakness
  • 1055757 2023-008
    Material Weakness
  • 1055758 2023-008
    Material Weakness
  • 1055759 2023-008
    Material Weakness
  • 1055760 2023-008
    Material Weakness
  • 1055761 2023-008
    Material Weakness
  • 1055762 2023-008
    Material Weakness
  • 1055763 2023-008
    Material Weakness
  • 1055764 2023-008
    Material Weakness
  • 1055765 2023-008
    Material Weakness
  • 1055766 2023-008
    Material Weakness
  • 1055767 2023-008
    Material Weakness
  • 1055768 2023-008
    Material Weakness
  • 1055769 2023-009
    Material Weakness
  • 1055770 2023-010
    Significant Deficiency
  • 1055771 2023-009
    Material Weakness
  • 1055772 2023-010
    Significant Deficiency
  • 1055773 2023-009
    Material Weakness
  • 1055774 2023-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
09.U00 Basic Field Grant $6.00M
21.027 Eviction Legal Defense $1.06M
93.044 Special Programs for the Aging, Title Iii, Part B $695,061
21.027 Arapahoe Eviction Clinic $456,208
16.575 Civil Legal Services for Victims $454,910
16.320 Services for Victims of Human Trafficking $178,481
09.U00 Agricultural Worker Grant $162,560
09.U00 Native American Grant $144,793
21.008 Low Income Taxpayer Clinics (litc) $142,673
21.027 Eviction Diversion $114,994
09.U00 Technology Innovation Grants (tig) $71,397
16.815 Tribal Civil Legal Assistance $16,888
93.044 Supportive Services and Senior Centers $6,536