Finding Text
2023- 011 –Indirect Costs Calculations and Documentation
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Homeless Services and CARES
Assistance Listing Number: 14.231
Pass-Through Agencies: All Chicago and Chicago Department of Family and Support Services
Pass-Through Numbers: N/A
Award Periods: January 1, 2022 through December 31, 2023
Type of Finding:
Material Weakness in Internal Control over Compliance
Other Matters
Criteria or Specific Requirement:
A well-designed system of internal control should include policies and procedures to ensure the accuracy of indirect cost calculations and voucher requests. This ensures only allowable costs are charged to federal programs.
Condition:
In testing a sample of five indirect cost items, we identified the following:
• 5 out of the 5 indirect cost calculations tested were calculated on personnel and benefit expenses for employees already being charged to the grant directly.
• 5 out of the 5 indirect cost calculations tested were prepared and reviewed by the same individual.
Questioned Costs:
$14,545
Context:
Indirect cost calculations are not being properly calculated, reviewed and approved throughout the voucher process.
Cause:
Policies and procedures had not been put into place to properly calculate the indirect costs and document review of vouchers prior to submission during the monthly voucher process. Procedures should be in accordance with the Uniform Guidance.
Effect:
Inaccurate costs may be charged to federal programs through the indirect cost allocation if The Blvd does not have procedures in place to monitor the accuracy of the calculation. Additionally, an error could occur during the voucher and process if The Blvd does not have procedures in place to properly review and approve the vouchers prior to submission.
Repeat Finding:
This is not a repeat finding.
Recommendation:
Management should develop a process whereby indirect costs for federal grants are supported by a system of internal controls which provides reasonable assurance that the allocation calculated is accurate, allowable, and properly calculated, and supported. This process should be documented by a sign-off and date of both the preparer and the reviewer prior to the submission of the voucher during the monthly voucher process.
Views of Responsible Officials and Planned Corrective Actions:
There is no disagreement with the audit finding. All vouchers will be reviewed and approved by upper management before submission. These vouchers will be checked against a modified policy ensuring costs are reasonable, allowable, and allocable to a State, Federal, local, and private awards shall be charged to that award directly or indirectly.
Name of the Contact Person Responsible for Corrective Action:
Bo Gasic, CFO
Planned Completion Date for Corrective Action Plan: Immediately