Finding Text
Indirect Cost
Federal agency: U.S. Department of Commerce
Federal program title: Connecting Minority Communities Pilot Program
ALN: 11.028
Criteria:
2 CFR 75.414 Indirect (F&A) costs states indirect (F&A) costs must be classified within two broad categories: “Facilities” and “Administration.” “Facilities” is defined as depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. “Administration” is defined as general administration and general expenses such as the director's office, accounting, personnel and all other types of expenditures not listed specifically under one of the subcategories of “Facilities” (including cross allocations from other pools, where applicable).”
Condition and Context:
The internal controls over recording and reporting indirect costs within the accounting system are not in place.
Cause:
The Institutions accounting system is not properly set up and there is no process for identifying indirect costs when processing transactions.
Effect:
Indirect costs charged of $36,217 was not clearly identified within the accounting system related the test of major programs and $66,027 related to non-major programs.
Questioned costs: None
Recommendation:
Establish the correct classification of in the chart of accounts in accordance with 200.CFR 75.414 and incorporate a coding process to include recording indirect cost into the correct accounts. During the month-end close process allocate indirect cost to the grant/programs where indirect costs are.