Identifying Number: 2022-004 - Indirect Cost and Fringe Benefit Rates
Finding: Sections 200.414 and 200.431 of Subpart E of the Uniform Guidance require that indirect costs and
fringe benefits costs charged to federal programs must be reasonable and allocated to the federal program
based on a written policy, and self-insured expenses must be based on historical experience and reasonable
assumptions. The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used, in order to determine if the amount being charged resulted in an adjustment to the billing for the program.
Corrective Actions Taken or Planned: Adjustments made to our workers compensation captive insurance liability resulted in lower than our expected fringe reimbursement rate. This was identified after year-end as part of the audit process, so it was unable to be addressed during the fiscal year. Normal practice is to use 403(b) match to bring the fringe pool to 51%. Late adjustments prevented this from occurring during fiscal year 2022. Improving the monthly close cycle and starting audits earlier following each fiscal year will allow for adjustments to be made to fringe to meet the 51% goal.
Indirect cost rate negotiations must use audited financials. Completing the audit on time will allow for negotiations to take place timely. New audit scheduled is being implemented with the auditors to include pre-year-end audit work and an earlier post year-end start. Automated process in the cost rate reports and year end close will further increase speed and accuracy of rate reporting.
Responsible Official: Michole Greenwood, Controller.
Actual or Anticipated Completion Date: Fiscal year 2023 audit completion by June 30, 2024 and implementation of new accounting software completed October 2023.