Finding Text
2024-002 – Indirect Costs (IDC)
Federal Programs – Research and Development Cluster (Assistance Listing No. 98.001 and 93.855)
Federal Agencies - U.S. Agency for International Development and Department of Health and Human Services
Federal Award Year – July 1, 2023 to June 30, 2024
Compliance Requirement – Activities Allowed/Unallowed and Allowable Costs
Criteria Requirement:
Indirect (facilities and administrative(F&A)) costs are those costs that are incurred for common or joint
objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, an
instructional activity, or any other institutional activity (2 CFR section 200.1).
Per 2 CFR 200, Appendix III, paragraph C.2, indirect costs requires that the negotiated (or submitted) rate(s)
are applied to the appropriate distribution base. Also, as described in 2 CFR section 200.403, costs must be consistently charged as either indirect or direct but may not be double charged or inconsistently charged as
both.
Condition Found:
For four out of twelve samples, the indirect cost recorded was overstated due to miscalculations of IDC due to
an ineffective control over the review and recalculation of indirect costs.
• For three out of the twelve samples, the miscalculations were overstated due to a calculation error in the
year end closing entry. However, the last draw request submitted for FY24 was on September 18, 2024, for
expenses incurred/booked through June 30, 2024; and the indirect costs claimed on this draw request were
calculated accurately, and did not include the overages. Therefore, these samples were not considered to
be compliance findings as EVMS did not seek reimbursement for more than was allowable within the
period of performance. As a result of the deficiency, the error resulted in questioned costs of approximately
$66 on the SEFA.
• For one out of twelve samples, the indirect cost calculation was performed using the incorrect cost base,
resulting in an overstatement of indirect costs of $4,793.92, causing a partially overdrawn amount of
$2,046.42, which resulted in noncompliance and questioned costs on the SEFA.
Cause and Possible Asserted Effect:
The institution’s control to review the indirect cost calculations did not operate consistently to ensure indirect
costs were accurately recorded. Consequently, there were questioned costs and an overdrawn amount in
FY24.
Identification of Questioned Costs:
The questioned costs associated with this finding are $4,859.92.
Sampling:
The sample was not intended to be and was not a statistically valid sample.
Identification of Repeat Finding:
This finding is not a repeat of a finding in the immediately prior year.
Recommendation:
Our recommendation is for management to reinforce and train those individuals in the compliance control
ownership role to ensure controls are operating as designed in order to prevent, or detect and correct
noncompliance on a timely basis. Specifically, strengthening its processes and controls around accuracy of the
review over indirect costs calculation requirements. This will help ensure that controls are functioning as
intended, thereby preventing or promptly identifying and rectifying instances of noncompliance.
Views of Responsible Officials:
Management agrees with the findings and recommendations. Through the merger with Old Dominion
University, additional controls have been adopted around the processes and controls around the accuracy of
the review over indirect cost calculation requirements.