Finding Text
2022-007 Proper Allocation of Reimbursable Expenses – Significant Deficiency
Condition: We obtained an understanding of how costs are allocated to the claims for reimbursement
submitted to SETA for both 20222 and 2021. We noted that claims were supported with calculations of
costs allocated to each program from federal funding in a worksheet separate from the accounting records.
Allocated costs for the SETA program are based on budgeted participant placements approved by SETA
at the beginning of the year, rather than a percentage of the actual participant placements for the period
for which reimbursements are being submitted to SETA.
Criteria: In accordance with SETA’s Cost Allocation Plan summary, costs which will be used to
charge/allocate a Fair Share of Actual costs to budget items and to the costs categories within the Budget
will be allocated based on actual costs. The costs allocated may be allocated based on “Direct Charge”,
“Square Footage”, “Staff Time”, “Square Footage Combined with Time of Staff Using Space”, “Number
Served”, or “Usage”.
Cause: Management has not implemented a written Cost Allocation Plan documenting how costs should
be allocated between multiple programs.
Effect: Costs reported in the claims for reimbursement could be inaccurate as the costs are not allocated
based on actual programs benefited but on beginning of the year budgets.
Questioned costs: None identified
Recommendation: If the Association continues to use “Number Served”, the Association should calculate
percentage of costs by program based on the number of participants actually served, rather than the
number of participants budgeted to be served.
Management’s Response and Corrective Action Plan: Please see attached corrective action plan.