Finding Text
Criteria: 2 CFR Section 200.400 requires allowable cost principles to be followed in accordance
with the Assistance Agreement.
Condition: The Organization’s Assistance Agreement limited reimbursement of certain
employees’ compensation, excluding the Executive Director, to 92.31% of their total
compensation. The Organization requested reimbursement for 100% of certain employees’
compensation.
Cause: Subsequent to the Assistance Agreement being awarded and finalized, the Organization
negotiated with the grantor to remove the compensation limitation; however, the Assistance
Agreement was not updated for this change.
Effect: Failure to comply with Assistance Agreement.
Questioned Costs: Based on the total labor charged, excluding the Executive Director, there are
likely questioned costs, which include direct labor, fringe on direct labor, and general and
administrative fringe, totaling approximately $180,000.
Recommendation: Management should ensure all negotiated agreements are included in the
Assistance Agreement.