Finding Text
U.S. Department of Health and Human Services - 93.432 Center for Independent Living
2024-005 Lack of Written Allocation Plan for Shared Costs
Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance.
Condition: During our audit of federal award expenditures, we found that the Organization did not maintain a written cost allocation plan to support how shared costs, such as payroll, health insurance, and retirement, were distributed across programs, including federal awards. While costs were charged to various funding sources, no formal documentation existed to describe the basis or methodology for those allocations.
Cause: The League relied on informal practices, but did not document or formalize the methodology in a written plan. As a result, there was no consistent or verifiable support for how shared costs were distributed.
Effect: Without a written allocation plan, there is an increased risk that shared costs may be allocated inconsistently or inappropriately to federal awards, potentially resulting in noncompliance with federal costs principles and questioned costs.
Questioned Costs: None noted.
Recommendation: We recommend that the League develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes.
Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.