Finding Text
2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued)
Federal Program Information:
Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s)
Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001
W15QKN-20-1-1000
Condition:
The accounting system utilized did not provide for the accumulation of costs by the applicable budgetary program activities for either the 2014 or the 2020 grant awards. The accounting system also did not immediately provide for the proper allocation of direct and indirect expenses. Functional categories in the accounting system are considered direct expenses or indirect expenses contingent upon the nature of the classification. Therefore, the accounting system does not further readily classify expenditures with budget amounts for each federal award.
Furthermore, the entity failed to establish policies and procedures related to the classification of direct and indirect costs and for determining the allowability of costs in accordance with subpart E of 2 CFR 200.302.
Questioned Costs:
Not applicable.
Context:
Total federal expenditures for the program as listed on the Schedule of Federal Awards was $6,267,848 with $703,925 charged to indirect expenses. As noted in subsequent findings, the compliance requirements related to Activities Allowed or Unallowed, and Allowable Costs/Cost Principles were impacted by these conditions.
Cause:
The accounting system utilized is not properly configured to fully comply with the provisions stipulated above. Furthermore, there is a lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs as determined in accordance with Subpart E of 2 CFR 200.302.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued)
2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued)
Federal Program Information:
Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s)
Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001
W15QKN-20-1-1000
Effect:
The lack of an accounting system to properly allocate by budgetary categories per award documents leads to a greater risk that the program could expend the federal award in a manner that is not consistent with federal award requirements. Additionally, the lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs creates a greater risk that costs may be improperly allocated or be unallowable pursuant to Subpart E of 2 CFR 200.302.
Recommendation:
Management should develop an effective correction action plan to address this matter in a timely manner. The plan should establish the methodology of designating program costs as either direct or indirect. The accounting system should be configured in a manner which allows for a timely comparison of actual expenses to the budget forecasts for the award program.
Views of Responsible Officials:
Management concurs with the finding and has developed a plan to correct the finding.