Finding 1155237 (2022-008)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
-
Year
2022
Accepted
2025-09-25
Audit: 367461
Organization: Defensewerx (FL)
Auditor: Warren Averett

AI Summary

  • Core Issue: The Organization lacks formal policies for allocating indirect costs to federal awards, leading to potential compliance risks.
  • Impacted Requirements: This situation violates 2 CFR § 200.403 and § 200.412–415, which mandate consistent and equitable cost allocation methods.
  • Recommended Follow-Up: Management should create and implement a clear indirect cost allocation policy that meets Uniform Guidance standards and ensure all staff are informed.

Finding Text

Criteria Per 2 CFR § 200.403 and § 200.412–415 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), non-federal entities must have consistent and equitable methods for allocating indirect costs to federal programs. Condition The Organization was unable to provide adequate support to substantiate its allocation of indirect costs to federal awards. Cause The Organization does not have formal policies and procedures for the allocation and application of indirect costs to federal awards. Effect Without a formal policy, there is an increased risk of inconsistent or noncompliant cost allocation practices, which may lead to questioned costs, audit findings, or disallowed reimbursements by federal awarding agencies. Questioned Costs None Context The organization does not have procedures in place to allocate indirect costs to contracts. Auditor allocated costs based on allowed percentages as part of testing. Recommendation We recommend that management develop and implement a comprehensive indirect cost allocation policy that aligns with Uniform Guidance requirements. The policy should clearly define the methodology for calculating, allocating, and applying indirect costs to federal awards and be communicated to all relevant personnel. Views of Responsible Officials See the accompanying Corrective Action Plan.

Categories

Allowable Costs / Cost Principles Cash Management Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 1155208 2022-004
    Material Weakness Repeat
  • 1155209 2022-005
    Material Weakness Repeat
  • 1155210 2022-006
    Material Weakness Repeat
  • 1155211 2022-007
    Material Weakness Repeat
  • 1155212 2022-008
    Material Weakness Repeat
  • 1155213 2022-004
    Material Weakness Repeat
  • 1155214 2022-005
    Material Weakness Repeat
  • 1155215 2022-006
    Material Weakness Repeat
  • 1155216 2022-007
    Material Weakness Repeat
  • 1155217 2022-008
    Material Weakness Repeat
  • 1155218 2022-004
    Material Weakness Repeat
  • 1155219 2022-005
    Material Weakness Repeat
  • 1155220 2022-006
    Material Weakness Repeat
  • 1155221 2022-007
    Material Weakness Repeat
  • 1155222 2022-008
    Material Weakness Repeat
  • 1155223 2022-004
    Material Weakness Repeat
  • 1155224 2022-005
    Material Weakness Repeat
  • 1155225 2022-006
    Material Weakness Repeat
  • 1155226 2022-007
    Material Weakness Repeat
  • 1155227 2022-008
    Material Weakness Repeat
  • 1155228 2022-004
    Material Weakness Repeat
  • 1155229 2022-005
    Material Weakness Repeat
  • 1155230 2022-006
    Material Weakness Repeat
  • 1155231 2022-007
    Material Weakness Repeat
  • 1155232 2022-008
    Material Weakness Repeat
  • 1155233 2022-004
    Material Weakness Repeat
  • 1155234 2022-005
    Material Weakness Repeat
  • 1155235 2022-006
    Material Weakness Repeat
  • 1155236 2022-007
    Material Weakness Repeat
  • 1155238 2022-004
    Material Weakness Repeat
  • 1155239 2022-005
    Material Weakness Repeat
  • 1155240 2022-006
    Material Weakness Repeat
  • 1155241 2022-007
    Material Weakness Repeat
  • 1155242 2022-008
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
12.800 Air Force Defense Research Sciences Program $28.06M
12.RD1 Innovation Hub Model Study $5.76M
12.630 Basic, Applied, and Advanced Research in Science and Engineering $5.39M
97.108 Public Safety and Violence Prevention Research, Evaluation, and Implementation $346,066