Finding Text
Finding 2024-004: Cost Allocation Methodology Condition: As a result of audit procedures, it was determined that Wisconsin Women's Business Initiative Corporation's cost allocation methodology was not properly updated based on a recent time study or other means to verify the accuracy of the allocations. For some awards, the de minimis rate was used but it was not applied consistently to all programs, where a method of direct allocation was done based on a prior time study conducted in 2020. Criteria: Per 2 CFR §200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Cause: Wisconsin Women's Business Initiative Corporation continued to use a legacy cost allocation model without periodic review or revision. There was no formal process to evaluate whether the methodology remained appropriate given changes in program structure, staffing, or funding sources. Effect: As a result of the financial reporting matter identified in the condition paragraph, a significant deficiency exists in Wisconsin Women's Business Initiative Corporation's internal controls over financial reporting. Recommendation: We recommend Wisconsin Women's Business Initiative Corporation conduct a comprehensive review of its cost allocation methodology, update policies to reflect current program operations and federal requirements. Wisconsin Women's Business Initiative Corporation should also implement controls to ensure allocations are based on actual benefit and supported by documentation and provide staff training on time-and-effort reporting and allocation principles. View of responsible officials: Management agrees with the finding and has developed a written corrective action plan. This finding represents a significant deficiency in internal controls over compliance and a non-material non-compliance with the reporting requirement for the major federal programs. Questioned Costs: None Major Programs: AL #14.218 Community Development Block Grant Cluster, Award Numbers CDBG FY 2024, FD 003 2023, CD5075180249, CDBG MKE RLF, CDBG Racine 2023-2024, CDBG FY 2023, B-23-UC-55-0003, ED 24020, 2024-2025 CDBG - Classic; AL #59.046 Microloan Program, Award Numbers SBAOCAML230534, SBAOCAML2024001568