Finding Text
Finding #2023-005 Federal Program: 21.027 - Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Repeat Finding: No Condition: During our audit of CSLFRF expenditures, we noted that the Organization charged $37,600 in office rent costs entirely to one CSLFRF grant (CSLFRF – Juntos). However, the rented office space was used to support activities under the CSLFRF – Juntos grant, a separate CSLFRF grant (CSLFRF – Centro Comunitario) and the general operations of the Organization. The Organization did not allocate rent costs between the two grants and general operations based on relative benefits received, resulting in an improper direct charge to a single award. Criteria: Per 2 CFR § 200.405, costs must be allocated to federal awards in accordance with the relative benefits received. Additionally, 2 CFR § 200.403 requires that costs charged to federal awards be necessary, reasonable, and allocable. Costs benefiting more than one award should be distributed among those awards to reflect the proportionate benefit each award received. Cause: The Organization did not properly implement procedures to allocate shared costs among multiple federal awards, resulting in the entire rent expense being charged to a single grant rather than distributed proportionally between both CSLFRF grants. Effect: The Organization has two grants under the CSLFRF program (Juntos Adelante and Centro Communitario Adelante on the Schedule of Expenditures of Federal Awards). The Organization charged $37,600 to the Juntos Adelante grant; however, determined that $4,324 should have been expensed under the Centro Communitario Adelante grant and $8,836 should not have been charged to either grant based on the proportionate benefit. Context: During testing of rent expenditures for the CSLFRF program, we noted the Organization’s lease agreement covered office space used by staff working on both Grant A and Grant B. The Organization confirmed no cost allocation methodology was used to split costs between the grants. Questioned Costs: See “Effect” Recommendation: We recommend that the Organization reallocate rent costs between the CSLFRF grants in accordance with the relative benefit each grant receives; develop and implement written procedures to allocate shared costs appropriately among federal awards; provide training to accounting staff on cost allocation requirements under Uniform Guidance. Reporting Views of Responsible Officials: Management concurs with the finding and will develop an allocation methodology for shared costs and reclassify expenses between CSLFRF grants. Management will work with the grantor to correct the costs charged to each grant.