Finding Text
Finding 2024-007: Activities Allowed or Unallowed / Allowable Costs / Cost Principles (Other than Personnel ("OTPS") Allocation) (Material Weakness & Material Noncompliance) Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Criteria: Under 2 CFR Part 200, Subpart E, costs charged to federal awards must be allowable, reasonable, and allocable. Allocable costs must be allocated in proportion to the benefits received and supported by a reasonable, documented allocation methodology applied consistently. A financial management system must provide records that adequately identify the source and application of funds, supported by effective internal controls. Record retention and documentation must support charges to federal awards. Condition/Context: Camillus charged OTPS costs to the SLFRF award without maintaining a documented allocation methodology. For 51 of 60 transactions tested, allocations were based solely on budget estimates rather than actual usage or other reasonable bases. 60 disbursements from the OTPS population included 51 from the Shelter Expansion program. The 51 selections lacked the documented methodology and support for expense allocation. Our sample was not, and was not intended to be, statistically valid. Cause: Camillus' system of internal controls was not properly designed to capture the required information to ensure that OTPS costs were allowable, supported, and properly allocated. Effect or potential effect: Costs charged to the federal awards may not be allocable in accordance with Uniform Guidance. Camillus relied on budget-based allocations and had no formal or documented contemporaneous actual cost allocation amounts for shared OTPS. Staff were not required to retain underlying usage/supporting records, and supervisory review did not detect the lack of allocability support. Questioned Costs: $53,147 Repeat Finding, if applicable: This was not a repeat finding. Recommendation: Management should adopt a written cost allocation plan for OTPS that identifies allocable cost pools and objective allocation bases (e.g., square footage, headcount, device counts, usage logs, transaction volumes, time/usage studies), require contemporaneous documentation (invoices, allocation worksheets, supporting metrics) for each OTPS charge to the award, and perform periodic true-ups from budget to actual activity. Management allocability support before posting costs to the award. Views of Responsible Officials: Camillus House acknowledges the finding and agrees that OTPS costs must be supported by documented, reasonable, and consistently applied allocation methodologies. Management recognizes the need to strengthen internal controls and record retention processes for OTPS charges to federal awards, including the Shelter Expansion program, to ensure compliance with Uniform Guidance. Management is committed to implementing a formal Cost Allocation Plan for OTPS that provides objective, documented allocation methods, and ensures ongoing oversight and compliance.