Finding Text
2023-003 Indirect Cost Allocations - Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25 and ALN 47.084-Technology, Innovation and Partnerships, Award 1940055, Award Period 9/19/22 – 3/31/25) Federal Agency: National Science Foundation Criteria: Program costs for allocation of indirect costs should be based on percentage of total costs at year end and allocated based on specific allocations of costs incurred and approved in a timely manner as required by 2 CFR 200.414. Condition: Our testing noted that program charges included nine monthly journal entries to allocate indirect costs based on budgeted calculations and one year-end entry to adjust the calculation based on actual results. The entries did not have the necessary review and approvals to ensure allowability of the costs to activities. Cause: The Organization lacks written policies, approval procedures and documentation to allocate indirect costs to the program. Effect: The Organization is not compliant with 2 CFR 2 CFR 200.414 which requires accurate, and complete disclosure of financial results including the allocation of approved and identified actual indirect costs incurred to the program in accordance with 2 CFR 200.414. Without a policy of reviewing and approving indirect costs on a regular basis, there is a risk that unallowable costs are allocated to the program. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-005 in the prior year. Recommendation: We recommend the Organization establish policy and procedures to identify and approve allowable indirect costs chargeable to the program on a monthly basis and report this allocation in the accounting ledger separately from the general expenses of the company. View of Responsible Officials: The Organization has since implemented controls and procedures to allocate indirect costs to program costs based on incurred costs. Monthly allocations are approved by the program administrator and separately reported in the general ledger. Questioned Costs: $202,309 – This is the amount of indirect costs charged to the program.