FAC Explorer

Finding 1167287 (2024-002)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2024
Accepted
2025-12-30
Audit: 378311
Organization: Central Texas Electric Cooperative, Inc. (TX)
Auditor: BOLINGER SEGARS GILBERT & MOSS LLP

AI Summary

  • Issue: Material overhead allocations were improperly included in project costs.
  • Impacted Requirement: Costs should be classified as direct only if they are specifically related to the federal award.
  • Follow-Up: Contact FEMA to clarify documentation needed to prove that material overhead costs are directly related to the award.

Finding Text

Material overhead allocations were included in the project worksheet submission Compliance Requirement: Allowable Costs/Cost Principles Condition/Criteria: Costs that otherwise would be treated as indirect costs may also be considered direct costs if they are directly related to a specific award (2 CFR Section 200.413(b). Cause: Material overhead allocations were included in the project worksheet. Effect: Indirect overheads are included in the material costs although they are not directly related to the federal award. Recommendation: Communicate with FEMA regarding supporting documentation that is required to substantiate material overhead costs as being directly related to the federal award.

Corrective Action Plan

During a December 13, 2024 conference call with FEMA, Texas Department of Emergency Management (TDEM) and Ernst & Young (EY), potential reimbursement for overheads was discussed. FEMA representatives could not clearly state if overheads would be allowable. FEMA representatives recommended including them for consideration. Both construction and material overheads were included in the initial reimbursement request. The day before the submission deadline FEMA requested clarification on the construction overheads. Given the time constraint, the Cooperative agreed to withdraw the construction overhead amount from the submission. No additional information was requested on the material overheads. Written confirmation will be requested from FEMA for any future overhead cost reimbursement requested.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1167286 2024-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $849,359