Finding Text
Finding Reference: 2024-003 Prior Year Finding: 2023-003 Federal Agency: Department of Health and Human Services Compliance Requirement: Allowable Costs (Indirect Costs) Type of Finding: Material Weakness in Internal Control over Compliance Federal Program: 93.569 – Community Services Block Grant (CSBG) Grant Award: Various Condition/Context: For fiscal year 2024, SMTCCAC charged general and administrative costs for other programs to the Community Services Block Grant in excess of the approved budget for administration costs, which is part of a two year grant which ends September 30, 2025. Criteria: On November 13, 2024, the Department of Health and Human Services approved a provisional indirect cost rate of 22% to be applied to total direct salaries and fringe benefit costs related to all federal programs. This rate is applicable to SMTCCAC’s grants, contract, and other agreements covered by 2 CFR 200 for the period effective from December 1, 2020 to June 30, 2024. According to the approved rate agreement, if any federal contract, grant, or other agreement is reimbursing indirect costs by a means other than the approved rate in this agreement, the organization should (1) credit such costs to the affected programs, and (2) apply the approved rate to the appropriate base to identify the proper amount of indirect costs allocable to these programs. Cause: For fiscal year 2024, SMTCCAC allocated $205,051 in indirect costs for salaries and fringe benefits and general and administrative expenses to the Community Services Block Grant (CSBG). The amended and approved CSBG budget for CSBG designated 25% ($118,088) of the total grant for administrative costs and 75% ($354,265) for program operating costs. Based on the approved indirect cost rate of 22% applied to total salaries and fringe benefits, the allowable indirect cost allocation amounts to $25,609, a difference of $179,442. This is $61,354 in excess of the total budget allowed costs for administration for the year ended June 30, 2024. The total costs for CSBG do not exceed the total budget during FY 2024. Effect: SMTCCAC allocated administrative costs in excess of the approved budget to the Community Services Block Grant. These costs were in excess of the budget for administration costs, although within the aggregate budget total. Questioned Costs: SMTCCAC allocated general and administrative costs to the CSBG grant which was not clearly authorized by the budget for the grant for that ended September 30, 2024. Questioned cost is $61,354. Recommendation: We recommend that SMTCCAC ensures compliance with the cost principles in 2 CFR Part 200, Subpart E, adhere to the approved federal indirect cost rate agreement, and properly apply either the actual annual indirect cost rate or the approved federal rate, whichever is lower, when determining indirect costs charged to federal awards. In addition, other general and administrative costs charged to CSBG should be within an approved budget for the costs.