Finding Text
2024-003 Material Weakness in Internal Control Over Allowable Costs/Cost Principles and Reporting – WIC Special Supplemental Nutrition Program for Women, Infants, and Children, and Immunization Cooperative Agreements (10.557, 93.268) Criteria: The District’s internal control structure should ensure that the indirect costs be properly calculated and reported according to the allowable indirect costs provided by Texas Health and Human Services. Condition: During the audit, formula errors were identified and total allowable costs were over reported and reimbursed. Specifically, the District utilized inaccurate salary bases when applying the approved indirect cost rate of 21.51%, resulting in the following program-specific variances: • WIC (10.557): Based on the audited allowable salary base of $654,232, the total allowable indirect cost was determined to be $140,725. However, the District only requested reimbursement for $139,492, representing an under-reported variance of $1,234. • Immunization Cooperative Agreements (93.268): The District reported indirect costs of $57,255. Based on the audited allowable salary base of $258,449, the maximum allowable indirect cost was $55,592, representing an over-reported variance of $1,663. (Note: This variance was partially offset by the under-reporting in other programs). The aggregate impact of these discrepancies resulted in a net over-reimbursement of $429. These errors were primarily attributed to manual spreadsheet formula inaccuracies and the omission of certain eligible salary categories from the financial reports. Cause: The District lacks a formal review of reporting. This deficiency was compounded by the software transition challenges and significant turnover in key accounting and finance personnel identified in the prior year, which prevented the District to properly review the reporting and the associated calculation. Effect: The total indirect costs were over reported and reimbursed. Recommendation: We recommend that the District develop and implement a formal review of reporting. Management’s Response: Management acknowledges the finding and is committed to strengthening its reporting controls. Questioned Costs: None. The $429 over-reimbursement of indirect costs was fully offset by the $5,513 understatement of salary expenditures identified in Finding 2024-002. Consequently, the cumulative impact resulted in a net understatement of federal expenditures, and no repayment is required. Recurring Finding: No. (This specific calculation error is a new finding for the fiscal year ended September 30, 2024).