Finding Text
2025-005: INDIRECT COSTS NOT CLAIMED Program: 84.299 Indian Education – Special Programs for Indian Children 84.184 School Safety National Activities Criteria: Uniform Guidance allows recipients to recover indirect costs using an approved indirect cost rate. Proper grant administration requires that allowable costs be identified and claimed consistently. Condition: For ALN 84.299 – Indian Education – Special Programs for Indian Children, indirect costs were not submitted for reimbursement for April 2025. Direct costs submitted for that month totaled $401,824. Applying the approved indirect cost rate of 13.41%, allowable indirect costs for the month would have been approximately $53,885. In addition, for ALN 84.184 – School Safety National Activities, we identied multiple differences in indirect cost calculations and submissions during the year. Applying the approved indirect cost rate of 13.41%, allowable indirect costs for the period would have been approximately $463,131. Indirect costs claimed were $311,310, resulting in a difference of $151,821. Repeat Finding: No Questioned Costs: N/A Context: During testing of reimbursement requests for major programs, we reviewed the calculation of indirect costs applied to reported direct expenditures. We identified one month in which indirect costs were not claimed for ALN 84.299 and multiple instances during the year in which indirect costs were inconsistently calculated or omitted for ALN 84.184. The identified amounts represent the difference between the allowable indirect costs based on the approved rate and the amounts actually claimed. Cause: Procedures were not in place to ensure indirect costs were calculated and submitted for reimbursement each reporting period. Potential Effect: Failure to claim allowable indirect costs results in under recovery of federal funds and indicates weaknesses in grant monitoring and reporting processes. Recommendation: We recommend that the ESU implement procedures to ensure indirect costs are calculated and included with each reimbursement request in accordance with the approved indirect cost rate and applicable federal requirements. Response: Management will review grant reporting procedures and evaluate potential process refinements related to the calculation and inclusion of indirect costs with reimbursement requests, consistent with the approved indirect cost rate where applicable. The previous approach reflected a conservative decision with respect to indirect cost recovery.