Finding Text
Criteria The Organization is responsible for ensuring all grant expense allocations are in accordance with the set cost allocation policy. Condition Instance 1:Allocation of mileage reimbursement to employee did not recalculate per documentation. Instance 2:Allocation does not agree to purchase division spreadsheet. Instance 3: Employee time worked on Your Choice grant allocated to IL ACL. Instance 4: Prior year property addition expenses to IL ACL were reversed in current year. Context Instance 1: Mileage reimbursements are allocated based on the amounts of miles driven by the employee for each grant. Instance 2: Expenses are allocated based on the purchase division spreadsheet that is made up by the cost allocation plan. Instance 3: Payroll and payroll tax is allocated based on employee hours worked on each grant. Some employees do not work on grant specific items so their time is recorded elsewhere. Instance 4: Property and equipment should be allocated to the grant through depreciation expense. Questioned Costs Instance 1: Based on the supporting documentation provided by an employee, mileage was under allocated by 41% with the total allocated to IL ACL Direct being $87.10 and the amounts per expense and mileage report being $156.09 for a total difference of $68.99. The total allocated to all grants was $167.84. Management indicated that the mileage reimbursement was properly allocated based on the employee's travel for training and that the form itself was not corrected to accurately reflect actual grant time. Instance 2: Cost was allocated to IL ACL Direct at 47%. The invoice indicates cost should have been allocated to IL Indirect at 60.60% which in turn agrees to the cost allocation plan. The total allocated to all grants was $28,850.60. Management indicated that the purchase was initially thought to be for painting of a location where multiple programs services were performed but later it was determined that it was a location mainly used for training. The correction was made in the allocation but not to the supporting documentation. Instance 3: Payroll tax was allocated to IL ACL Direct at 89% for $66.61 which included time spent on IL ACL and Your Choice grant. Per timesheet, amount allocated to IL ACL should have been 83% for $62.34. The total allocated to all grants was $75.12. Instance 4: Total cost credited to IL ACL Indirect was $(11,380.42). Cause Instance 1-2: Documentation to support the cost and allocation was initially completed incorrectly or had been marked for specific program allocations incorrectly and not updated to final allocation determined to be appropriate for the cost. Instance 3: Due to allocation being allocated manually for all costs, there is more risk for human error. Error in calculation of amount allocated to IL ACL and was overlooked by management. Instance 4: In prior year, full asset costs were expensed in error. Effect Instance 1-2: Documentation maintained to support cost and allocation to grants was different than actual allocations. Instance 3: Cost allocation plan was not followed and expenses were incorrectly allocated to the grant. Instance 4: Indirect expense account was credited; therefore, reported to the State of IL with incorrect expenditures. Recommendation Instance 1-2: We recommend that management correct supporting documentation when initially completed incorrectly to substantiate how the costs are allocated to each program or grant. Instance 3: We recommend that management update the cost allocation policy to incorporate more automated processes to reduce the risk of human error in allocating grant expenditures by manual spreadsheet. Instance 4: We recommend that management follow the cost allocation and capitalization policy to ensure correct expenditures.