Finding Text
Significant deficiency in internal control over compliance with allowable costs and cost allocation under the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Title: Social Services Research and Demonstration Program Assistance Listing Number: 93.647 Project Number: 90XP0459-01-00 Award Period: August 31, 2022 – August 30, 2023 Criteria In accordance with 2 CFR Part 200, costs charged to a federal award must be necessary, reasonable, allowable under the cost principles, allocable, and adequately documented; entertainment costs are specifically unallowable per 2 CFR 200.438, and costs must be allocated consistently between federal awards and other activities, as inconsistent allocation is not permitted under the Uniform Guidance. Condition Unallowable costs were charged to federal programs, and the Organization was unable to substantiate the allocation percentages used for nonpayroll costs during our testing. Cause Unallowable costs were charged because the Organization lacked adequate review procedures to ensure compliance with federal cost principles, and was unable to substantiate allocation percentages used in the allocation of nonpayroll costs during our testing. Effect or Potential Effect The absence of review of charge resulted in $138 of unallowable costs charged to the Federal Program. In addition, our testing of 6 out of 40 selections, adequate supporting documentation was not present to support the allocation of nonpayroll costs. Questioned Costs $4,185 Recommendation We recommend that management develop and implement enhanced review procedures and formal written policies for allocating shared costs to ensure all costs charged to federal awards are allowable under Uniform Guidance, provide training to staff responsible for approving expenditures on federal cost principles, and periodically review allocations for consistency and compliance with federal requirements.