Finding Text
Identification of the Federal Program: 10.720 – Infrastructure Investment and Jobs Act Community Wildfire Defense Grants Criteria: 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition: Homer Electric Association, Inc. has not developed written procedures for determining the allowability of costs. Cause: Management did not have written procedures for determining the allowability of costs. Effect: Unallowable costs could be charged to the program. Questioned Costs: None Recommendations: Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials: Management of Homer Electric Association, Inc. concurs with the auditors’ finding regarding the absence of written procedures for determining the allowability of costs in accordance with 2 CFR Part 200.302(b)(7). While Homer Electric Association, Inc. applies applicable federal cost principles when administering grant-funded activities and no unallowable costs were identified, these practices were not formally documented in written procedures during the audit period. Management acknowledges that written procedures are required to ensure consistency, continuity, and clear guidance for personnel involved in federal grant administration. To address this matter, management will develop and implement written procedures for determining the allowability of costs charged to federal programs. These procedures will reference applicable Uniform Guidance cost principles and outline review and approval responsibilities to ensure compliance prior to costs being charged to federal awards. The procedures will be communicated to appropriate staff and incorporated into Homer Electric Association, Inc.’s grant administration practices. Management believes these corrective actions will strengthen internal controls over federal financial management and support continued responsible stewardship of grant funds for the benefit of Homer Electric Association, Inc.’s members.