Finding Text
Department of Health and Human Services Federal Assistance Listing #93.912 Rural Healthcare Services Programs Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: For a portion of the year, BHD, LLC calculated their indirect cost rate based on the total grant budget and took an equal amount of that per month instead of calculating the indirect cost rate per direct expenditures for each month. When they started to calculate the indirect cost rate per direct expenditures for each month, they used the wrong cost pool per the budget and award. Cause: BHD, LLC did not have an internal control process in place to ensure the correct amounts of indirect costs were requested based on the direct costs for the same period. Effect: Without an effective internal control process in place, improper costs could be chargedto the program. Questioned Costs: None reported. Context: A nonstatistical sample of 5 out of 10 indirect expenditures were selected for testing. In addition, the indirect expenditures were tested in total for the year. Repeat Finding from Prior Years: Yes Recommendation: We recommend BHD, LLC enhance internal control procedures to ensure the indirect cost rate is applied against the monthly direct costs when requesting program reimbursements. Views of Responsible Officials: Management agrees with the finding.