Finding Text
Criteria: Uniform Guidance (2 CFR 200.403) requires that costs charged to federal awards be allowable and consistent with the terms and conditions of the award, including any prior approval requirements for capital expenditures or significant property improvements. Condition: Testing identified that the Organization charged $4,074 to the federal program for an HVAC replacement that was not approved by the granting agency per the grant and did not appear to meet allowability requirements. Cause: The condition appears to result from inadequate controls over reviewing expenditures for compliance with grant terms and federal allowability requirements prior to charging costs to the program. Effect: As a result, the Organization charged an unallowable cost to the federal program, resulting in noncompliance with Uniform Guidance and grant requirements. Recommendation: We recommend that the Organization implement procedures to review all non-routine or capital-related expenditures for allowability and compliance with grant terms prior to charging such costs to federal awards, including obtaining required approvals where applicable. Management’s Response: Management agrees with the finding and indicates that it will implement additional review procedures to ensure that all expenditures charged to federal programs are evaluated for allowability and properly approved prior to being incurred.