Finding Text
2024-007 Significant Deficiency – Fringe Benefit and Indirect Cost Rate Calculations Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must submit reimbursement requests for fringe and indirect costs based on the budget of the grant. During compliance and control testing for allowable cost/allowable activities, 6 of the 12 monthly FSRs submitted during the year ended December 31, 2024 included overbillings on fringe benefits and indirect costs based on the terms outlined in the grant agreements. Context: As outlined in the awards, fringe benefits should be billed monthly at 10% of eligible wages through October 2024, and at 25% of eligible wages in November and December. Indirect costs should be billed monthly at 5% of total eligible costs through October, and at 10% of eligible costs in November and December. It was also noted that in 3 months, fringe benefits were underbilled. In 3 different months, wages were underbilled and reported net of employee withholding. Cause: In 3 of the 6 months with overbillings, management reported net wages on line 1 of the FSRs for salaries and wages, and reported the employee withholding as fringe benefits on line 2 of the FSRs instead of correctly reporting gross wages plus the applicable fringe rate. Remaining errors are due to reporting errors. Effect: The 6 months of overbilling of fringe and indirect costs resulted in known questioned costs of $61,113. Recommendation: Establish a system of controls to review FSR submissions for grant compliance prior to submission. Views of Responsible Officials and Planned Corrective Action: The chief financial officer will compare the FSR to the grant before submission to ensure the correct rates are used.