FAC Explorer

Finding 1224002 (2025-002)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-07-19
Audit: 407413
Organization: Wisconsin Women's Business Initiative Corporation (WI)
Auditor: WIPFLI LLP

AI Summary

  • Core Issue: The cost allocation methodology at Wisconsin Women's Business Initiative Corporation is outdated and inconsistent, failing to reflect recent program changes and not validated by a current time study.
  • Impacted Requirements: This finding violates 2 CFR §200.405(d), which mandates that costs benefiting multiple projects must be allocated based on proportional benefits.
  • Recommended Follow-Up: Conduct a thorough review and update of the cost allocation methodology, implement controls for accurate allocations, and provide staff training on allocation principles.

Finding Text

Finding 2025-002: Cost Allocation Methodology Condition: As a result of audit procedures, it was determined that Wisconsin Women's Business Initiative Corporation’s cost allocation methodology was not updated based on a recent time study or other supporting analysis to validate the accuracy of allocations. For certain awards, the de minimis rate was applied; however, application was not consistent across all programs, with some allocations based on a prior time study conducted in 2020. Accordingly, this represents a repeat of Finding 2024-004, as the revised cost allocation plan methodology was not implemented until after December 31, 2025. Criteria: Per 2 CFR §200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Cause: Wisconsin Women's Business Initiative Corporation continued to use a legacy cost allocation model without periodic review or revision. There was no formal process to evaluate whether the methodology remained appropriate given changes in program structure, staffing, or funding sources. Effect: As a result of the financial reporting matter identified in the condition paragraph, a significant deficiency exists in Wisconsin Women's Business Initiative Corporation's internal controls over financial reporting. Recommendation: We recommend Wisconsin Women's Business Initiative Corporation conduct a comprehensive review of its cost allocation methodology, update policies to reflect current program operations and federal requirements. Wisconsin Women's Business Initiative Corporation should also implement controls to ensure allocations are based on actual benefit and supported by documentation and provide staff training on time-and-effort reporting and allocation principles. View of responsible officials: Management agrees with the finding and has developed a written corrective action plan. This finding represents a significant deficiency in internal controls over compliance and a non-material non-compliance with the reporting requirement for the major federal programs. Questioned Costs: None Major Programs: AL #14.218 Community Development Block Grant Cluster, Award Numbers CDBG FY 2025, FD 003 2023, CD5075180249, CD15125B178, CDBG MKE RLF, B-23-UC-55-0003, ED 24020, 2024-2025 CDBG - BELOIT; AL #59.046 Microloan Program, Award Numbers SBAOCAML2024001568, SBAOCAML250815-01-00

Corrective Action Plan

· Review current cost allocation plan and policy to determine if all information presented and needed is included in the policy document · Work with outside agency to review top down approach to cost allocation philosophy and determine if revisions are warranted · Work to payroll vendor to review the process to re-establish time-and-effort reporting through the timesheet entry process and the consolidation of time-and-effort information into reporting that can be easily summated by department/project and uploaded to MIP · Determine the allocation and cost distribution methods needed and the resulting detail reporting needed to substantiate the allocation methods used for propriety · Reinstitute the timesheet entry process by project/cost code and train staffing at an upcoming All Staff meeting to reset the view of timesheets and their importance of timesheet tracking to minimize errors for cost allocation purposes · Have staff begin using timesheets in Paylocity (by December 1st) · Complete update of Fiscal Policies Manual (inclusive of Cost Allocation methodology and philosophy) and timely reviews (i.e. at a minimum semiannually or with major program changes/contracts) to ensure no substantive changes needed to policy or actions needed to ensure appropriate accounting updates

Categories

Allowable Costs / Cost Principles Reporting Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1223993 2025-002
    Material Weakness Repeat
  • 1223994 2025-002
    Material Weakness Repeat
  • 1223995 2025-002
    Material Weakness Repeat
  • 1223996 2025-002
    Material Weakness Repeat
  • 1223997 2025-002
    Material Weakness Repeat
  • 1223998 2025-002
    Material Weakness Repeat
  • 1223999 2025-002
    Material Weakness Repeat
  • 1224000 2025-002
    Material Weakness Repeat
  • 1224001 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
59.046 MICROLOAN PROGRAM $2.21M
59.043 WOMEN'S BUSINESS OWNERSHIP ASSISTANCE $646,320
10.870 RURAL MICROENTREPRENEUR ASSISTANCE PROGRAM $468,052
59.044 VETERANS OUTREACH PROGRAM $357,848
21.020 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS PROGRAM $221,158
14.870 RESIDENT OPPORTUNITY AND SUPPORTIVE SERVICES - SERVICE COORDINATORS $105,000
21.033 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND EQUITABLE RECOVERY PROGRAM (CDFI ERP) $66,641
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $30,000