Finding Text
Allowable Costs and Cost Principles U.S. Department of Public Health ALN: 93.696, The Central Montana CCBHC Improvement and Advancement Project Criteria: Entities receiving federal awards shall establish and maintain internal control over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. he award budget permits the allocation of shared direct costs based on estimated allocations in accordance with the Center's direct cost allocation plan. In addition, bad debts, including losses arising from uncollectible accounts and other claims, are unallowable under 2 CFR 200.426. Condition: The Center included unallowable bad debt expenses totaling ($429,010) in the shared direct cost allocation calculation. In addition, overhead costs totaling $332,910 were included in the calculation. The combined net effect of these two items was $96,100, of which 10 percent ($9,610) was allocated as shared direct costs. Context: Bad debt expenses were included in the shared direct cost calculation for May and June 2025. Overhead costs were also included in the June 2025 shared direct cost calculation. Effect: The combined effect for these two months totaled $9,610 more in federal funding that could have been requested and drawn. Questioned Costs: There were no questioned costs identified. Cause: The errors resulted from inaccuracies in the shared direct cost calculation for May and June 2025. Management indicated that the calculation will be corrected beginning in the next grant year. Auditor Recommendation: We recommend that the Center strengthen its internal controls over the preparation and review of the shared direct cost allocation calculation to reduce the risk of similar errors occurring in the future. Organization Response: This error resulted from staff turnover and transition of the draw process to new accounting personnel. We will review the allocation of allowable costs and strengthen controls to ensure accurate cost accounting for future submissions. The error will be corrected in the August 2026 draw submission. The Controller and CFO are responsible for implementing and monitoring these corrective actions.