Finding Text
Finding No. 2024-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Significant Deficiency in Internal Control over Compliance (Cost Allocation Plan) Federal Program Name: All Pass-through Entity: All Federal Assistance Listing Number: All Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be adequately documented, allowable, and allocated to programs based on relative benefits received. Organizations allocating shared or indirect costs among multiple funding sources are required to maintain a reasonable, consistently applied, and current cost allocation methodology. Condition The Organization’s cost allocation plan (“CAP”) has not been formally reviewed or updated in several years and does not reflect the current structure of awards and programs. As a result, the Organization could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questioned Costs None. Context The Organization's cost allocation plan had not been formally reviewed or updated since 2015. The outdated plan was utilized during the audit period to allocate shared costs among multiple funding sources and programs. Effect Without a current and formally maintained CAP, there is an increased risk that costs charged to federal awards may not be properly allocated, may not reflect relative benefits received, or may not be consistently applied in accordance with federal requirements. Cause The Organization does not have established procedures requiring periodic review and update of the CAP to ensure it remains current with changes in operations and funding sources. Repeat Finding No Recommendation We recommend that the Organization formally document its cost allocation methodology and establish procedures for periodic review and update of the CAP to ensure it reflects current operations and funding sources. The CAP should be formally approved by governance and retained as support for allocation of shared costs to federal programs. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.