Finding Text
Finding No. 2024-004: Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Cost Allocation Plan) – Significant Deficiency in Internal Control over Compliance 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 Coalition has not established a formal cost allocation plan (“CAP”) to support the allocation of shared or indirect costs among multiple funding sources and programs. As a result, the Coalition could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questioned Costs Unknown. Context The Coalition allocated shared costs among multiple funding sources during the audit period without a formally documented cost allocation plan. Effect Without a formal cost allocation plan, 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 applied consistently. In addition, the absence of a documented methodology limits the ability to demonstrate that allocations are reasonable and compliant with federal requirements. Cause Procedures were not established to develop, document, and maintain a formal cost allocation methodology for allocating shared or indirect costs. Repeat Finding No Recommendation We recommend that the Coalition develop and formally document a CAP to support the allocation of shared and indirect costs among funding sources. The CAP should clearly define the methodology used to allocate costs, be consistently applied, and be based on relative benefits received. In addition, management should establish procedures for periodic review and update of the CAP to ensure it remains aligned with current operations and funding sources. The CAP should be formally approved by governance and retained as support for cost allocations. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.