Finding Text
Section III – Major Federal Awards Programs – Findings and Questioned Costs Finding 2025-005: Activities Allowed or Unallowed / Allowable Costs - Inadequate Chart of Accounts Segregation for Unallowable Costs (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: Under 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds and must segregate unallowable costs to ensure compliance with cost principles. Condition: The chart of accounts does not sufficiently segregate unallowable costs from allowable program expenditures. Certain unallowable expenditures were coded to general operating accounts without clear differentiation. Cause: The Center lacks a detailed coding structure and written policies requiring explicit identification and segregation of unallowable costs. Effect: There is increased risk that unallowable costs could be charged to Federal awards, leading to potential noncompliance, questioned costs, or improper reimbursement requests. Recommendation: Management should implement a revised chart of accounts that clearly differentiates allowable vs. unallowable costs, supported by updated written policies and staff training. Repeat Finding: This is a repeat finding.