Finding Text
2025-005 UNALLOWABLE COSTS DUE TO EXPENSE CLASSIFICATION ALN 11.307 Grant Number 05-79-06072 US Department of Commerce - Economic Development Cluster Type of Finding: Noncompliance Related to Federal Awards Criteria: Under Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 200.403, costs charged to a federal award must be allowable. In general, allowable costs must be necessary and reasonable for the performance of the award, allocable to the federal award, consistent with applicable policies and procedures, consistently treated, not used to meet cost-sharing or matching requirements of another federal program, adequately documented, and incurred during the approved budget period. Condition: During our testing of the Allowable Costs compliance requirement, we identified $2,871 in expenses charged to the federal award that were not allowable, based on a review of supporting documentation. Cause: The condition occurred because the District’s procedures for reviewing and approving costs charged to federal awards did not consistently identify whether expenses were properly classified and allocable to the award. Effect: The District is out of compliance with 2 CFR 200.403. Recommendation: We recommend that management strengthen controls over costs charged to federal awards. Recommended actions include implementation and enhancement of grant coding review procedures. Management's Response: Northern Rocky Mountain Economic Development District (NRMEDD) agrees with the recommendation. The $2,871 misclassified expenditures has been reclassified to the correct account. The corrective action described in response to Finding 1 applies uniformly to expense classifications, with no separate or exception process.