Finding Text
Finding No. 2025-004: Lack of a Formal Cost Allocation Plan Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs; Refugee and Entrant Assistance Discretionary Grants Federal Assistance Listing Number: 93.566; 93.576 Type of Finding Material Weakness in Internal Control over Compliance 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 IRIS does not have a cost allocation plan ("CAP") that has not been formally reviewed and approved and does not reflect the current structure of awards and programs. As a result, IRIS could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questions Costs None Context IRIS’ cost allocation plan has not been formally reviewed and approved. Management utilized an informal practice during the audit period to allocate shared costs among multiple funding sources and programs. Effect Without an approved 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 Management has historically allocated shared costs based on established practices; however, the methodology has not been formalized in a written cost allocation plan. 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 state programs. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.