Finding Text
Federal Program Information: WIOA Pilots, Demonstrations, and Research Projects (ALN#: 17.261) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): B. Allowable Costs/Cost Principles ? Appendix IV to Part 200 - Allocation of Indirect Costs and Determination of Indirect Cost Rates 2. Simplified Allocation Method a. Where an organization's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by (i) separating the organization's total costs for the base period as either direct or indirect, and (ii) dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. The result of this process is an indirect cost rate which is used to distribute indirect costs to individual Federal awards. The rate should be expressed as the percentage which the total amount of allowable indirect costs bears to the base selected. This method should also be used where an organization has only one major function encompassing a number of individual projects or activities and may be used where the level of Federal awards to an organization is relatively small. b. Both the direct costs and the indirect costs must exclude capital expenditures and unallowable costs. However, unallowable costs which represent activities must be included in the direct costs under the conditions described in ? 200.413(e). c. The distribution base may be total direct costs (excluding capital expenditures and other distorting items, such as subawards for $25,000 or more), direct salaries and wages, or other base which results in an equitable distribution. The distribution base must exclude participant support costs as defined in ? 200.1. Condition: An instance was identified where the BGCA indirect cost rate used did not match the negotiated rate within the executed grant agreement. The modified total direct cost base recalculated by BGCA did not properly exclude certain unallowable expenditures (eg. subawards over $25,000). Cause: Insufficient internal controls and administrative oversight with respect to indirect cost calculations. Effect: BGCA recorded indirect cost in excess of cost base multiplied by negotiated IDC rate. Questioned Costs: $ 26,776 Context: For DOL WOIA grant, BGCA did not apply the correct indirect cost rate and modified total direct cost base resulting in excess indirect cost claimed by BGCA. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend BGCA enhance its internal controls and policies and procedures over allocation of indirect cost. Views of Responsible Officials and Planned Corrective Actions: Management will exclude the amount of subawards that exceeds $25,000 per ?Club? from the monthly indirect cost calculation. Management will continue to review the indirect costs calculation before it is posted to the general ledger.