Finding Text
Criteria: Compliance: In accordance with 2 CFR Section 200.68, Modified Total Direct Cost (MTDC) means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Charges to the Federal award for indirect costs were based on the total direct cost base rather than the MTDC. Cause: Inadequate monitoring of policies and procedures and administrative oversight with respect to review of federal expenditures for indirect costs. Effect: Charges to Federal awards for indirect costs may not reflect allowable costs allocated to the Federal program, even though the charges are not in excess of amounts approved for the grant period. Questioned costs: None. Context: The condition occurred in fourteen out of fourteen allowable cost transactions selected for testing. Adjusting journal entries were proposed to correct the transactions and indirect costs were reallocated in the financial statements to support the modified total direct cost. Repeat Finding: No Recommendation: I recommend NADPH perform indirect cost reconciliations to the underlying general ledger detail and a timely detailed review by a knowledgeable individual other than the preparer. View of Responsible Officials: Management agrees with the finding. The response to this finding is described in the accompanying management’s corrective action plan.