Finding Text
Finding 2022-005 Indirect Cost Allocation ? Questioned Costs Condition: Grant 102-TCC-BS-PY21, PY Business Services & Solutions, grant document did not contain a specific allowable indirect cost amount. The budget contained a line for ?Subcontractors and Other? of $66,077. The Organization charged an indirect allocation to this grant of $47,070, an overcharge of $19,007. Grant 102-TCC-CT-BS-PY21, Thurston Chamber ? Sector Training, had an indirect budget line item of $17,274. The Organization charged $24,736, an over change of $7,462. Grant 102-TCCC-PEC-PY21, Thurston Chamber Pathway to Employment Cohort, had no budget line item for indirect costs. The Organization charged indirect costs under ?Career Services? for $73,535, an overcharge of $73,535. These overcharges total questioned costs of $100,004. The Organization lacked a methodology of pooling all indirect costs and allocating the costs uniformly across all revenue sources. Cause: The Organization did not obtain adequate training and understanding of the calculation and allocation of indirect costs in government funded programs. Criteria: Uniform Guidance 2 CFR ? 200.405 Allocable costs. (a) A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. (b) All activities which benefit from the non-Federal entity's indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs. (c) Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid SECTION 3 ? FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Finding 2022-005 Indirect Cost Allocation ? Questioned Costs restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons. However, this prohibition would not preclude the non-Federal entity from shifting costs that are allowable under two or more Federal awards in accordance with existing Federal statutes, regulations, or the terms and conditions of the Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Effect: The Organization charged federal programs for unallowed indirect costs. Recommendation: To ensure compliance with indirect cost calculation and allocation procedures, the Organization should obtain additional grant training. Management?s response: Management agrees with the need for additional grant training, especially as it applies to calculating and allocating indirect costs. However, we do have issues with the classification of expenses within the original contract and hope we can reconcile those prior to the finalization of the grant award. Person Responsible: President/CEO Finance Officer