Finding Text
Finding 2022-001 – Allowable Costs
Federal Agency: U.S. Department of Health and Human Services
Federal Program title: Health Center Program Cluster
Assistance Listing Number: 93.224 and 93.527
Federal Award Identification Number: H80CS00834-20; H80CS00834-21; H8FCS40554-01
Award Periods: March 1, 2021 – February 28, 2022; March 1, 2022 – February 28, 2023; April 1, 2021 - March 31, 2023, respectively
Type of Finding: Significant deficiency in internal control over compliance
Criteria: Appendix IV to Part 200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations - Section C. Negotiation and Approval of Indirect Cost Rates - Subsection 2. Negotiation and approval of Rates - Clause "c:" Unless approved by the cognizant agency for indirect costs in accordance with § 200.414(g), organizations that have previously established indirect cost rates must submit a new indirect cost proposal to the cognizant agency for indirect costs within six months after the close of each fiscal year; and Clause "g:" The results of each negotiation must be formalized in a written agreement between the cognizant agency for indirect costs and the nonprofit organization. The cognizant agency for indirect costs must make available copies of the agreement to all concerned Federal agencies.
Condition: ACCESS requested reimbursement of indirect costs during a six-month period in which its indirect cost rate had expired.
Questioned Costs: None.
Context: ACCESS’ indirect cost rate expired on June 30, 2022, however, the Organization did not request an extension until October 2022. In January 2023, ACCESS received a response to its extension request in which it was denied with the cited reason being that the indirect cost rate was no longer current. The Organization subsequently submitted an indirect cost rate proposal in January 2023 and in May 2023 the Cognizant agency for indirect costs (the Agency) did provide written notice to ACCESS that it could continue using its previous indirect cost rate until the Agency completed its review of the proposal and a new rate was established.
Cause: Oversight. Effect: Unallowable indirect costs could be charged to a grant if the organization does not submit an updated indirect cost rate agreement application within a timely manner.
Repeat Finding: No.
Recommendation: Management should refine its processes and controls over indirect costs to more closely monitor whether indirect costs being allocated to a grant are based on its current federally negotiated indirect cost rate. This may include identifying the expiration date of the current indirect cost rate during the grant budget preparation process and requesting an extension before the rate expires, or preparing and submitting a new indirect cost rate proposal at the earliest opportunity.
Views of responsible officials: There is no disagreement with the audit finding.