Finding Text
Corporation for National and Community Services
Assistance Listing Numbers 94.006 – AmeriCorps State and National
Compliance and Significant Deficiency over Activities Allowed or Unallowed and Allowable
Costs/Cost Principle (Indirect Costs)
Repeat Finding: No
Condition:
The Organization was unable to provide applicable indirect costs rationale documentation for the
period August 1, 2022 through July 31, 2023 in order to validate compliance and internal controls
over Activities Allowed and Allowable Costs/Cost Principles. Management was not able to
provide the approved indirect rate for the various locations to support the actual indirect cost rate
charged.
Criteria:
The Uniform Guidance requires that non-Federal entities receiving Federal awards establish and
maintain internal controls designed to reasonably ensure compliance with Federal laws,
regulations, and program compliance requirements.
The characteristics of internal controls are presented in the context of the components of internal
controls discussed in Internal Control-Integrated Framework (COSO Report), published by the
Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report
provides a framework for organizations to design, implement, and evaluate control that will
facilitate compliance with the requirements of Federal laws, regulations, and program compliance
requirements.
Per AmeriCorps general terms and conditions, the recipient must maintain financial management
systems that comply with 2 CFR § 200.302(b). The recipient’s financial management systems
must be capable of distinguishing expenditures attributable to this award from expenditures not
attributable to this award. The systems must be able to identify costs by program year and by
budget category, and to differentiate between direct and indirect costs. For all recipient’s
financial management requirements and responsibilities, refer to Subparts D and E of 2 CFR
Part 200.
Cause:
The Organization did not have adequate controls over the rationale of indirect cost process,
therefore recording and retention of supporting documentation was not properly adhered to in
accordance with Uniform Guidance.
Effect or Potential Effect:
Indirect costs were not properly supported by a system of internal controls which provides
reasonable assurance that the charges are accurate, allowable, and properly allocated.
Questioned Costs:
Unknown.
Recommendation:
We recommend the Organization establish and implement controls to properly document the
indirect costs rationale and approved rate determination to charge to the grant.