Finding Text
Condition: We identified unallowable costs totaling $11,454, comprised of $2,275 of employee meals and $9,179 of
investment advisory fees.
Criteria: Title 2, CFR, Part 200, Subpart E-Cost Principles, Basic Considerations, section 200.403, Factors Affecting
Allowability of Costs, states, in part, that “Except where otherwise authorized by statute, costs must meet the following
general criteria in order to be allowable under Federal awards: a) be necessary and reasonable for the performance of the
Federal award, b) be properly documented showing the business nature of the charge.
Cause: Internal controls over reporting compliance requirements were not properly designed and were not placed in
operation. Management is responsible for compliance with the requirements of allowable/unallowable costs and for the
design, implementation, and maintenance of effective internal controls over compliance with the requirements of laws,
statutes, regulations, rules, and provisions of grant agreements applicable to its federal program.
Effect: The lack of internal controls and procedures over compliance increases the risk of using federal funds for
unallowable costs.
Recommendation: We recommend the Agency develop a written policies and procedures manual for
allowable/unallowable costs compliance, which should include a checklist detailing all the necessary steps to ensure a
proper review of all costs charged to the federal program.