Finding Text
#2023-001 – Significant Deficiency in Internal Controls over Allowable Costs/Improper Payments
Compliance Finding: Allowable Costs/Improper Payments
Criteria: Costs charged to federal awards must meet certain general criteria as defined in the cost principles contained in 2 CFR Part 200. The basic guidelines include such requirements as: costs be necessary and reasonable for the administration of the program, be allocable under the cost principles, be accorded consistent treatment, be determined in accordance with generally accepted accounting principles, not be included as a cost used to meet matching requirements and be adequately documented, among other requirements. Further criteria are set forth as line items within the categories provided in contract and grant budgets.
Condition/Cause: The Agency included a general ledger account in the calculation of cost reimbursement requests that represented the value of donated volunteer time. The value of donated time is recorded as in-kind support and in-kind expense in the general ledger. The value of donated services does not meet the standards of the cost principles. The Agency has documented procedures in place to review costs charged to federal awards; however, the procedures failed to identify this error.
Questioned Costs: $26,200
Identification of How Questioned Costs Were Computed: Upon review of expenditures charged to the grants, a questioned cost was identified for costs relating to the donated volunteer time. Costs appear to be confined to one general ledger account that was included in cash request calculations. Of note, a portion of the questioned costs above includes charges to a grant outside of the major program (Federal Assistance Listing #93.052).
Effect: An overstatement of expenditures for the grant was reported and submitted for reimbursement.
Recommendation:
• We recommend that the Agency enhance its procedures to promote future compliance with all cost principles in the regulations, as well as those outlined in contracts and grant agreements.
• We recommend that the Agency separate in-kind donation accounts from account groupings that are used for grant billings.
Views of Responsible Officials and Planned Corrective Actions: Management of the Agency concurs with the audit finding. The individual preparing the reports this year did not realize that the account was included in the group of accounts used for billings. Additional training will be provided, and management will perform a quality control review over future grant billings to ensure that costs meet the criteria defined by the regulations and included in contracts and grant agreements. The Agency’s CFO will implement a process to reconcile match amounts, on a monthly basis beginning July 2024, to insure compliance.