Finding 405968 (2023-002)

Significant Deficiency
Requirement
H
Questioned Costs
$1
Year
2023
Accepted
2024-07-02
Audit: 311525
Organization: Tech Corps Ohio (OH)
Auditor: Wells CPA LLC

AI Summary

  • Core Issue: There is a significant deficiency in internal controls over compliance, specifically regarding the allocation of indirect costs for the TANF program.
  • Impacted Requirements: Costs incurred outside the approved grant period (August 2023) are being improperly allocated to the major program, violating compliance requirements.
  • Recommended Follow-Up: Indirect cost allocations should be performed more frequently throughout the fiscal year to ensure alignment with the grant period and improve cost allocation accuracy.

Finding Text

Federal agency: All agencies in the SEFA Assistance Listing Number: See SEFA Award Period: 01/01/2023 to 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The compliance requirements for Federal Assistance Number 93.558 – Temporary Assistance for Needy Families (TANF) State Programs includes a Period of Performance element. The compliance requirement related to period of performance is that a non-federal entity may charge only allowable costs incurred during the approved budget period (also identified as the grant period) of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Allocations of indirect costs are performed once during the year-end closing process based on time study data for the entire year, and when program attendance data for programs that are ran for various increments throughout the year is available. The TANF grant period that was tested as a major program was December 2022 – August 2023. As the grant period ended in September, no costs incurred after that date should be considered major program expenditures. Questioned Costs: Indeterminable. The questioned costs could be considered those indirect costs considered TANF expenditures that were incurred after August 2023. In addition, because the program attendance is used to allocate costs between programs, program attendance after August 2023 may be inappropriate to be considered when allocating those indirect costs to specific programs. Context: Indirect cost allocations are performed once during the year-end closing process by the auditee. Time studies are performed to allocate indirect costs between supporting and program functions. The indirect costs allocated to the program functions are then allocated between individual programs, including federally funded programs, based on the number of participant hours in each program. The time study and program hours used to allocate indirect costs are based on the entire year and not just the major program grant period. In addition, indirect costs that are allocated are incurred during the entire year and not just the major program grant period. Cause: Time and program participation data used to allocate costs are not consistent with the grant period. In addition, the costs that are allocated are not consistent with the grant period. Effect: The single annual allocation of costs means that costs incurred outside the major program grant/budget period are being allocated to the major program. In addition, allocation base data from outside the grant/budget period is being used as a base for the indirect cost allocation. Repeat Finding: No Auditor’s Recommendation: We recommend the auditee perform indirect cost allocations so that the costs and allocation base align with the grant/budget period. Performing the allocation of indirect costs annually may not create an equitable allocation at the individual program level. Views of Responsible Officials and Planned Corrective Actions: We agree that the allocation being performed once annually does not create the most equitable allocation of costs between our individual programs. We will perform our indirect cost allocations more periodically during the course of the fiscal year to ensure that more appropriate times studies and applicable participant hours are being utilized to limit the potential of allocating unrelated indirect costs from the year to individual programs, including the federally funded programs.

Corrective Action Plan

We agree that the allocation being performed once annually does not create the most equitable allocation of costs between our individual programs. We will perform our indirect cost allocations more periodically during the course of the fiscal year to ensure that more appropriate times studies and applicable participant hours are being utilized to limit the potential of allocating unrelated indirect costs from the year to individual programs, including the federally funded programs.

Categories

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring Period of Performance Reporting Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 405966 2023-001
    Significant Deficiency
  • 405967 2023-001
    Significant Deficiency
  • 405969 2023-002
    Significant Deficiency
  • 982408 2023-001
    Significant Deficiency
  • 982409 2023-001
    Significant Deficiency
  • 982410 2023-002
    Significant Deficiency
  • 982411 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.215 Fund for the Improvement of Education $109,254
93.558 Temporary Assistance for Needy Families $4,202