As part of internal controls and spenddown grant management, FDDC management regularly evaluates
costs that are allowed to be allocated to CDFI if we are underspent for the grant. Management proactively
charged specific non-federal funding sources to prevent the dispersion of administrative time as indirect
costs across programs, while continuing the practice of charging time considered indirect to the general
administration pool. These salary and fringe charges, constituting the reclassifications, were deemed
integral, allowable, reasonable, equitable, and directly allocable to the CDFI awards, rather than indirect.
This clarifies the redistribution of staff time from three selected funding sources that offered the greatest
flexibility. To support allocation costs, we utilize a Personal Activity Report (PAR) that is maintained in
tandem with timecards to ensure management knows the activity performed supports the allocation of
allowable expenses. In addition, as part of our analysis, time for fundraising and other non-allowable
expenses were excluded as it constitutes an explicitly unallowable use of funds. Our financials undergo
monthly reconciliation, with management reviewing spenddown at that time, often aggregating expenses
occurring more than 30 days prior.
A deliberate strategy to restrict direct billing to grants was employed to prevent overspending grants,
utilizing the aforementioned technique, to ensure accurate and allowable expenses are reclassified to
the appropriate grants.
To address the concern, we reversed the entry to ensure there was no conflicting interpretation
between FDDC and the auditor. FDDC plans to enhance internal processes to directly allocate all
allowable expenses to the CDFI grant.
Given the complexities of our shared understandings, management addressed the finding through
the deployment of loan products during this audit period.