Finding 480175 (2023-003)

-
Requirement
A
Questioned Costs
$1
Year
2023
Accepted
2024-08-01
Audit: 316459
Organization: Telamon Corporation (NC)
Auditor: Rsm US LLP

AI Summary

  • Core Issue: The Organization failed to timely calculate and review indirect cost rates, leading to potential overbilling of $123,160.
  • Impacted Requirements: Compliance with Sections 200.414 and 200.431 of the Uniform Guidance regarding reasonable allocation of costs.
  • Recommended Follow-Up: Conduct annual reviews and reconciliations of indirect and fringe benefit cost rates to ensure accurate billing.

Finding Text

Finding 2023-003–Indirect Cost and Fringe Benefit Rates Nonmaterial Noncompliance–Allowable Costs Identification of the federal program: U.S. Department of Health and Human Services Direct Award Program Name: Head Start Cluster ALN # 93.600 Criteria: Sections 200.414 and 200.431 of Subpart E of the Uniform Guidance require that indirect costs and fringe benefit costs charged to federal programs must be reasonable and allocated to the federal program based on a written policy, and self-insured expenses must be based on historical experience and reasonable assumptions. Condition: The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used in order to determine if the amount being charged resulted in an adjustment to the billing for the program. Cause: The expenses allocated and charged to the program based on provisional rates for both indirect and fringe benefit costs exceeded the actual expenses reported in the trial balance and allocated to the program. Effect: The lack of timely calculations or reviews could result in having to reconcile funds due to or from the federal government a significant amount of indirect costs that were overbilled or underbilled. Questioned costs: $123,160 Context: A recalculation was performed over the indirect expenses of the major program and determined the indirect expenses were overbilled by $123,160. Repeat finding: No Recommendation: We recommend the Organization review the indirect and fringe benefit cost rates at least annually and perform reconciliations between the provisional and actual rates to determine if amounts billed to the program should be adjusted. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.

Corrective Action Plan

Finding 2023-003–Indirect Cost and Fringe Benefit Rates The Organization did not perform a timely calculation or review of the indirect rate based on actual expenses compared to the provisional rate being used in order to determine if the amount being charged resulted in an adjustment to the billing for the program. Corrective Action Planned As mentioned above the timing of the September 30, 2023 Audit was heavily impacted by turnover in senior financial staff happening just before this audit began. By going through the audit process the Chief Financial Officer and Controller were able to understand the intricacies of the indirect process as it relates to indirect costs and fringe benefits. We will use our monthly close process to perform a review of these costs to ensure that Telamon is reconciling these rates. Uniform Guidance will be updated on 10/1/24 to increase the de minimis rate from 10% to 15% for several federal agencies. Telamon will be working with consultants to review the potential move to the de minimis rate for indirect costs. This will also mean that the fringe pool will need to be evaluated to see if Telamon will handle the benefits moving forward. This will allow for more timely decisions based on benefits at the local level. Responsible Official: Michole Greenwood, Controller Anticipated Completion Date: September 2024

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
21.023 Covid-19 - Emergency Rental Assistance Program $9.99M
93.600 Head Start $1.93M
21.027 Covid-19 - Coronavirus State and Local Fiscal Recovery Funds $966,806
93.568 Low-Income Home Energy Assistance $320,400
64.033 Va Supportive Services for Veteran Families Program $145,161
10.558 Child and Adult Care Food Program $143,230
14.417 Fair Housing Organization Initiatives $132,336
17.805 Homeless Veterans Reintegration Project $120,979
14.267 Continuum of Care Program $63,359
21.026 Homeowner Assistance Fund $44,511
10.181 Ams - Pandemic Response and Safety Grants Program/ Ams - Farmworker and Meatpacking Worker Relief Grant Program $42,964
10.311 Beginning Farmer and Rancher Development Program $36,685
17.264 National Farmworker Jobs Program $12,072
14.416 Education and Outreach Initiatives $11,430
99.U01 Housing Stability Counseling Program $8,729
17.259 Wia Youth Activities $8,369
93.569 Community Services Block Grant $1,710
81.042 Weatherization Assistance for Low-Income Persons $529
64.024 Va Homeless Providers Grant and Per Diem Program $297
14.169 Housing Counseling Assistance Program $276
66.714 Regional Agricultural Ipm Grants $274
14.231 Emergency Solutions Grant Program $116
84.011 Migrant Education_state Grant Program $-1,565