Finding Text
2023-001: Significant Deficiency – Allowable Costs/Cost Principles
Federal Agency: U.S. Department of Education
Federal Program: Adult Education - Basic Grants to States
ALN: 84.002A
Award Period: 07/01/2022 - 06/30/2023
Type of Finding: Significant Deficiency
The Council did not implement an established and accurate cost allocation plan during the fiscal year ending June 30, 2023. Therefore, not all costs were shared among different grants consistently and accurately.
Criteria: Under the U.S. Code of Federal Regulations (CFR), Title 2: Grants and Agreements, PART 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E – Cost Principles Sec. 200.405 Allocable Costs – the cost must be allocated to the grants/projects based on the proportional benefit. If a cost benefits two or more grants/projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on a reasonable documented basis.
Condition & Context: During the prior year audit as well as during a monitoring visit by PDE, it was discovered that certain expenses were allocated to grants on an unsupported basis. Based on our testing of expenditures performed for the current year, an accurate cost allocation plan was not accurately developed or implemented during the fiscal year ending June 30, 2023.
Cause: The Council did not create or implement an accurate cost allocation plan during the current or prior fiscal year.
Effect: The Council is not in compliance with 2 CFR Sec. 200.405 – Allocable Costs.
Repeat Finding: Yes
Recommendation: We recommend that the Council work to develop and implement a written allocation plan including calculations for all direct and indirect costs that benefit two or more grants or programs. Specifically, the Council should review actual expenses on an ongoing basis and make any necessary adjustments to the allocated expenses.