Finding Text
2022-004—Allowable Costs/Cost Principles
Federal program information:
Funding agency: All
Title: All
ALN: All
Award year and number: All
Pass-through entity (if applicable): All
Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity.
Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following:
• There is no documentation of an employee’s approved pay rate.
• The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes.
Questioned Costs: Undeterminable
Context: Six of six payroll disbursements tested were not adequately documented.
Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies.
Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable.
Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance.
Management’s Response: Management of the Institute did not provide any comments in response to this finding.