Finding Text
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a)Be necessary and reasonable for the performance of the Federal award and be allocablethereto under these principles. (b)Conform to any limitations or exclusions set forth in these principles or in the Federal awardas to types or amount of cost items. (c)Be consistent with policies and procedures that apply uniformly to both federally-financedand other activities of the non-Federal entity. (d)Be accorded consistent treatment. A cost may not be assigned to a Federal award as a directcost if any other cost incurred for the same purpose in like circumstances has been allocatedto the Federal award as an indirect cost. (e)Be determined in accordance with generally accepted accounting principles (GAAP), except,for state and local governments and Indian tribes only, as otherwise provided for in this part. (f)Not be included as a cost or used to meet cost sharing or matching requirements of any otherfederally-financed program in either the current or a prior period. (g)Be adequately documented.? Condition ? In our examination of the program?s indirect cost charges, we noted that APS did not charge the appropriate indirect cost of $81,916 for the months of May through July 2022 to the program. Consequently, an adjustment was recorded to correct the SEFA. Cause ? Management did not adhere to their internal policies and procedures to ensure that all federal transactions are charged to the programs and that the SEFA is complete and accurate. Effect or potential effect ? The SEFA may not be fairly presented, in all material respects, in relation to the basic financial statements taken as a whole. In addition, the lack of adherence to the established internal controls policies and procedures can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements. Questioned Costs ? None. Context ? This is a condition identified per review of APS? compliance with specified requirements using a statistically valid sample. Recommendation ? We recommend that APS strengthen their policies and procedures to ensure the completeness and accuracy of the SEFA. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.