Finding Text
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/22 ? 12/31/22, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations section 200 states the non-Federal entity may utilize a federally agreed upon indirect cost rate (IDCR) in identifying eligible expenditures under a federal grant. A provisional IDCR may be issued, but billing reconciliation should be done when a final IDCR agreement is issued. Condition: During our testing, we noted the Organization used its provisional federal IDCR for the whole period, but a final IDCR agreement was received in September 2022 reducing the IDCR for the whole grant period. Eligible expenses and drawdowns were not reconciled for change in IDCR after the change. Questioned costs: None Context: While the IDCR decreased during the year, the Organization had sufficient other eligible expenditures to make up for the difference in IDCR used compared to the final IDCR. The Organization just missed the process of reallocating expenses in the system to make up for the drop in indirect expenses. For the grant impacted, subsequent to year-end more eligible expenditures have already been identified than would be needed with the revised rated to utilize the full grant. Cause: While the Organization had a process in place to make sure the approved IDCR was setup in the system to calculate indirect costs at the start of the grant, there was not a process in place to revise that IDCR in the event the provisional rate was finalized. Effect: Without a process to properly update and reconcile indirect costs in the event of an IDCR change, the Organization risks overstating total eligible expenditures and noncompliance with grant requirements. Repeat finding: No Recommendation: We recommend the Organization develop a process to address changes in the approved IDCR midway through grant periods where grant expenditures are reconciled to the new IDCR, and additional direct expenditures identified, if needed. Views of responsible officials: There is no disagreement with the audit finding.