Finding Text
2022-002: Application of De Minimis Indirect Cost Rate Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: N/A Federal Assistance Listing Number: 93.332 Program Title: Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges Pass-through Entity Identifying Number: N/A Award Year: 2020-2021; 2021-2022 Questioned Costs: $35,716 Criteria: The Uniform Guidance allows nonfederal entities that have never received a negotiated indirect cost rate to elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) to federal awards. If elected, the rate must be used consistently for all of an organization?s federal awards. 2 CFR 200.1 defines MTDC as ?all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward?? Condition: During the fiscal year, the organization elected to begin using the de minimis 10% indirect cost rate on its federal awards. However, the 10% rate was applied to a base that did not exclude the portion of direct subaward costs that exceeded $25,000. This resulted in excess indirect costs being charged to the organization?s Navigator 8 (NAVCA190351-02-02) and Navigator 9 (NAVCA210402-01-01) grants as follows: "See Schedule of Findings and Questioned Costs for chart/table" Cause: The organization has had turnover in the Executive Director and contracted accounting positions in the past two fiscal years and the current management was not aware of the Uniform Guidance requirement to limit subrecipient expenses to the first $25,000 per subaward. Effect: The inclusion of the portion of each subaward greater than $25,000 in the MTDC base resulted in more indirect costs being charged to federal awards during the fiscal year than were allowable under the de minimis indirect cost rate election. Recommendation: We recommend that the organization review the requirements of the Uniform Guidance and ensure that the MTDC base is properly applied in future federal grants.