Finding Text
Information on the federal program _ Assistance Listing Number 10.557, Special Supplemental Nutrition Program for Women, Infants, and Children, Department of Agriculture; Assistance Listing Number 93.676, Unaccompanied Alien Children Program, Department of Health and Human Services; Assistance Listing Number 93.870, Maternal, Infant and Early Childhood Home Visiting Grant Program, Department of Health and Human Services
Criteria or specific requirement – As stated in 2 CFR §200.303, the non-federal entity (i.e., the Organization) must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or in the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
According to 2 CFR §200.414 Subpart F, Appendix IV, Section C.2.f, the provisional and final rates must be negotiated where neither predetermined nor fixed rates are appropriate. Predetermined or fixed rates may replace provisional rates at any time prior to the close of the organization's fiscal year. If that event does not occur, a final rate will be established and upward or downward adjustments will be made based on the actual allowable costs incurred for the period involved.
Condition – During our review of the Organization’s indirect cost rate calculation, we were unable to be provided with a true-up of actual indirect costs based on the final rates versus the provisional rates used by the Organization.
Cause – The Organization did not have internal controls in place to ensure that the provisional rate utilized was in line with actual allowable costs incurred for the period involved.
Effect or potential effect – Total indirect costs charged by the Organization may not be in line with the final rates determined by the oversight agency.
Questioned costs – None
Context – 3 out of 4 major programs tested did not have calculated indirect cost rates that agreed with their respective agreements.
Identification as a repeat finding, if applicable – Is a repeat finding (2022-008)
Recommendation – We recommend the Organization establish an internal control procedure to ensure that indirect costs charged to the federal program using the provisional rate are appropriately adjusted, if necessary, based on actual costs incurred. We recommend that on an annual basis, the Organization obtain an updated Nonprofit Rate Agreement from the federal government that shows final approved rates based on actual costs.
Views of responsible officials and planned corrective actions – See separate auditee document for planned corrective action.