Finding Text
Finding 2024-002: Allowable Costs - Capital Expenditures (Significant Deficiency)
Federal Program: Assistance Listing Number 14.267
Criteria: The Uniform Guidance, specifically 2 CFR 200.439(b)(1), notes that capital expenditures
for general purpose equipment, buildings and land are allowable as direct costs, but only with the
prior written approval of the Federal agency or pass-through entity.
Condition: The Organization did not obtain prior written approval from the granting agency for a
vehicle purchased during the year ended June 30, 2024.
Cause: The Organization received verbal approval during a call with the granting agency two
months before the purchase was made, and had email correspondence with the granting agency
discussing the process of allocating a portion of the total vehicle cost to the program. However, there
was no prior written approval allowing the vehicle purchase to be allocated to the program.
Effect or Potential Effect: The vehicle was not formally approved for purchase prior to payment,
which creates the risk of the Organization being reimbursed for unallowable costs.
Questioned Costs: $15,535.
Context: We noted one instance where a capital expenditure allocated to the program was not
supported with prior written approval.
Identification as a Repeat Finding, if Applicable: Not a repeat finding.
Recommendation: We recommend that management formally communicate with Federal granting
agencies in writing to obtain prior written approval for capital expenditures that are intended to be
used in a Federal program.