Finding Text
Criteria – 2 CFR §200.414 Indirect Costs – Entities must maintain accurate records and apply indirect
costs consistently across all federal awards. They must also ensure that subrecipient indirect costs are
managed in accordance with federal regulations.
Condition/context – Indirect costs are not being requested, applied, billed, or reported consistently by the
Organization. Indirect costs are not being applied to subrecipients consistently.
We observed numerous errors in the application of indirect costs by the Organization, including: not
requesting indirect costs in grant applications, negotiating non-de minimis rates with passthrough
agencies after electing a de minimis rate, billing indirect costs in excess of indirect costs awarded in the
grant agreement, erroneously including passthrough awards greater than $25,000 per subrecipient in the
modified total direct cost base, approving indirect cost rates for subrecipients that did not match the
subrecipient's elected de minimis rate, and including subrecipient indirect costs in the section of SF-425
reports reserved for reporting its own indirect costs.
Questioned costs – $27,467
Cause/effect – The Organization has decentralized grant controls which are not designed to ensure
compliance over indirect costs and consistency of application across all federal awards. Indirect costs in
excess of allowable indirect costs were billed to federal awards.
Repeat finding – No.
Recommendation – The Organization should develop procedures and internal controls to ensure indirect
cost rates are requested, applied, billed, and reported consistently across all federal awards using the
same rate. The Organization should develop similar procedures to ensure it is awarding and reporting
subrecipient indirect costs accurately. The Organization should ensure individuals responsible for these
controls are adequately trained.