Finding 538178 (2024-001)

Significant Deficiency

Requirement

Questioned Costs

Year

2024

Accepted

2025-03-27

Audit: 349202

Organization: Urban League of Greater Chattanooga (TN)

Auditor: Hoskins & Company

AI Summary

Core Issue: The Urban League of Greater Chattanooga lacks a proper process for allocating indirect costs, risking double charging to federal and state programs.
Impacted Requirements: This finding violates 2 CFR § 200.412, which mandates consistent treatment of costs to prevent overpayments.
Recommended Follow-Up: Establish a monthly process for recording and allocating indirect costs, ensuring oversight by a knowledgeable individual and a review by a supervisor.

Finding Text

Finding # 2024-001 – Indirect Costs Allocation Process Needs Improvement Federal program titles: • Volunteer Income Tax Assistance ALN: 21.009 • Coronavirus State and Local Recovery Funds ALN: 21.019 • Senior Care Service Employment Program ALN 17.235 • Twenty First Century Community Learning ALN 84.287C • Connected Literacy Program ALN 84.425B Criteria or specific requirements: 2 CFR § 200.412 Classification of costs “…cost incurred for the same purpose in like circumstances must be treated consistently either as a direct or an indirect cost to avoid possible double charging of Federal awards. Condition and Context: The Urban League of Greater Chattanooga process for allocating indirect costs to programs where indirect costs are reimbursable needs improvement. The is no process to prevent or detect if the indirect cost pool costs support the amounts charged to federal and state programs. Cause: The Urban League of Greater Chattanooga records indirect costs to a cost allocation pool but does not record a journal entry in the general ledger to allocate those costs to the programs. Effect: Duplication of cost charged to programs could result in receiving overpayments. Based on analysis of the total indirect cost pool, the indirect cost pool included supported indirect costs charged to the programs. Known and Likely Questioned Costs: None Recommendation: Implement a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed. The allocation should be prepared by someone knowledgeable of the indirect allocation and reviewed by another individual at least one level above.

Corrective Action Plan

Per the auditor's reportable finding via the Section II- Findings Related to the Financials Statements Audited in Accordance with Government Auditing Standrds and Section III- Findings and Questioned Costs For Federal Awards: 2024-001 Indirect Costs Alloction Process Needs Improvements, the following represents management's explanation of tits corrective action plan: Effectively immediately, Urban League of Greater Chattanooga (ULGC) implementing a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed for all federal and state programs. Kyree Brown, Accountant will calculate and record the journal entry and Pierre Pinkerton, CFO will perform the review. Also Kyree Brown will eprform a monthly reconciliation of indirect costs charged to programs with the amount recorded to the general ledger. Any differences will be investigated and immediately resolved.

Other Findings in this Audit

538179 2024-001

Significant Deficiency
538180 2024-001

Significant Deficiency
538181 2024-001

Significant Deficiency
538182 2024-001

Significant Deficiency
1114620 2024-001

Significant Deficiency
1114621 2024-001

Significant Deficiency
1114622 2024-001

Significant Deficiency
1114623 2024-001

Significant Deficiency
1114624 2024-001

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
21.019	Coronavirus Relief Fund	$437,305
17.235	Senior Community Service Employment Program	$387,546
21.009	Volunteer Income Tax Assistance (vita) Matching Grant Program	$266,796
84.425	Education Stabilization Fund	$158,803