Finding Text
Finding 2024-001 Not meeting the deadline for Indirect Cost Rate Proposal
Criteria: Per grant agreement with Department of Labor (DOL) Part B(1.) Indirect Cost Rate and Cost Allocation Plan: An award recipient that is claiming indirect costs to a Federal award must have a Negotiated Indirect Cost Rate Agreement (NICRA), Cost Allocation Plan (CAP), or elect to utilize the de minimis rate of 10% of modified total direct costs (MTDC). Per the 2CFR Part 200, Appendix XI, Compliance Supplement May 2024, Part 3, “NPOs that have previously established indirect cost rates must submit a new ICRP within six months after the close of each fiscal year.”
The Association is required to submit an indirect cost rate proposal to the DOL by the annual deadline to obtain an updated NICRA to establish the final rate. The Association should have an internal control process in place to ensure the timely submission of its indirect cost rate proposal to the appropriate parties.
Condition: The Association did not submit the fiscal years 2022-2023 and 2023-2024 indirect cost rate proposal to establish a final rate to the Department of Labor by the required due date.
Questioned Cost: Not applicable. The Association is currently working with DOL to complete the required indirect cost rate proposals.
Cause: During the fiscal year, the Association experienced staff turnover and the extended leave of key management personnel which prevented the Association from complying.
Effect: The delay in finalizing the indirect cost rate proposal may lead to the Association being disallowed for some of the indirect costs incurred.
Recommendation: Management is currently working with the DOL Indirect Cost Rate negotiator to complete the required indirect cost rate proposal. We recommend that management submit the indirect cost rate proposal to the DOL as soon as possible. We also recommend that the Association continue to obtain the necessary temporary support while searching to recruit new staff members. Management may also consider training seasoned staff members for important roles at the Association to provide backup support. We further recommend that management put in place procedures or personnel to ensure this matter does not occur in the future.
Views of Responsible Officials: The Association’s management acknowledges the finding and has been working with DOL personnel on completing the required indirect cost rate proposals. Management will also engage a consultant to assist with the completion of the indirect cost rate proposals as soon as feasible.