Finding Text
Finding 2024-001
Significant deficiency in internal controls over compliance related to allowable costs.
Federal Agency: Department of Defense
Program Titles: Air Force Defense Research Sciences Program and Research and Technology Development
Assistance Listing Number: 12.800 and 12.910
Award Number: All
Award Period: September 15, 2020 - September 14, 2026
Criteria
2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards provides for specific items of cost which are considered to be unallowable. Additionally, that costs must be accounted for in accordance generally accepted accounting principles (GAAP) and be given consistent treatment. Topos Institute’s internal controls over allowable costs failed to remove these items from allowable costs.
Condition/Context
During testing of allowable costs, there was once instance where unallowable costs were charged to the indirect cost pool. Additionally, two instances where subscription costs were not accounted for in accordance with GAAP and one instance where a service fee was expensed in the incorrect period. Finally, one instance where two items were purchased but only one item was charged to the indirect cost pool, however the full amount of the tax was inappropriately allocated to the indirect cost pool for the Federal awards.
Questioned Costs
$3,494
Cause
The Institute’s operation of internal controls was not sufficient to ensure that no unallowable costs, costs not charged in accordance with GAAP, and cost not allocated equitably were charged to the federal funding.
Effect
Based on the exception noted in the operation of internal controls, there could exist unallowable costs that were charged to the Federal Award.
Repeat Finding
This is not a repeat finding.
Recommendation
We recommend that the Institute ensure current internal controls are communicated to staff charging expenses to federal awards and consider the need for further strengthening internal controls over allowable costs.
Views of Responsible Official of Auditee
Management concurs with the finding and has provided accompanying corrective action plan.