Finding Text
2023-001 Surveys, Studies, Investigations, Demonstrations, and Training Grants and Cooperative – Assistance Listing No. 66.436; Grant No.84039801, 84039601,94039501; Grant Period – Year ended December 31, 2023.
Statement of Condition: Compliance over allowable cost, including application of the indirect cost rate supplied by the United States Department of the Interior. Approved provisional rate of 26.3% not used. Instead, allocation based upon prior month’s payroll.
Criteria: The Uniform Guidance, indirect cost negotiation agreement, and National Association of Wetland Managers’ internal control policies and procedures.
Cause: Management’s misunderstanding of accounting application of the provisional rate method.
Effect: Under/over charging of indirect cost.
Questioned Costs: Not identified.
Perspective: N/A.
Identification: Non-repeat.
Recommendation: Obtain professional accounting training in proper accounting for indirect cost utilizing a provisional/final rate method.
Views of Responsible Officials: The indirect cost rates contained are for use on grants, contracts, and other agreements with the Federal Government. The rates are negotiated by the U.S. Department of the Interior, Interior Business Center, and NAWM every year in accordance with the authority contained in applicable regulations.
The negotiated Indirect cost rates are provided to the Funding Agency at the time when the project budget is developed. Subsequent billing of the indirect cost is based on the time spent on the project.
Base: Total direct salaries and wages, including fringe benefits. All other program costs are eliminated from the calculation.
Treatment of fringe benefits: Fringe benefits applicable to direct salaries and wages are treated as direct costs; fringe benefits applicable to indirect salaries and wages are treated as indirect costs.
Treatment of paid absences: Vacation, holiday, sick leave, and other paid absences are included in salaries and wages and are claimed on grants, contracts, and other agreements as part of the normal cost for the salaries and wages.
Provisional/Final Rate: Within six (6) months after year end, a final indirect cost rate proposal is submitted based on actual costs. Billings and charges to contracts and grants are adjusted if the final rate varies from the provisional rate. If the final rate is greater than the provisional rate and there are no funds available to cover the additional indirect costs, NAWM may not recover all indirect costs. Conversely, if the final rate is less than the provisional rate, NAWM is required to pay back the difference to the funding agency.
All of our federal grants are multiyear and indirect cost is adjusted accordingly.
Record Keeping: NAWM maintains accounting records that demonstrate that each type of cost has been treated consistently, either as a direct cost or an indirect cost. Records pertaining to the costs of program administration, such as salaries, travel, and related costs, are kept on an annual basis.
Auditors’ Evaluation of Views of Responsible Officials: Management’s Response is in conflict with above Statement of Condition, Criteria, and Cause.