Finding Text
Significant deficiency in internal controls over allowable costs.
Federal Agencies:
Department of Defense; United States Department of Health and Human Services
Assistance Listing Numbers:
12.420, 12.750, 93.865
Assistance Listing Names:
Military Medical Research and Development; Uniformed Services University Medical Research Projects; Child Health and Human Development Extramural Research
Award Numbers:
HU00012020011; HU00012120093; 5938; W81XWH-22-1-0519; HU00012320049; HU00012320068; HU00012320090; HU00012420044; HU00012320120; 67420; HU00012320060
Period of Award: Various
Criteria
Per standards contained in Title 2 U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303, a non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition/Context
During testing over allowable costs, out of 25 nonpayroll transactions tested, 3 transactions were related to facility lease costs which were recovered from the Federal award at a higher rental rate than was identified in the underlying lease agreement resulting in an over recovery of costs of $16,033. Upon further testing, we identified total over recovery of facility lease costs of $94,529 to Federal awards during calendar year 2024 as a result of costing errors related to this particular lease agreement.
Cause
The Foundation had renegotiated the facility lease at a lower rental rate. Due to an administrative oversight, lease costs continued to be recovered from Federal awards at the previous rental rate. The Foundation’s internal controls over compliance were not operating effectively to detect the over recovery of costs.
Effect or Potential Effect
Lack of adequate internal controls resulted in lease costs being over recovered from Federal awards.
Questioned Costs
$94,529
Repeat Finding
This is not a repeat finding.
Recommendation
We recommend the Foundation improve the operation of internal controls over compliance to ensure costs charged to Federal awards are properly reviewed.
Views of Responsible Officials and Corrective Action Plan
Management agrees with the finding and has provided the accompanying corrective action plan.