Finding Text
Criteria
All costs charged to federal awards must be reviewed and approved to ensure they are allowable, allocable, and reasonable. Additionally, non-federal entities are required to prepare a schedule of expenditures of federal awards (SEFA) that accurately reflects the total federal awards expended during the fiscal year.
Context
All nine transactions of our sample of nine out of 218 salaries and fringe benefit transactions allocated to federal awards were not reviewed and approved prior to reimbursement request. Management noted that documented review and approval over salaries and fringe benefit allocations to federal awards did not occur during 2024. Indirect costs allocated to the Technical Assistance for Specialty Crops Program were improperly calculated resulting in an overstatement on the SEFA.
Cause
Lack of documented review processes over costs allocated to federal awards and improper calculations of indirect costs.
Effect
Failure to review costs allocated to federal awards and failure to accurately report federal expenditures on the SEFA resulted in non-compliance with the Uniform Guidance, which led to questioned costs, and may lead to potential withholding of future funds, or other administrative actions by the federal awarding agency.
Questioned Cost:
$84,474 for indirect costs not properly calculated.
Recommendation
We recommend that management document its review of all costs allocated to federal awards. We recommend that management review and enhance its internal controls, policies and procedures as needed to ensure indirect costs allocated to the grants are properly calculated and the SEFA is accurately prepared and reported.
Views of Responsible Officials and Planned Corrective Actions
See Corrective Action Plan.