Finding Text
Criteria or Specific Requirement: In accordance with 2 CFR 200.430, fringe benefits should be
allocated based on an approved indirect cost rate agreement (if applicable) or on actual costs when no
approved rate exists. If a predetermined or negotiated rate has been established, it must be applied
consistently and accurately across all programs.
Condition: Solvista Health utilized a fringe benefit allocation rate of 31.15% when allocating fringe
benefit expenditures to the Certified Community Behavioral Health Clinic Expansion Grant. However,
the maximum agreed-upon fringe benefit rate submitted to the grantor was 30.15%. Additionally, it was
noted that the actual fringe benefit expenditures incurred by the organization during the period were
estimated at 25%.
Context: Fringe benefits should have been charged at a rate consistent with Solvista Health’s actual fringe
benefit expenditures incurred and should not have exceeded the maximum allowed rate. These errors
resulted in an overstatement of fringe benefits and related indirect costs applied to the grant.
Questioned Costs: $18,307 consisting of an accounting error in applying a fringe benefit rate higher than
the maximum rate, in addition to applying the maximum fringe benefit rate rather than actual fringe benefit
expenditures incurred.
Cause: These errors were due to clerical errors in applying a fringe benefit rate higher than the agreed
upon maximum fringe benefit rate, in addition to applying a maximum fringe benefit rate to the program
rather than actual fringe benefit expenditures incurred by Solvista Health. Solvista Health lacks a properly
designed and implemented system of internal control with regards to review and approval of costs
submitted for reimbursement,
Effect: Solvista Health improperly overstated fringe benefit expenditures allocated to the federal program
during the performance period. This resulted in an excess reimbursement of program expenditures and
questioned costs.
Identification as a Repeat Finding: Not a repeat finding.
Recommendation: We recommend that Solvista Health design and implement a system of internal
controls which includes a review process to ensure accurate use of approved fringe benefit rates in all
federal reporting. Additionally, management should reconcile budgeted and actual fringe benefit costs
regularly to ensure continued compliance.