Finding Text
Finding 2024-003: 10.761 - U.S. Department of Agriculture - Water and Waste Technical Assistance and
Training - Material Weakness
Compliance
Requirement: Allowable Costs/Cost Principles
Criteria: 2 CFR 200, subpart E, requires indirect costs to be accorded consistent and equitable
treatment to all federal and non-federal awards.
Condition: The indirect cost rates calculated and utilized by EWB-USA were in excess of both the
provisional and approved rates allowable by the federal awards.
Effect: EWB-USA requested and received reimbursement from federal awards that exceeded
allowable indirect costs limits.
Questioned Costs: $40,258
Context: To determine the amount of indirect costs to be billed under the agreement, direct salaries
and wages and related fringe benefits should be summed and multiplied by the rate. All
other program costs should be eliminated from the calculation. During our testing of
indirect costs, we identified the approved provisional rate was not applied correctly as
other program costs were included in the calculation. Additionally, the indirect cost basis
used to negotiate the indirect costs rate was not based upon an equitable distribution to
all federal and non-federal programs.
Cause: EWB-USA included other program costs when calculating the amount of the indirect costs
to be billed. Additionally, EWB-USA did not have controls in place to ensure the indirect
cost rate methodology utilized when submitting to the federal agency was an equitable
distribution to all federal and non-federal programs.
Recommendation: We recommend EWB-USA implement procedures to ensure the approved provisional rate
is properly applied to the correct direct costs when calculating the amount of indirect costsResponse:
to be billed. Additionally, we recommend EWB-USA revise its indirect cost methodology
submitted for approval to determine an equitable distribution to all federal and non-federal
programs.
1. Review and revise existing policies and procedures for the application of indirect
rates with the appropriate oversight by the Finance/ Accounting department across
federal grants to ensure accuracy and compliance with relevant regulations.
2. Review the allowable indirect rate methodologies to ensure the method used is
based upon an equitable distribution across federal and non-federal programs.
3. Provide training to relevant staff on the revised policies, procedures to ensure the
proper application of the indirect rate and calculation of indirect costs.