Finding Text
Criteria
2 CFR Part 200, Appendix IV, Indirect (F&A) Cost Identification and Assignment, and Rate Determination for Nonprofit Organizations Part C 2 discusses negotiations and approval of indirect cost rates. Specifically, Part C 2f indicates that upward or downward adjustments of indirect costs will be made based on the actual allowable costs incurred for the period involved after the approval of a current negotiated indirect cost rate with the cognizant agency.
Cause
The Academy did not utilize the current approved negotiated indirect rate when calculating the indirect costs for the year ended June 30, 2023. The Academy inaccurately used an expired indirect cost rate.
Condition
During the testing of indirect costs charged to the award, it was noted that an expired indirect cost rate was used.
Effect
As a result of applying an expired indirect cost rate, the indirect costs charged to the grants were understated by $77,448 for the year ended June 30, 2023.
Questioned Costs
None.
Context
The Academy did not utilize the current approved indirect cost rate for the year ended June 30, 2023.
Repeat Finding?
No.
Recommendation
The Academy should implement additional controls around the recording of indirect costs, including a reconciliation of indirect costs to the currently negotiated indirect cost rate. As new rates are negotiated and approved by the cognizant agency, controls should be in place to ensure that the appropriate rate is communicated and being used throughout the Academy.
Views of Responsible Officials
Management concurs and will implement the recommendation. See corrective action plan.