Finding Text
2022-002 – Allocation Percentage Charged – Significant Deficiency in Internal Controls over
Compliance
ALN: 84.126
Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States
Federal Agency: United States Department of Education
Pass-Through Entity: Texas Health and Human Services Commission
Award Number(s): HHS000186000005, HHS000202900008
Federal Award Year: 2022
Condition: The Entity charged the incorrect allocation % in 9 out of 20 nonpayroll expenses and 5
out of 25 payroll expenses.
Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must
establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entities is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal
Government” issued by the Comptroller General of the United States or the “Internal Control
Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
According to 2 CFR 200.405(a)(2), costs allocated to a Federal award must be distributed in
proportions that may be approximated using reasonable methods.
Effect: The Entity may unintentionally under/over charge expenses to the grant which could lead
to questioned costs and repayment of funds to the Grantor agency.
Cause: The Entity does not have proper controls in place to verify the approved allocation % is
charged on expenses.
Questioned Costs:
Nonpayroll allocated costs – known questioned costs of $727 and likely questioned costs of
$14,513.
Payroll allocated costs – No questioned costs. Federal award was undercharged by $71 and, when
extrapolated, the undercharge was calculated at $7,132.
Combined questioned costs: known questioned costs of $655 and likely questioned costs of
$7,381