Finding Text
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates
Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278
Federal Agency U.S. Department of Labor (DOL)
Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost
Type of finding
Internal Control over Compliance/non-compliance
Category
Significant deficiency
Criteria
As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles,
for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2
CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows:
(1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs.
(2) The methods for allocating the costs should be in accordance with the cost principles and produce
an equitable and consistent distribution of costs.
(3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements
(ICRA).
Condition
The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year
ended June 30, 2022.
Cause
The Department did not have sufficient validation controls over accounting entries related to the recognition
of indirect costs and expenses reimbursable to state funds.
Puerto Rico Department of Economic Development and Commerce
(An Agency of the Commonwealth of Puerto Rico)
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2022
- 103 -
Part III - Findings and Questioned Costs Relating to Federal Awards – (continued)
Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued)
Effect
Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the
indirect costs general ledger account. .
Questioned Costs
The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and
thus there is no questioned cost.
Identification as a Repeated Finding
This is not a repeat finding from the immediate previous audit.
Recommendation
We recommend the Department to strengthen its administrative and management controls and processes for
recording transactions related to indirect cost. Also establish a periodic account review process to ensure that
indirect costs are properly presented within the performance period.
Views of Responsible Official (Unaudited)
Refer to the corrective action plan on pages 110-114