Finding Text
Finding Number: 2021-002; Finding Type: Federal award finding and financial statement finding; Federal Assistance Listing No.: 1) 16.556 2) 93.591; Program Names: 1) State Domestic Violence and Sexual Assault Coalitions 2) Family Violence Prevention and Services/State Domestic Violence Coalition; Federal Agencies: 1) U.S. Department of Justice 2) U.S. Department of Health and Human Services; Pass-Through Entity: n/a; Grant Numbers: 1) 2019-MU-AX-0017, 2) 2001ORSDC3; Federal Award Year: 2021; Control Deficiency Type: Material weakness in internal controls over compliance and financial reporting Instance of Noncompliance: Yes; Compliance Requirement: Allowable costs; Questioned Costs: 1) ALN 16.556: none over $25,000 2) ALN 93.591: $53,351; Repeat Finding: No;
Criteria: According to 2 CFR §200.405, costs of a federal award must be allowable and allocable. A cost is allocable to a particular federal award if the goods or services involved are chargeable to the federal award in accordance with relative benefits received. This standard is met if the cost was incurred specifically for the federal award; benefits both the federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and is necessary to the overall operation of the non-federal entity and is assignable in part to the federal award in accordance with cost principles in this section. An organization must use an equitable distribution base to allocate its indirect and administrative costs. The organization should have controls in place to ensure that indirect costs are charged uniformly to both federally funded activities and other activities of the organization, and the allocation methodology results in an equitable allocation of indirect and shared administrative costs.
Condition: During the audit, it was noted that costs appearing administrative in nature were charged as direct costs to two federal awards, including $39,814 of the accounting manager’s salary and $26,797 in audit fees relating to the fiscal year 2020 audit, a year in which no Single Audit was require or performed. In accordance with CFR §200.425, costs of auditing a non-federal entity that is exempted from having an audit conducted under the Single Audit Act because its expenditures under federal awards are less than $750,000 during the non-federal entity’s fiscal year are considered unallowable costs.
Cause: The organization did not have a proper understanding of the Uniform Guidance regulations governing the expenditure of federal funds.
Effect: Costs that appeared to be administrative in nature and benefitted all programs were charged to two federal grants as direct expenses: $53,351 to ALN 93.591 and $13,260 to ALN 16.556.
Audit Recommendation: We recommend the Coalition develop controls and procedures to correctly distinguish between direct and indirect costs, as well as, procedures to identify and exclude costs that the Uniform Guidance has indicated as unallowable costs.
Management’s Response: OCADSV added an Administrative Cost Center to its General Ledger effective 10/01/22, the beginning of FY23 and began costing administrative payroll cost to that cost center. Additionally, the organization retrained administrative staff on direct cost allowable activities vs. administrative activities relative to timekeeping and timesheet preparation and the necessity of daily work descriptions supporting the hourly allocation. The Payroll policy that requires supervisors to review and sign off on timesheets and hourly allocations to cost centers was also reviewed.
Audit costs for FY22 will be allocated in accordance with 2 CFR 200.405 requirements. Beginning with FY23 all accounting and other admin payroll related cost will be allocated to the administration cost center with the exception of time spent in activities related to a specific grant or other cost center.
FY22 grant expenditures were reviewed post year-end and a line-by-line review was conducted to bring the di-rect and indirect expense cumulative total into compliance with audit findings.
Any outstanding reports were adjusted to reflect the adjusted Life of Grant to current date reporting.
Executive, Financial and Grant Management staff will, during FY24, complete the Online Grants Financial Management Training available at onlinegfmt.training.ojp.gov to improve knowledge and compliance with 2 CFR 200 guidance and requirements. The said training will be incorporated into onboarding processes for any newly hired employee who have direct responsibilities related to grant management and/or reporting