Finding Text
U.S. Department of Education Pass-Through Iowa Department of Education Education Stabilization Fund: COVID-19 Elementary and Secondary School Emergency Relief (ESSER II) Fund; COVID-19 Governor’s Emergency Education Relief (GEER II) Fund; COVID-19 ARP-Elementary and Secondary School Emergency Relief (ARP ESSER); COVID-19 ARP-Elementary and Secondary School Emergency Relief-Homeless Children and Youth (ARP-HCY); Finding: The District overcharged indirect costs to the Education Stabilization Fund program. Criteria: The 2 Code of Federal Regulation (CFR) Part 200, Subpart E provides guidance on the provisions of indirect costs. Indirect cost rates are applied to modified total direct costs (MTDC). 2 CFR 200 defines MTDC as: All direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs. Condition: The District did not apply the indirect cost rate to the correct modified total direct cost allocation base. The District applied the indirect cost rate to total expenditures of the ESSER II award of the Education Stabilization Fund without first reducing the allocation base by the total indirect costs already included and by the capital outlay object expenditure amounts. Cause: The District does not prepare a calculation of the modified program direct costs before applying the indirect cost rate. Effect: The District could overcharge federal awards for indirect costs. Questioned costs: The District overcharged the program $94,605 computed by applying the unrestricted indirect cost rate provided by the Iowa Department of Education to the modified total direct cost allocation base which excluded the indirect cost journal entry posted by the District and capital outlay object expenditure amounts. Context: The overcharge represents approximately 1 percent of the ESSER II award modified total direct cost allocation base and approximately 0.5 percent of the total Education Stabilization Fund program modified total direct cost allocation base. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend the District annually prepare an indirect cost worksheet to compute the modified total direct cost allocation base for all federal awards to apply indirect cost rates. Response and Corrective Action Plan: The District will annually prepare a calculation of the modified total direct cost allocation base for all federal awards before applying the indirect cost rate to federal programs.