Finding 601785 (2022-003)

FINDING 2022-003 Assistance Listing Numbers 97.024 Emergency Food and Shelter National Board Program Federal Agency U.S. Department of Homeland Security Pass-through Agency Not Applicable Award Numbers / Years 2022 City Departments Office of Budget and Management Criteria: The Funding Guidance provided to the City by the Federal Emergency Management Agency states that the program does not allow the use of indirect cost rates. Administrative costs that support relief services are allowable. Limitations on the allowability of expenditures under federal programs apply to both the City as the direct recipient as well as any subrecipients awarded program funds by the City. Condition/Context: The transactions selected in our sample consisted of reimbursements to subrecipients. One of the five sampled transactions was for administrative costs charged to the program utilizing a percentage of direct costs rather than identifying specific administrative costs that support relief services. Our sample was not statistically valid. Effect: Unallowable costs may have been charged to the program by the City via its subrecipient agreements. Questioned Costs: Known questioned costs for ALN 97.024 consist of unsupported administrative cost reimbursements made to subrecipients in the amount of $230,902. Cause: City personnel responsible for administering the award did not prohibit subrecipients from including administrative costs charged as a percentage of direct costs in the program expenditures presented in their vouchers. Recommendation: We recommend the City determine the amount of ineligible administrative costs charged to the City and determine if the funds should be returned to the federal government or if they can be used to provide additional services under the program. Views of Responsible Officials: See Corrective Action Plan.