Finding Text
Finding 2022-002: Allowable Costs/Cost Principles - Federally Approved Indirect Cost Rate (Material Weakness) Criteria: Organizations must obtain a federally approved indirect cost rate if they elect not to use the de minimis 10% indirect cost rate. The indirect cost rate must be based on analysis performed over actual indirect costs incurred compared to direct costs incurred and charged to the federal program. Statement of Condition: Shatterproof elected not to utilized the de minimis 10% indirect cost rate. Shatterproof did not obtain federal approval of the indirect cost rate that was charged to the government contracts. Cause: Documentation of the calculation of the indirect cost rate was not maintained and federal approval of the indirect cost rate charged to the government contracts was not obtained. Effect: Management did not have sufficient documentation for the indirect cost rates charged to the government contracts. Questioned Costs: $47,530 Identification of Repeat Finding: No Recommendation: We recommend that management implement policies, controls and procedures to ensure the indirect cost rate that is charged to government contracts is calculated in accordance with the requirements of the Uniform Guidance, or utilize the 10% de minimis indirect cost rate that is allowable by the Uniform Guidance. View of Responsible Officials: Management is in agreement with the finding. Management is in the process of implementing additional policies, procedures and controls to ensure indirect costs do not exceed the 10% de minimis cost rate.