Finding Text
Criteria: The allocation of direct and indirect costs of grants should be reasonable and fair. Condition: The allocation of grant expenses, for which budget approval is pending, were improperly included as administrative expenses and no accrual of grant revenue was recorded. Cause: Allocation system was flawed. Effect: The matching of revenues and expenses to the proper period was not accounted for properly. Recommendation: We recommend that management develop and implement procedures to allocate direct and indirect costs fairly, and to provide a review process for the same.