Finding Text
2022 ? 003: Allowable Costs/Cost Principles Federal agency: U.S. Department of Transportation Federal program: Formula Grants for Rural Areas Assistance Listing Number: 20.509C Award Period: 1/1/2022 ? 12/31/2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Guidance allows nonprofit organizations to use an indirect cost rate allocation that is approved by the grantor. The costs being allocated must not include unallowable costs. Condition: The Organization?s indirect cost calculation does not match the cost allocation approved by the state. This has resulted in less indirect costs being allocated to the grant compared to what is allowed based on the approved allocation plan. In addition, advertising and depreciation costs are included in the amount allocated to the grant which are not allowable costs. Questioned costs: None Context: We selected three months of allocation calculations, noting none of them to match the Organization?s cost allocation policy approved by the grantor. Cause: The Organization has not taken steps to correct the calculation being used to allocate indirect costs. Effect: Using the current cost allocation method versus the approved plan has resulted in less costs being allocated to the grant than what is allowed under the plan. This has resulted in the Organization needing to pay back unused funds that could have otherwise been allocated to the grant. Repeat Finding: No Recommendation: We recommend the Organization review its policy and determine if there needs to be an amendment to its policy, or the calculations need to be updated to reflect the approved policy. Views of responsible officials and planned corrective actions: There is no disagreement with the finding.