Finding Text
Finding No. 2022-003: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Health and Human Services (HHS) Program: ALN: 93.829, Section 223 Demonstration Programs to Improve Community Mental Health Services Criteria: Program requirements state that only allowable indirect expenses to support the program can be charged to the program under the grant. Condition: The Organization utilized an internal general and administrative allocation percentage to charge indirect expenses to the program instead of the ten percent de minimus rate elected to be used by the Organization and allowed under the program. Cause: An error in the determination of the amount of indirect costs to be charged to the program was made and an appropriate review of the program billings was not performed by a member of management. Effect: Excess indirect costs were charged to the program. Improper reporting could result in the HHS withholding payments or recouping payments to the Organization. Questioned Costs: $47,736 was the total calculated amount that was over charged to the program by using the Organization?s internal general and administrative allocation rather than the ten percent de minimus rate during the year ended June 30, 2022. Context: Indirect expenses charged to the program were in excess allowable costs using the ten percent de minimus rate. Recommendation: We recommend the Organization implement additional trainings for management and operations staff working on the program to ensure a thorough understanding of the program and the related allowable costs and that management implement additional control procedures for the review of the allowability of expenses charged to the program. View of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.