Finding Text
Assistance Listings number and name 84.425F COVID-19 Education Stabilization Fund?Higher Education Emergency Relief Fund (HEERF) Institutional Portion Award number and years P425F201546-20B, May 6, 2020 through June 30, 2023 Federal agency U.S. Department of Education Compliance requirement(s) Allowable costs/cost principles Questioned costs $4,249,864 Condition?Contrary to federal guidance and regulations and the District?s federal indirect cost agreement, the District overcharged $4,249,864 of indirect costs to its HEERF program?s institutional portion during fiscal year 2022. Specifically, the District charged a total of $4,301,518, but its federal indirect cost agreement allowed it to charge no more than $51,654 when correctly applying and calculating the agreement?s base and allocation, thus it overcharged nearly $4.25 million. These unallowed indirect costs comprised 64 percent of the program?s total federal award expenditures for fiscal year 2022. Effect?The District?s spending $4,249,864 more on indirect costs than allowed resulted in less monies available to spend on allowable program costs for addressing institutional and student needs, such as defraying costs associated with COVID-19 (including lost revenue and payroll) and making additional financial grants to students. Also, the U.S. Department of Education may require the District to repay the misspent monies in accordance with Uniform Guidance requirements.1 Cause?The District?s administration reported to us that it misinterpreted its federal indirect cost agreement when applying and calculating its indirect cost base and allocation. Further, the District did not follow its procedures for receiving written confirmation from its grantor of its indirect cost calculation method. Criteria?District procedures require employees to follow what is stated in the grant award notice, and verify and receive written confirmation from its grantor of the calculation method when calculating indirect costs when calculating indirect costs (Yuma/La Paz Counties Community College District's Grants Desk Manual, Grant Indirect Costs). Additionally, federal guidance and regulations require the District to follow its federal indirect cost agreement to apply and calculate indirect costs allocated to federal programs at the specific percentages for specific costs that comprise the program?s base expenditures.2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 Code of Federal Regulations [CFR] ?200.303). Recommendations?The District?s administration should: 1. Follow written procedures for applying and calculating indirect costs to its federal programs, including following and correctly applying the award?s base rate and allocation, which is stated in its grant award notice, and verifying and receiving written confirmation from its grantor of its calculation method when charging indirect costs to federal programs. 2. Work with the U.S. Department of Education to resolve the $4,249,864 of unallowable costs it allocated to the federal program. The District?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the District, takes appropriate and timely corrective action (2 CFR ?200.513[c]). Further, it requires that federal awarding agencies? management decisions clearly state whether the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR ?200.521). 2 U.S. Department of Education. (2021). Higher Education Emergency Relief Fund III?Frequently Asked Questions, Question 43. Retrieved 12/13/2022 from https://www2.ed.gov/about/offices/list/ope/arpfaq.pdf. Also, U.S. Office of Management and Budget. (2021). 2 CFR 200.414 and Appendix III to 2 CFR Part 200?Indirect (F&A) Costs Identification and Assignment, and Rate Determinations for Institutions of Higher Education. Retrieved 12/13/2022 from https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200#sg2.1.200_1411.sg11%22.