Finding Text
2022-003 INTERNAL CONTROLS OVER ALLOWABLE COSTS Grantor: Various Award Name: Various Award Year: Various Award Numbers: Various CFDA Number: Various Criteria: Title 2, Chapter 2, part 200 of the Code of Federal Regulations (2 CFR Part 200) establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. An important method of adhering to these cost principles and ensuring allowable and allocable costs are charged to federal programs is through the use of a cost allocation plan. As important as the plan is, internal controls over the cost allocation plan are just as necessary. Nonprofit organizations, local governments, and other grantees must maintain internal controls over the allocation of costs to ensure costs are not over or under allocated, consistency across programs, and that they are traceable back to the accounting records themselves. Condition: During our audit procedures, we noted that the District does not maintain a cost allocation plan and there were no internal controls in place to ensure the requirements referenced in the previous paragraph. The cost allocations as presented on grant financial reports were being made independently and without supporting documentation in the underlying accounting records. Cause: No cost allocation plan has been developed by the District. Effect: There is no linkage between the costs as reported to grantors in financial reports with the underlying accounting records. Questioned Costs: None noted. Recommendation: The District should develop a cost allocation plan and implement internal controls (periodic reconciliations, etc.) to ensure accuracy and consistency with allocations made using the plan. Management?s Views and Corrective Action Plan: Management agrees with this finding and has outlined its resulting actions in a separately issued Corrective Action Plan.