Finding Text
Compliance and Internal Control Systems Over Allowable Costs/Cost Principles and Cash Management - U.S. Department of Health & Human Services, Refugee and Entrant Assistance State/Replacement Designee Administered Programs, Assistance Listing Number 93.566
Criteria: As defined in 45 CFR 75, the auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award, including all allowable indirect and fringe cost rates.
Condition: The Center requested indirect costs in excess of expenses incurred.
Cause: The Center utilized a historical process to calculate and request indirect costs for reimbursement that was not updated to account for the increase in federal grant awards during the fiscal year.
Effect: Reimbursement requests related to indirect costs not incurred resulted in the Center receiving federal award funding in excess of what was allowable.
Known Questioned Costs: Requests for reimbursement of indirect costs exceeded indirect costs incurred by $51,980 for this federal award program.
Repeat Finding: No
Recommendation: We recommend that management design and implement a system whereby only incurred and allowable indirect expenses are submitted for reimbursement.
Views of Responsible Officials and Planned Corrective Actions: The Center experienced significant growth in its federal awards during the fiscal year that were not commensurate with the growth in its overhead and indirect costs. As a result, the processes used in prior years to capture and request indirect costs for reimbursement were no longer effective. The Center will reconcile the accounting class utilized in its general ledger system at least quarterly to ensure indirect costs incurred are equal to or exceed the indirect costs requested for reimbursement under federal grant awards.