Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Higher Education Institutional Aid – Fostering Inclusive Excellence for STEM
Achievement
Assistance Listing Number: 84.031C
Award Period: July 01, 2022 - June 30, 2023
Type of Finding:
Significant Deficiency in Internal Control over Compliance, Other Matters
Criteria or specific requirement: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. (CFR 200.405)
Condition: During testing of indirect costs, it was noted that the University did not properly calculate the allocation of indirect costs.
Questioned costs: $15,710.
Context: During our testing, it was noted that the University used the budgeted amount of indirect costs from the grant agreement instead of calculating the indirect costs based on actual direct costs incurred multiplied by the University’s negotiated indirect cost rate. It was also noted that the grant period for year 1 was October 1, 2021 through September 30, 2022 and that majority of indirect costs for that period were claimed in fiscal year 2023 instead of as the direct costs were incurred.
Cause: By utilizing the budgeted amount instead of calculating the indirect costs for the period based off actual expenditures, $15,170 of indirect costs were claimed that should not have been.
Effect: The University is not in compliance with allowable cost principles.
Repeat finding: No.
Recommendation: We recommend the University calculate the indirect costs when the direct cost is incurred instead of claiming the amount per the budget to ensure indirect costs are consistently calculated and allocated throughout the grant term.
Views of responsible officials: Management agrees with the finding.