Finding Text
2023-004 INTERNAL CONTROLS OVER ALLOWABLE COSTS
Grantor: Various
Award Name: Various
Award Year: Various
Award Numbers: Various
Assistance Listing 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 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 although the Center maintains a cost allocation
plan, there were no internal controls in place to ensure the plan was achieving the requirements referenced
in the previous paragraph. The cost allocation plan was effectively existing and operating independently
from the underlying accounting records.
Cause: No individuals at the Center were periodically performing reconciling and other activities which
would have served to ensure the cost allocation plan and underlying accounting records were in line and
consistent.
Effect: The Center incurs the risk of allocating disallowed costs to federal programs contrary to Federal
Regulations.
Questioned Costs: None noted.
Recommendation: The Center should implement internal controls (periodic reconciliations, etc.) to
ensure accuracy and consistency in allocations.
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.