Finding Text
Finding 2023-015 – B. Allowable Costs/Cost Principles – Indirect costs
Information on Federal Program(s) – Research and Development Cluster (ALN 43.009)
Criteria or Specific Requirement – NASA’s Grant and Cooperative Agreement Manual indicates that if a recipient is applying an indirect cost rate to their NASA award, the indirect cost rate must be applied on the basis of the award’s modified total direct cost (“MTDC”), which includes direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $25,000.
Condition – The University did not accurately calculate indirect costs.
Cause - Administrative oversight and insufficient internal control.
Effect or Potential Effect – Noncompliance with cost principles.
Questioned Costs – Below reportable threshold.
Context – The University erroneously charged indirect costs to the grant for equipment/capital expenditures.
Indication of Repeat Finding - No similar findings noted in the prior year.
Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that indirect costs are charged accordingly.
Views of Responsible Officials – The University acknowledges that the allowable indirect costs reimbursed to the University from the NASA federal grant funds was not calculated correctly for fiscal year 2023. In recent years the University has applied for a quarterly no cost extension of the previously used indirect cost rate for federal grant purposes. In March of 2024 the University actively pursued a contract with a firm known as Point Consulting to help reevaluate the currently used in direct cost rate for the University. Pont consulting has been contracted by the university in past years, but the percentage has been simply rolled forward and not adjusted. Going forward the University plans to reevaluate the indirect cost percentage in accordance with federal guidelines. The accounting department will work directly with the Challenger Learning center to make sure that indirect funds are calculated correctly and drawn down in timely and accurate manner.