Finding Text
Criteria: Under the requirements 45 CFR 1630 Cost Standards and Procedures, the Organization is required to accurately distribute costs incurred in each program using a manner that benefits the grant or contract and other work in a reasonable proportion to the benefits received. Conditions/Context: The allocation of indirect costs related to the programs were not reflective of the benefits received by each program. Cause: The accounting manual dictates that the cost be allocated quarterly based on the hours worked on each program. The deficiency was caused by the allocations not being updated during hte year to reflect actual hours worked. Effect: The failure to update the cost allocations resulted in costs being allocated to various programs that was not reflective of the benefits they actually received. Recommendation: We recommend the Organization review it's processes around the cost allocation method and devise a program to ensure the cost allocation is updated quarterly based on actual hours consumed by each program.