District Health Department No. 2Local Government

Condition and Criteria: ?2 CRF Part 200 Subpart E ? Cost Principals? requires that all indirect costs be applied on a consistent basis, while considering the reasonableness and equitability of such treatments. Effect: Various federal grants were over or under charged for their equitable portion of the indirect costs. Cause: Management believed that because certain grants did not allow for indirect costs to be drawn down off the grant, that they did not need to be part of the total calculation for determining the portion of indirect costs that should be charged to each grant, thus overcharging the grants that allow for indirect costs to be drawn. Context: All grant activity is tracked separately, with administrative and facility costs being tracked in a separate program. Those administrative and facility costs are then allocated to all of the grant programs, based on square footage being used as well as time charged to each program. The time spent on the programs that did not allow for indirect costs to be drawn down, were fully removed from the calculation, charging 100% of the administrative and facility costs to only those grants that allowed for indirect costs to be drawn. Questioned Costs: $1,721.86 for ALN 10.557 and $7,556.69 for ALN 93.323. Auditor's Recommendation: We recommend that management allocates indirect costs to all programs, regardless of whether or not the program allows for the indirect costs to be drawn down off the grant. Views of Responsible Officials and Planned Corrective Actions: The Health Officer and Finance Team understand the issue and have already implemented procedures to ensure that all programs are charged their portion of the indirect costs.