To: Megan Meermans, Headquarters Business Manager
From: Robyn Lamb, External Audit Manager
cc:
- Lori Copeland, Controller’s Office, Operations
- Brooke Dunn, Headquarters Business Office
- Kent Peterson, Headquarters Business Office
- Michael Standke, Headquarters Business Office
- Isabel Ferrer Gonzalez, Headquarters Business Office
- Carol McBroom, Pikes Peak Area Council of Governments, Finance Director
Date: July 19, 2024
Re: Pikes Peak Area Council of Governments – Fiscal Year 2025 Approved Indirect Cost Rate
Background
When a local agency, nonprofit organization, or transit agency proposes an indirect cost rate to be used in a Colorado Department of Transportation (CDOT) grant agreement, the Audit Division (Audit) reviews the proposal to determine compliance with federal regulations. In June 2024, Pikes Peak Area Council of Governments’ (PPACoG) Finance Director submitted a request for review of the proposed fiscal year 2025 indirect cost rate, which was prepared using expenditures from the year ended December 31, 2023. PPACoG is a local government agency, comprised of 16 counties and municipalities, with a mission to ensure that all communities have a forum to discuss issues that cross their political boundaries, identity shared opportunities and challenges, and develop collaborative strategies for action.
Objective and Scope
The objective of Audit’s review was to determine whether PPACoG’s proposed fiscal year 2025 indirect cost rate complies with 2 CFR 200. The scope of our work was limited to PPACoG’s most currently calculated indirect cost rate. Audit did not evaluate the accuracy of the PPACoG’s financial statements that were used to calculate the rate. Instead, we relied on its independent auditor’s opinion of the audited financial statements, if applicable. Although we do not conclude on the accuracy of the entity’s financial statements, nothing came to our attention to indicate that the financial statements were unreliable.
Methodology
The process used to complete this review included:
- Obtaining and reviewing PPACoG’s fiscal year ended December 31, 2023, audited financial statements and Independent Auditor’s Reports
- Comparing PPACoG’s proposed fiscal year 2025 indirect cost rate to the audited financial statements
- Conducting a three-year trend analysis of PPACoG’s indirect cost rates, allocation base, and indirect cost pools
- Reviewing costs for allowability
- Recalculating the proposed indirect cost rate and carry-forward calculation, if necessary
- Discussing costs and calculations with PPACoG and/or its independent auditor, if necessary
Conclusion
PPACoG’s proposed fiscal year 2025 indirect cost rate of 47. 92 percent appears to comply with 2 CFR 200. This rate should be used in the calculation for prospective billings and applied to PPACoG’s direct salary and fringe benefit costs incurred from October 1, 2024, through September 30, 2025. In addition, the 47. 92 percent rate and the related $54, 155 underapplied carry-forward amount should be used by PPACoG in the calculation of its proposed fiscal year 2026 indirect cost rate.
If additional information is required, please contact Kyle Oliveria, Lead Auditor, at kyle.oliveria@state.co.us.