Review of Contracted Training Costs Allocated to Federally-Funded Programs Administered by the Florida Department of Health and Rehabilitative Services

EXECUTIVE SUMMARY:

The objective of the review was to determine the allowability of contracted training cost allocated to federally funded programs administered by the Florida Department of Health and Rehabilitative Services (DHRS) during State Fiscal Years (SFY) ending June 30, 1994 and 1995.

Our review of Title IV-E contracted training cost showed:

* Administrative cost exceeded the maximum amount allowed under State law by $626,071. The DHRS believed it was permissible to use such excess administrative cost to meet Federal matching requirements. According to a DHRS official, the State has discontinued reporting cost in excess of the capped amount.

* Cost recorded in DHRS' accounting records was $148,627 less than cost reported to the Federal Government. We believe reported cost exceeded recorded cost because of flaws in the computerized grant reporting system recently implemented by DHRS.

* Administrative cost totaling $172,653 ($98,635 for SFY 1994 and $74,018 for SFY 1995) was claimed at an enhanced Federal Financial Participation (FFP) rate rather than the lesser administrative cost rate. A DHRS official said it was an administrative oversight that caused DHRS to claim administrative cost at an enhanced rate rather than the appropriate lesser rate.

We are recommending DHRS make a financial adjustment of:

* $626,071 ($469,554 FFP) applicable to administrative cost in excess of the amount allowed by State law,

* $148,627 ($111,470 FFP) applicable to cost reported in excess of cost recorded, and

* $74,018 (FFP) applicable to administrative cost claimed for SFY 1995 at an enhanced rate rather than the lesser administrative cost rate.

We also recommend that DHRS:

* limit future administrative cost claims to amounts allowed by State law,

* identify and correct the flaws in its new computerized grant reporting system, and

* calculate future claims for administrative cost using the federally established administrative cost rate rather than the enhanced FFP rate.

In written comments to our draft report, DHRS agreed with our recommendation.