International Leadership of Texas, Inc.

Finding 2025-001: Allowable Costs/Cost Principles – Significant deficiency in internal controls over compliance and compliance finding. Title I ALN 84.010. Criteria: ILTexas is required to comply with allowable cost principles as detailed in 2 CFR 200, Subpart E. Condition: During allowable cost payroll testing for the program, one out of twenty-five samples selected contained unallowable costs, in violation of 2 CFR 200.431(i). Cause: ILTexas terminated a program employee and paid out the remainder of their contract. The contract payout was charged to the grant in error. Effect: Unallowable costs were erroneously charged to the grant. ILTexas has reduced a future grant billing to refund the uncollectable cost to the grantors. Questioned costs: None reported. Recommendation: ILTexas should implement controls over payroll that ensures unallowable costs, such as contract payouts, are detected and appropriately omitted from grant reimbursement requests. Management’s response: See corrective action plan.