MEMORANDUM AUDIT REPORT NO. 80-52, REVIEW OF PLANNED PARENTHOOD FEDERATION OF AMERICA, INC.

Evaluation dated 4/28/80, was based on a review of PPFA project files. PPFA"s overhead should be adjusted downward. Computations indicate that the overhead costs for 1975 and 1976 were lower than the rates proposed by PPFA and Audit Report No. 80-21. A.I.D."s contracting officer should therefore seek a refund of $309,541. Under Grant AID/Pha-G-1131, PPFA procured office equipment in the amount of $16,281 with A.I.D. funds and applied the overhead rate, despite an agreement with A.I.D. not to include commodities in overhead costs. It is recommended that office equipment purchases be included in the commodity cost category. Recommendations 1-5 listed in Audit Report No. 80-21 remain open, pending resolution by the Contracting Officer. However, recommendations 6 and 7 are considered closed and, as a result of this review, have been restated as follows: AID/W"s Office of Contract Management (SER/CM) should review the auditor"s evaluation of overhead costs and negotiate final overhead rates for the years 1975 and 1976 pursuant to the requirements of the grants. SER/CM should also review with PPFA the principles for the future allocation of overhead to the A.I.D. grant as a basis for achieving mutual agreement on written guidelines for overhead determination and audit response. The recomputation of PPFA"s overhead rates were discussed with A.I.D."s contracting officials and they agreed with auditors" methodology for computing overhead.