Audit 366828

Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.

Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.