Audit 380884

Finding 2024-002: Reportable finding considered a material weakness - Cash Management Program Name: Environmental and Scientific Partnerships and Programs Assistance Listing: 19.017 Federal Awarding Agency: US Department of State Federal Award Number: SAQMIP22CA0082 Pass-through Entity: N/A - Direct Award Pass-through Entity Award Number: N/A Criteria: Federal regulations under 2 CFR §200.305 require recipients of Federal awards to maintain written procedures that minimize the time between the receipt and disbursement of Federal funds, to deposit advance payments in interest-bearing accounts when applicable, and to remit interest earned in excess of $500 annually to the Federal government. Entities are also required to have adequate internal controls to ensure that drawdown and reimbursement requests are properly reviewed, approved, and supported by allowable expenditures. Condition: Two instances were identified in which advance funds were not disbursed within a reasonable period after receipt. In both cases, the funds were not maintained in an interest-bearing account. Additionally, reimbursement requests lacked secondary approval and were not supported by detailed underlying expenditures at the time of submission. Cause: The Foundation had not established formal written procedures for managing Federal cash advances. The absence of defined processes and review controls contributed to delays in disbursement, lack of supporting documentation, and noncompliance with the interest-bearing account requirements. Effect: The absence of formal written procedures and consistent oversight increases the risk that Federal cash-management requirements may not be fully met. Without clear guidance and monitoring, the organization may be unable to demonstrate that advances are disbursed timely, maintained appropriately, and supported by sufficient documentation. This condition reflects a deficiency in internal control over compliance rather than a material impact on the financial statements or program expenditures. Repeat Finding: This is not a repeat finding. Questioned Costs: $592.97, representing the estimated interest that should have been remitted to the Federal agency. Perspective: While the transactions noted represent a limited portion of total Federal expenditures tested, the frequency and nature of the exceptions indicate that the issue is systemic rather than isolated. Although the related dollar amounts are not significant in the context of overall Federal program expenditures, the underlying control weaknesses increase the risk of future noncompliance if not addressed. Recommendation: - It is recommended that the Foundation: 1. Develop and implement written cash-management procedures that comply with Federal regulations. 2. Ensure that advance funds are disbursed timely and only as needed to meet immediate program cash requirements. 3. Maintain advance funds in interest-bearing accounts unless an exemption applies. 4. Establish a formal review and approval process for drawdown and reimbursement requests, supported by detailed documentation. 5. Remit any interest earned in excess of $500 annually to the appropriate Federal payment system. Management's response and corrective action plan (unaudited): See corrective action plan.