Audit 382353

2025-001 – Internal Control Over Compliance and Compliance with Cash Management Identification of the Federal Program: U.S. Department of State Assistance Listing Number: 19.415 Assistance Listing Name: Professional and Cultural Exchange Programs – Citizen Exchanges Pass-through Identifying Number: N/A Criteria or Specific Requirements – In accordance with §200.305(b)(8), Federal Payment, advance payments must be deposited in interest bearing accounts unless one of the four exceptions apply. In accordance with §200.305(b)(9), Federal Payment, interest earned on amounts up to $500 per year may be retained by the non-Federal entity for administrative purposes. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition – We noted the Organization maintained the advance payments on Federal awards in interest-bearing accounts, however, the advances were comingled with other funds and the Organization did not track the interest earned on the federal advances that needs to be remitted to the Department of Health and Human Services Payment Management System (PMS). Cause – The Organization does not have a dedicated interest-bearing bank account to maintain advance payments on Federal awards. In addition, it does not have a process in place to track interest earned on Federal advances that are comingled with other funds. This was due to the fact that the Organization’s Federal awards are primarily on reimbursement basis until during the fiscal year 2025, when the Organization was required to draw advances from its Federal awards due to changes in political landscape. Effect – In the absence of a dedicated interest-bearing bank account to maintain Federal advances or a system in place to calculate the amount of interest earned on Federal advances comingled with other funds resulted in the Organization not returning funding to the U.S. Government, as required. Questioned costs – The Organization received approximately $17.2 million during March 2025, which were disbursed in April, May and June 2025. Total interest earned on the bank account where the unused federal advances were deposited in April, May and June 2025 was $258,799. The total of the computed pro-rated interest earned on the advances that need to be remitted to the Department of Health and Human Services Payment Management System was $153,449. Context – The nature of these findings is detailed in the condition section above. Repeat Finding – This finding is not a repeat finding from prior year. Recommendation – We recommend that management ensure compliance with the cash management policies that align to U.S. Government funding requirements related to interest on cash advances. Specifically, we recommend that the Organization calculates the interest earned on Federal advances and remit the interest earned in excess of $500 to the Federal government within 12 months when the advances were received. Views of Responsible Officials – Management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.