Audit 386085

Federal Program: U.S. Department of Agriculture Assistance Listing Number 10.331 Gus Schumacher Nutrition Incentive Program Compliance Requirement: Cash Management Criteria: Federal cash management regulations require recipients of grant funds to minimize the time between the transfer of funds and the disbursement of those funds. Specifically, drawdowns must be limited to the immediate cash needs of the program in accordance with applicable regulations and grant agreements, including requirements that funds be disbursed promptly after receipt. Condition: Iowa Healthiest State Initiative drew down an advance of $575,000 in federal funds in February 2025. Instead of being disbursed immediately for program costs, most funds were expended gradually over the subsequent months. Cause: The improper drawdowns resulted from management's misinterpretation of applicable cash management requirements, which led to drawdown requests that exceeded immediate program needs. Questioned Costs: The $575,000 drawdown made in February 2025 is considered a questioned cost; however, it was subsequently used over the following months of the fiscal year for allowable expenditures, except for $22,537 for the Rx program. Based on our testing, all funds, except for $22,537 for the Rx program, were spent on eligible costs and supported by appropriate documentation as of September 30, 2025. Potential Effects: As a result, Iowa Healthiest State Initiative did not comply with cash management requirements, increasing the risk of unallowable interest earnings, misuse of funds, and potential questioned costs. These practices may subject Iowa Healthiest State Initiative to financial sanctions, repayment of excess funds, or increased oversight by the awarding agency. Recommendation: We recommend Management review compliance requirements for understanding and developing procedures to ensure adherence to cash management requirements. Responsible Official's Response: Management agrees with the finding and recommendation.