Audit 390586

Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S Department of Health and Human Services Award No. 6 H80CS08765-18-08, March 1, 2025 – February 28, 2026 Criteria or Specific Requirement – Cash Management – 45 CFR 75.305 Condition – The Organization’s internal controls over the cash drawdown process were not operating effectively to minimize the time elapsing between the transfer of funds to the Organization from the U.S. Treasury and the issuance of payments for program purposes by the Organization. Cause – The Organization did not comply with their federal cash drawdown policy or federal grant cash management requirements. Effect or potential effect– Grant funds were drawn down sooner than administratively necessary. Questioned Costs – None Context – The Organization did not follow their process of determining whether sufficient grant expenditures had been incurred and disbursed prior to drawing down grant funds. Grant funds were drawn down prior to disbursements of expenditures within the grant period for $150,939 for one draw out of twelve draws during the fiscal year ended October 31, 2025. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – The Organization should ensure procedures are followed to prevent cash draws from being drawn down prior to disbursement of allowable expenditures. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the cash management finding and the corrective action needed to ensure compliance with drawdown submissions, specifically the need to ensure that the timing of monthly drawdowns is supported by expenditures that have been incurred and paid prior to request for funds. To correct this, we have created an updated schedule to ensure allocated expenditures have already been incurred and adjusted the timing of drawdown request submissions to occur during the first week of the following month to ensure all allocated expenses have been incurred and paid. All parties involved in the cash management process for the Base grant funding have been notified. These changes are in effect as of January 2026. Sherri Edwards, Director of Grants, will update timing of the preparation of drawdowns as noted. Brandon Cannon, Accounting Manager, will update the new monthly schedule to ensure that reimbursement status is maintained. Sam Lammers, CFO, will review the prepared monthly drawdown request to ensure updated procedures are properly applied.