Audit 394450

U.S. Department of Health and Human Services – Health Resources and Services Administration Finding 2025-004: Material Weakness in Internal Control and Material Noncompliance – Allowable Costs/Cost Principles & Cash Management – Community Project Funding/Congressional Directives Program #93.493 Statement of Condition: During our audit, we noted that federal funds available under the grant were drawn in advance and were used for purposes other than those stated in the grant agreement. Criteria: In accordance with 2 CFR 200.304(a), costs must be “necessary and reasonable for the performance of the Federal award”. Also, per 2 CFR 200.305(b), “Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs.” Effect of Condition: Federal funds were inappropriately drawn in advance and used on unallowable costs. Questioned Costs: The questioned costs total $9,574,454, which represent federal funds drawn in advance and used for purposes other than stated in the grant agreement. Cause of Condition: The College does not consistently follow its policies and procedures related to federal grant funding. Recommendation: We recommend that the College enforce its cash management policy and ensure that controls surrounding cash management of federal funds are in accordance with 2 CFR 200.305(b). Management’s Response: Management agrees and will submit a Corrective Action Plan.