Audit 396857

Item 2025-003 - Reporting - U.S. Department of Health and Human Services, Unaccompanied Alien Children Program (Assistance Listing Number 93.676), FAIN # 90ZU0603, 90ZU0567, and 90ZU0536, for FY 2025 - Significant Deficiency Criteria In accordance with 2 CFR § 200.238 and the terms and conditions of the federal award, the Agency must submit accurate and timely Federal Financial Reports (SF-425) that reflect cumulative expenditures, unobligated balances, and program income as required by the Federal awards. Reports submitted on an annual basis must be due no later than 90 calendar days after the reporting period. Statement of Condition The Agency did not file two of the required annual Federal Financial Reports on a timely basis. Cause The delay occurred due to insufficient internal controls to ensure that federal reporting deadlines are properly monitored and reports are submitted timely. Effect Failure to submit required Federal Financial Reports timely may result in noncompliance with grant reporting requirements and could affect the federal agency’s ability to effectively monitor the use of grant funds. Questioned Costs None Context During our testing of reporting compliance for the year ended June 30, 2025, we noted that the Federal Financial Report for the reporting periods ended March 31, 2025 and April 30, 2025 were submitted after the required deadline. The Federal Financial Report for period ended March 31, 2025 was due on June 30, 2025 and submitted on December 19, 2025. The Federal Financial Report for period ended April 30, 2025 was due on July 30, 2025 and submitted on February 10, 2026. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend that management of the Agency implement procedures to track all federal reporting deadlines and ensure that reports are reviewed and submitted timely. This could include maintaining a centralized grant reporting calendar and implementing supervisory review prior to submission. Management Response Management agrees with the finding. The delays in the SF-425 filings were directly impacted by the data reconciliation challenges encountered during the NetSuite implementation and the mid-year transition to BTQ Financial. During the system migration, the Agency implemented additional verification steps to ensure the integrity of cumulative expenditure data, which contributed to the filing delays. With the NetSuite environment now stabilized, the Agency has prioritized adherence to federal deadlines. With the outsourcing to BTQ now fully operational, a centralized Federal Grant Reporting Calendar has been established. This calendar includes automated alerts for all 30/60/90 day deadlines. BTQ has also implemented a dual-level supervisory review process to ensure that all future reports are validated against the general ledger and submitted well in advance of federal deadlines.

Item 2025-004 - Cash Management - U.S. Department of Health and Human Services, Unaccompanied Alien Children Program (Assistance Listing Number 93.676), FAIN # 90ZU0603, 90ZU0567, and 90ZU0536, for FY 2025 - Significant Deficiency Criteria Nonfederal entities other than states are required to have internal controls in place to ensure compliance with the requirements of cash management that are contained in 2 CFR sections 200.302(b)(6) and 200,305, 31 CFR Part 205, 48 CFR sections 52.216-7(b) and 52.232-12. Statement of Condition During our audit, we noted that there is no evidence of review and approval of drawdowns from the Unaccompanied Alien Children Program and the supporting records. In addition, there was an excess drawdown identified by the Agency which had to be returned to the funder. Cause Insufficient internal controls over the cash drawdown process, including the absence of documented review and procedures to ensure that drawdowns are based on immediate cash needs. Effect Failure to document review and approval of drawdowns may result in unauthorized or incorrect drawdowns from the Unaccompanied Alien Children Program. Furthermore, drawing funds in advance of immediate cash needs increases the risk that federal funds are held for longer than permitted, which could result in federal agencies requiring repayment of interest or other corrective actions. Questioned Costs None Context Although there is no evidence of review and approval of the drawdowns, the amounts of the 2 sample drawdowns tested agreed to the underlying records and supporting documents. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend that management of the Agency implement formal controls over the drawdown process that includes establishing procedures requiring documented supervisory review and approval of all drawdown requests and ensuring drawdowns are based on immediate cash needs so that federal funds are expended within a reasonable amount of time. Management Response Management of the Agency is in agreement with this finding.The lack of documented evidence for drawdown approvals resulted from the transition from the internal fiscal department to the outsourced model managed by BTQ Financial. Due to significant turnover, the Agency was unable to produce historical documentation of reviews for the audit period. BTQ has a formalized process where the duties are segregated, and approvals are documented. The Agency, in collaboration with BTQ Financial, has implemented a formalized "Drawdown Authorization Protocol." This new workflow improves upon the existing, and adds a standardized approach to every drawdown request, documented supporting schedules (showing immediate cash needs), and a formal approval from BTQ’s Project Manager, Senior Vice President of Finance, Vice President of Finance, or Assistant Vice President of Finance. This ensures a clear audit trail and prevents the accumulation of excess federal cash on hand.