Audit 399062

Condition: CRMHS’ internal controls were not functioning as designed to ensure that federal draw requests were reviewed and reconciled to underlying allowable expenditures for the above program, resulting in CRMHS drawing down federal funds in advance of immediate cash needs. Criteria: Under 2 CFC Part 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes. Funds should only be drawn down as need for immediate cash requirements.Cause: CRMHS made a draw prior to the year ended June 30, 2024 in excess of what was needed for immediate cash needs.Effect: Holding excess federal funds for extended periods can result in non-compliance with federal regulations and could potentially increase the risk of mismanagement or misuse of funds.Questioned Costs: $155,949. Recommendation: We recommend management review the current controls over cash management procedures and ensure a proper reconciliation of all federal draw requests to supporting expenditure records prior to submission of the draw request.View of responsible officials: CRMHS management concurs with the finding. During the fiscal year ended June 30, 2024, CRMHS did not consistently operate internal controls over federal cash management as designed. Specifically, a federal draw was processed in excess of immediate cash needs and was not fully reconciled to supporting allowable expenditures prior to submission. This resulted in federal funds being drawn in advance of program disbursement requirements.Management acknowledges that this practice does not comply with 2 CFR §200.305, which requires non-federal entities to minimize the time between drawdown of federal funds and their disbursement for program purposes.While the funds were ultimately expended on allowable program costs, the timing of the draw created a compliance exception and reflects a material weakness in internal control over compliance. Management takes this matter seriously and has implemented corrective measures to strengthen cash management oversight and reconciliation procedures. The Chief Financial Officer is responsible for the implementation and oversight of these corrective measures.