U.S. DEPARTMENT OF EDUCATION MAGNET SCHOOLS ASSISTANCE - AL NUMBER 84.165A AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Cash Management Criteria or specific requirement: 2 CFR § 200.305 requires that for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. In addition, interest earned on federal funds up to $500 per year may be retained by the non-Federal entity for administrative expenses. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be returned annually to the Department of Health and Human Services Payment Management System. Condition: On March 21, 2025, the District made a drawdown of Magnet Schools Assistance Program (MSAP) funds totaling $804,310, which consisted of reimbursements of $62,794 and advance payment of $741,516. From March 21, 2025 through June 30, 2025, the District incurred expenditures of $321,608 while also drawing down additional funds of $87,216 and $99,155 on April 30, 2025, and May 30, 2025, respectively. This resulted in significant time elapsing between the drawdown of funds and the disbursement of the funds by the District. At June 30, 2025, the District had $606,279 of excess federal award funds on hand. Cause: Lack of internal controls in place surrounding the drawdown of funds. Effect or potential effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement can result in program non-compliance and loss of program funds. In addition, excess drawdowns can lead to interest earned on federal advance payments, which mut be returned in excess of $500 per year. Questioned costs: None Context: An examination of three of six cash drawdowns and supporting documentation revealed excess funds drawn, because the District did not adjust future draws or return excess funds. Identification as a repeat finding: No Recommendation: The District should implement internal control processes and monitoring for MSAP cash drawdowns and ensure drawdowns are timed with the District's immediate cash requirements. Views of responsible officials: The District has implemented an internal control process that requires the review and approval of detailed expenditure reports and G5 drawdown amounts prior to submission. The review process includes the Director of the Magnet Program, Finance Coordinator, Executive Director of School Leadership, and the Business Manager to ensure accuracy, compliance, and proper authorization before completion.