Audit 410915

Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, recipients must minimize the time elapsed between the transfer of funds from the federal awarding agency and disbursement for program purposes. Further, advance payments 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. Unless certain exceptions apply, the entity must deposit those funds in interest-bearing accounts and must remit any interest earned on advances in excess of $500 per year to the federal agency. Condition: During our audit of the Organization’s federal awards, management identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into an insured interest-bearing account required as required by the Uniform Guidance. Questioned Costs: $2,733 in interest in excess of $500 Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: Interest that should have been earned on federal advance payments may not have been earned, calculated, or remitted to the grantor in excess of $500. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Repeat finding: This is a repeat of the prior year finding 2024-001. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.