FA 2025-001 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016 (Year: 2021) Questioned Costs: None Identified Description: The School District made cash drawdowns in excess of immediate cash needs of the Comprehensive Literacy Development program. Background Information: The School District may request Comprehensive Literacy Development program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the Comprehensive Literacy Development program funds are typically disbursed to the School District through an electronic payment process the next week. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance Section 200.305(b) state, “For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement by the recipient or subrecipient…” In addition, the Uniform Guidance Section 200.302(b)(6) requires that the entity develop written cash management procedures. Condition: A review of all cash drawdowns and disbursements related to the Comprehensive Literacy Development program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Excessive cash balances totaling as much as $43,073.23 were maintained for a cumulative total of 94 days throughout FY25, occurring across multiple periods, with the longest continuous occurrence lasting 41 days. Cause: In discussing this issue with the School District, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred fund and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for the Comprehensive Literacy Development program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Comprehensive Literacy Development program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur a review of the cash ledger for the Comprehensive Literacy (L4GA) grant fund 418 indicated there was an excessive cash balance for several days throughout FY25, however we respectfully disagree with the statements that the excessive cash balance was maintained for a total of 94 days and was due to the lack of review of the grant. While the LEA does agree there was an excessive cash balance in the Comprehensive Literacy/L4GA grant fund 418 for at least 94 days throughout FY25, the LEA would like to submit that per the analysis performed by the FY2025 DOAA audit team, the longest number of consecutive days for which the excessive cash balance was maintained was 41 days. It is also the view of the LEA that the excessive cash balance was not due to the lack of review of the federal grant nor due to intentionally drawing down funds from GADOE in excess of immediate cash needs, but instead largely due in part to the LEA receiving a duplicate reimbursement payment from GADOE for specific expenditures that were erroneously submitted twice by the LEA to GADOE. Finally, the LEA’s would like to submit that the cause for not immediately detecting and rectifying the excessive balance error was due to the timing of the posting of other numerous expenditures coinciding with the posting of the duplicate reimbursement payment within the 418 ledger, and the lack of review of specific reports that would have helped to identify that the cash ledger reflected an excessive cash balance from the duplicate reimbursement payment for grant expenditures. The LEA acknowledges this was unacceptable; the error should have been detected and corrected earlier in the fiscal year and there was a deficiency in the process of monitoring the cash ledger for fund 418. Auditor's Concluding Remarks: We acknowledge the LEA's response. The LEA does not dispute that an excessive cash balance existed in fund 418 during FY25 or that a deficiency in its review of the fund 418 cash ledger prevented timely detection and correction. This remains the substance of the finding. Our analysis confirms the excessive balance occurred over a cumulative 94 days, with the longest continuous occurrence lasting 41 days, and we will revise the finding to reflect this distinction. Regardless of the initiating event, including the duplicate GADOE reimbursement cited by the LEA, the LEA's response confirms that reports which would have identified the excessive balance were not reviewed, a deficiency in monitoring sufficient to ensure compliance with federal cash management requirements under 2 CFR 200.305. We reaffirm our finding, revised as noted above, and will review the LEA's corrective action during our next audit.