Audit 412182

Finding Type: Material Weakness in Internal Control over Major Programs Assistance Listing #: 84.116Z Fund for the Improvement of Postsecondary Education Award Year: July 1, 2024, through June 30, 2025 Criteria: Under 2 CFR 200.317 through 200.327, non-Federal entities must maintain and follow documented procurement procedures that conform to applicable Federal law and standards. Specifically, 2 CFR 200.320 requires entities to obtain price or rate quotations from an adequate number of qualified sources for purchases falling under the simplified acquisition threshold (small purchases). Additionally, under 2 CFR 180.220 and 2 CFR 180.300, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. For procurement contracts, a covered transaction is any contract expected to equal or exceed $25,000. Entities must verify that the vendor is not excluded or disqualified by checking the System for Award Management (SAM.gov) Exclusions, collecting a certification, or adding a clause to the covered transaction. Condition: During our testing of Procurement, Suspension, and Debarment, we noted the following deficiencies: 1. Procurement: The University’s procurement policies and practices did not meet minimum federal requirements. The University failed to obtain or document an adequate number of quotes for small purchases exceeding the micro-purchase threshold. 2. Suspension and Debarment: The University did not have controls in place to verify the suspension and debarment status of vendors. Management did not check the SAM.gov exclusions list, obtain vendor certifications, or include required clauses in contracts for covered transactions exceeding $25,000. Cause: Internal controls over Procurement and Suspension and Debarment were not properly designed or implemented. Management was unaware of the specific federal requirements regarding small purchase quotation documentation and the mandate to verify vendor exclusion status for contracts over $25,000. Effect or Potential Effect: By failing to obtain adequate quotes, the University cannot ensure that federal funds were used to obtain the most advantageous pricing, potentially resulting in overpayments for goods and services. By failing to verify suspension and debarment status, the University is at high risk of entering into covered transactions with federally excluded or debarred parties. Questioned Costs: $526,874 represents the total sum of federal funds disbursed to vendors in our sample where required procurement procedures and/or suspension and debarment verifications were not performed.

Finding Type: Material Weakness in Internal Control over Major Programs Assistance Listing #: 84.116Z Fund for the Improvement of Postsecondary Education Award Year: July 1, 2024, through June 30, 2025 Criteria: Under 2 CFR 200.305(b)(1), non-Federal entities must minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement by the non-Federal entity for direct program or project costs. Furthermore, 2 CFR 200.305(b)(8) requires that non-Federal entities maintain advance payments of Federal awards in interest-bearing accounts. Entities may retain up to $500 per year for administrative expenses, but any additional interest earned must be remitted annually to the Department of Health and Human Services Payment Management System. SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2025-003 Cash Management (Continued) Condition: During our testing of Cash Management, we noted that the University requested and received federal funds in advance of its immediate cash needs. The University drew down a total of $1,928,536 during the audit period; however, approximately $1,000,000 of these funds remained undisbursed at various points throughout the year, with federal cash sitting idle for periods ranging from 3 days to over 150 days. Additionally, the University failed to maintain these advance payments in an interest-bearing account. As a result, no interest was calculated, and no interest was remitted to the federal government Cause: Internal controls over Cash Management were not properly designed or operating effectively. Management utilized a spreadsheet that calculated drawdown requests based on broad expenditure estimates rather than limiting requests to the immediate cash needs of the grant. Furthermore, management was unaware of the federal requirement to hold advance payments in an interest-bearing account. Effect or Potential Effect: The University maintained excess federal cash on hand, which constitutes noncompliance with the timing requirements of the Uniform Guidance. By holding these excess funds in a non-interest-bearing account, the federal government was deprived of the time value of money (interest earnings). Questioned Costs: None reported. We calculated the imputed lost interest resulting from the excess cash balances to be approximately $16,800. Because this amount is below the statutory reporting threshold of $25,000, no questioned costs are formally reported.