2025-001 – Cash Management Federal program information: Funding Agency: U.S. Department of the Interior; Bureau of Indian Education Title: Indian Education Assistance to Schools Assistance Listing Number: 15.130 Award Period: December 9, 2024 – December 8, 2026 Criteria: Uniform Guidance regulations section 2 CFR 200.305(b)(1) requires advance payments to be limited to the minimum amounts needed and to be timed in accordance with the actual, immediate cash requirements of the recipient in carrying out the purpose of the approved program, with the timing and amount of cash advances as close as is administratively feasible to the actual disbursements. The same section conditions the entitlement to advance payment on the recipient maintaining written procedures that minimize the time elapsing between the transfer of funds and their disbursement. The Department of the Interior Financial Assistance Award General Terms and Conditions, incorporated into the award, state the same standard and provide that payment will be made by electronic drawdown reimbursement through the Automated Standard Application for Payment system unless an approved waiver is in place. Section 2 CFR 200.305(b)(12) permits a recipient to retain up to $500 per year of interest earned on federal advances and requires interest above that amount to be remitted annually to the Department of Health and Human Services Payment Management System. Interest earned on advances of federal funds is excluded from program income under 2 CFR 200.1 and is payable to the federal government. Condition: On December 12 and 13, 2024, three and four days after the award was issued, NFEAIE drew the entire $7,500,000 Round 1 award through the Automated Standard Application for Payment system in two requests of $1,000,000 and $6,500,000, respectively. At the date of the drawdown, NFEAIE had no executed subawards and no obligations payable under the program. The subaward competition was launched in April 2025, the eight subaward agreements were executed in May and August 2025, and the first program disbursement occurred on May 23, 2025. The federal balance remained at $7,500,000 through March 31, 2025, and $608,907 remained at December 31, 2025. NFEAIE did not maintain written drawdown procedures during the year. The advance earned $142,909 of interest during the year ended December 31, 2025, of which $116,559 is attributable to the federal award under NFEAIE's monthly average balance allocation. NFEAIE had not assigned responsibility for computing or remitting interest earned on federal advances, and the federally attributable interest was recorded as interest income rather than as an amount due to the federal government at December 31, 2025. The matter was identified during our audit, and an adjustment was recorded to move $116,559 from interest income to accrued liabilities. Context: Management represents that the timing of the December 2024 drawdown was directed by the Department of the Interior. The payment request was submitted by NFEAIE through the Automated Standard Application for Payment system, as that system requires, and written confirmation of the Department of Interior's direction was not available for our review. Management further represents that at the date of the drawdown NFEAIE expected to complete the subaward competition and disburse the funds substantially earlier than actually occurred. Management requested a written determination from the Director of the Bureau of Indian Education under 2 CFR 200.102(c) authorizing retention of the interest. That request was denied on September 17, 2026. NFEAIE remitted $116,559 to the Payment Management System on September 21, 2026 without conditioning the remittance on the outcome of that request. Questioned Costs: None. The federally attributable interest is a payable to the federal government rather than a cost charged to the award, and no federal funds were applied to an unallowable purpose. Cause: NFEAIE drew the full award in December 2024 rather than on the reimbursement basis provided in the award terms. Management represents this was directed by the Department of the Interior, as NFEAIE would not have had the available funds to make subrecipient payments at the time. NFEAIE had not hired an Executive Director or contracted a Finance Director at the date of the drawdown, the subaward competition was launched in April 2025, and the subawards were executed in May and August 2025, so the disbursements the drawdown anticipated occurred later than NFEAIE had originally expected. NFEAIE did not have written drawdown procedures in place at the date of the drawdown and had no procedure assigning responsibility for computing and remitting interest earned on federal advances. As a result, the interest was accounted for as revenue of NFEAIE rather than as an amount due to the federal government. Effect: NFEAIE held federal cash substantially in excess of its immediate cash requirements for approximately five months, which is the condition that generated the interest. Interest income was overstated and liabilities were understated by $116,559 in the accounting records provided for audit, and an audit adjustment was required to correct the financial statements. Without written procedures, advances on future draws may again exceed immediate cash requirements, and interest earned on those advances may not be identified, computed, or remitted. Auditors’ Recommendation: NFEAIE should adopt a written drawdown procedure that limits each request to the amount needed for disbursements expected within a short and defined period, identifies the disbursements the request supports, and requires approval of the request before submission. Where the awarding agency directs NFEAIE to draw on a different schedule, that direction should be obtained in writing and retained in the award file. Auditors’ Recommendation – continued: NFEAIE should also adopt a written procedure assigning responsibility for computing interest earned on federal advances at least annually, documenting the allocation between federal and non-federal funds where accounts are commingled, recording the amount payable to the federal government in the period earned, and remitting that amount through the Payment Management System. NFEAIE should consider holding federal advances in a separate account so that an allocation is not required. Management Response: Management concurs with the condition described and with the internal control deficiencies identified. The federal government incurred no loss, no federal funds were applied to an unallowable purpose, and there are no questioned costs. NFEAIE received the Round 1 award on December 9, 2024. At that date the organization had no employees, no Executive Director, and no finance staff. The full award was drawn on December 12 and 13, 2024 at the direction of the Department of the Interior, and NFEAIE submitted the requests through the Automated Standard Application for Payment system because that system requires the recipient to submit them. NFEAIE expected to complete the subaward competition and disburse the funds substantially sooner than proved possible. Written confirmation of the Department’s direction has not been located. Throughout the period the advance was held in a federally insured, interest-bearing account as 2 CFR 200.305(b)(10) and (b)(11) require. The interest was preserved in full and none of it was expended. NFEAIE computed the federally attributable share of the interest using a monthly average balance allocation of the commingled account, documented the methodology, and remitted $116,558.82 to the Department of Health and Human Services Payment Management System on September 21, 2026. NFEAIE had requested a determination from the Bureau of Indian Education under 2 CFR 200.102(c) permitting retention of the interest. That request was denied on September 17, 2026. NFEAIE did not condition the remittance on its outcome. NFEAIE’s Financial Management Policies and Procedures Manual, adopted by the Board of Directors on August 14, 2025, provides that funds received in advance will be held in a federally insured account and that interest earned will be submitted to the funder agency in accordance with that agency’s guidelines, and assigns responsibility for grant fiscal compliance to the Finance Director (a role since replaced with the CFO position). The manual did not prescribe a method for computing interest on federal advances, the allocation of interest where federal and non-federal funds are commingled, the $500 annual retention threshold, or remittance through the Payment Management System. NFEAIE also did not maintain written drawdown procedures during the period, and the amount payable to the federal government was not recorded in the period earned. The corrective action plan below supplies that specificity.
2025-002 – Subrecipient Monitoring Federal program information: Funding Agency: U.S. Department of the Interior; Bureau of Indian Education Title: Indian Education Assistance to Schools Assistance Listing Number: 15.130 Award Period: December 9, 2024 – December 8, 2026 Criteria: Uniform Guidance regulations section 2 CFR 200.332(b) require a pass-through entity to ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the federal award identification information listed at 2 CFR 200.332(b)(1). That information includes the subrecipient's unique entity identifier, the Assistance Listing Number and title, and the subaward budget period start and end date. Where any of that information is unavailable at the time of the subaward, the pass-through entity must provide the best available information and must provide the unavailable information when it is obtained. Condition: NFEAIE issued eight subawards totaling $6,635,000 during the year ended December 31, 2025. The Assistance Listing Number and title were not stated in any of the eight executed subaward agreements or their attachments. The subaward budget period was not stated in any of the eight agreements. The subrecipient's unique entity identifier was not stated in three agreements totaling $2,238,547. Context: Eight subawards tested, representing 100% of the subrecipient population and 96% of total federal expenditures for the year. Questioned Costs: None. Cause: The subaward template was drafted without comparing it to the information required by 2 CFR 200.332(b)(1). NFEAIE has no written procedure requiring executed subaward agreements to be reviewed against that information before execution. Effect: NFEAIE did not comply with 2 CFR 200.332(b)(1). A subrecipient that is not given the Assistance Listing Number may report the award incorrectly or omit it from its own schedule of expenditures of federal awards, which affects the subrecipient's major program determination and audit coverage, and may also affect subaward reporting under the Federal Funding Accountability and Transparency Act. Omission of the unique entity identifier removes the identifier used to match the subaward to the subrecipient's registration. Auditors' Recommendation: NFEAIE should amend each of the eight executed subaward agreements to add the Assistance Listing Number and title, the subaward budget period, and the unique entity identifier where it was omitted, and should provide the amended agreements to each subrecipient. NFEAIE should adopt a written subaward issuance procedure that includes a checklist of the information required by 2 CFR 200.332(b)(1), completed and retained in the subaward file before execution, and should update the subaward template before the second round of awards is issued. Management's Response: Management concurs with the condition described. Three of the federal award identification elements required by 2 CFR 200.332(b)(1) were omitted from the Round 1 subaward instruments. There are no questioned costs. The Round 1 instruments identified the subrecipient, the Federal Award Identification Number, the federal award date, the subaward period of performance, the total amount of the subaward, the federal award project description, the pass-through entity and its contact, the research and development determination, and the applicable indirect cost rate. They flowed down the Uniform Guidance cost principles and administrative requirements, records retention and audit access under 2 CFR 200.334 and 200.337, closeout obligations under 2 CFR 200.344 and 200.345, the nonprocurement suspension and debarment certification, and quarterly and annual reporting requirements. The omission was limited to the Assistance Listing Number and title, the subaward budget period, and, in three instruments, the unique entity identifier. Before making any subaward, NFEAIE evaluated forty applications through a competitive process, each scored independently by three reviewers, and conducted entity-level financial and compliance due diligence on applicants advancing to award consideration. Four applicants were declined or deferred on the basis of that review. NFEAIE has monitored the subawards throughout the period of performance. The Round 1 template was prepared in the organization’s first months of operation and was not checked against the data element list at 2 CFR 200.332(b)(1). NFEAIE corrected the template in September 2026. The corrected form was used for the subaward executed September 18, 2026 and carries the full element set, together with specific conditions imposed under 2 CFR 200.208 for subrecipients designated elevated risk. The remaining remediation is set out below.