Condition: The Center requested four drawdowns that were not based on its immediate cash needs. The Center did not earn any interest on the advances. Criteria:Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR 200.305(b)). Cause: The Center experienced delays in collecting sufficient practice revenue funds for those drawdowns. Effect: The Center is not in compliance with the cash management requirement. Context: The Center submitted 19 reimbursement requests to the federal government during the fiscal year. Questioned Costs: $0. Recommendation: We recommend the Center continue to identify other alternative resources for funding until practice revenue funds are received by the organization. Views of Responsible Official and Planned Corrective Action: After being informed of the finding, the Center instituted strategies to align drawdowns with near-term disbursement needs. However, these adjustments commenced during the subject fiscal year and will remain in place moving forward.
U.S. Department of Health and Human Services Assistance Listing Number 93.224 Health Center Program Cluster Program Year 2025-2026 Criteria or Specific Requirement – Per 2 CFR §200.305(b) and (b)(1) and §200.302(b)(6), non-federal entities must maintain or demonstrate the willingness to maintain both written procedures that minimize the time elapsing between the transfers of funds and disbursement by the recipient. Advance payments must be limited to the minimum amounts needed and timed to be in accordance with the entity’s actual, immediate cash requirements. Condition – During testing of cash management requirements, we selected a federal cash draw of $150,000 made on April 15, 2025. The draw was supported by payroll expenditures for the periods April 1, 2025 through April 15, 2025 and April 16, 2025 through April 30, 2025, which were not disbursed until April 30, 2025 and May 15, 2025, respectively. As a result, federal funds were drawn approximately 15 and 30 days prior to the related payroll disbursements, indicating the draw may not have been limited to the Organization's immediate cash needs as required. Additionally, the Organization was unable to provide sufficient documentation demonstrating the basis for the draw request and compliance with federal cash management requirements. Cause – The Organization did not have adequate procedures and review controls in place to ensure Federal cash draws were supported by eligible expenditures and requested only for actual, immediate cash needs. In addition, supporting documentation for cash draw requests was not consistently maintained and reviewed. Effect or Potential Effect – Without adequate documentation and controls over the timing of federal cash drawdowns, the Organization may be unable to demonstrate that funds were drawn only for actual, immediate cash requirements and disbursed as close as administratively feasible to receipt. This could result in excess federal cash on hand, liability for interest earned on advance funds, required repayment of unsupported or prematurely drawn amounts, and other federal corrective action. Questioned Costs – None Context – A sample of four federal cash draws were tested from a population of 37 draws. The sampling methodology used is not and is not intended to be statistically valid. The exception identified related to one of the draws selected for testing. Identification as a Repeat Finding – No Recommendation – We recommend the Organization implement formal policies and procedures requiring federal funds to be drawn only for actual, immediate cash needs and as close as administratively feasible to the related disbursements. The procedures should also require personnel to verify that expenses supporting each draw are allowable, properly documented, and recorded in the correct accounting and federal award period. Draw requests should be reconciled to the underlying expenditures and independently reviewed and approved before submission. Views of Responsible Officials and Planned Corrective Actions – The Organization concurs with the finding and is developing and implementing formal cash management policies and procedures to ensure federal draw requests are supported by allowable expenditures, requested only for immediate cash needs, and properly documented. Management will require reconciliation of draw requests to supporting expenditures, implement independent review and approval procedures, and monitor compliance with the new controls.
Finding Number: 2025-003 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Pass-Through Entity: n/a Grant Number: F24AC01768-00 Award Project Period: July 1, 2024 through July 1, 2029 Control Deficiency Type: Material weakness Instance of Noncompliance: Yes Compliance Requirement: Cash Management Repeat Finding: No Criteria: Under 2 CFR 200.305(b), advance payments must be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the non Federal entity. Federal funds should not be drawn significantly in advance of when program costs will be incurred. When the non-Federal entity must be paid in advance in should maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Further, non-federal entities must maintain advance payments in an interest-bearing account. Condition: The Council drew down a portion of the federal award amount in advance of immediate cash needs. The draw occurred in March 2025 after management determined that a potential federal funding freeze could significantly delay the project if funds were not immediately accessible. The Council typically limits drawdowns to requests for reimbursement; however, management elected to deviate from this practice due to the perceived risk. In addition, the Council does not currently have a written cash management policy compliant with 2 CFR 200, which contributed to the inconsistency. The funds were fully expended on allowable program costs over a nine-month period. The funds were not kept in an interest-bearing account in accordance with 2 CFR 200.305(b). Cause: Management was aware of cash management requirements but made a deliberate decision to draw down the funds in advance due to concerns about a potential funding freeze and the risk of project delays. Effect: Although the funds were ultimately spent on allowable program costs, drawing funds earlier than necessary resulted in noncompliance with federal cash management requirements regarding both the timing of the draws and the requirement to hold advance funds in an interest-bearing account, which may have failed to earn interest that would otherwise be payable to the federal government. Questioned Costs: None. Audit Recommendation: The Council should develop and implement written cash management policies that clearly define allowable timing of drawdowns. When unusual circumstances arise, the Council should obtain authorization from the federal awarding agency before deviating from standard practices. Draws in advance of immediate cash requirements should be kept in an interest-bearing account, and the interest should be remitted to the federal government. Management’s Response: The Rogue River Watershed Council will develop a cash management policy in compliance with 2 CFR 200 (or amend our Fiscal Management Policy to include required cash management policies and procedures). The policy/ amendment will focus on short-term cash flow needs and the need to minimize time between the transfer and disbursement of federal funds, which will guide the organization’s use of federal funding.
2025-004 LACK OF WRITTEN FEDERAL POLICIES AND PROCEDURES REQUIRED BY UNIFORM GUIDANCE Type of Finding: Material noncompliance Federal Program: Coronavirus State and Local Fiscal Recovery Funds (ALN# 21.027) Compliance Requirement: All Criteria - Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318-320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Condition - The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. A similar issue was noted and reported last year as 2024-005. Cause - The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect - The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Questioned Costs - None Recommendation - We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. Views of Responsible Officials: Management agrees with the finding and will take appropriate steps to remedy noted finding.
Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR 200.305(b)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the nonfederal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR 200.305(b)(1)). The reimbursement payment method is the preferred payment method if (a) the non-federal entity cannot meet the requirements in 2 CFR 200.305(b)(1) for advance payment, (b) the federal awarding agency sets a specific condition for use of the reimbursement or (c) if requested by the non-federal entity (2 CFR 200.305(b)(3) and 200.208). The reimbursement payment method also may be used on a federal award for construction or for other construction activity as specified in 2 CFR 200.305(b)(3). To the extent available, the non-federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional federal cash draws (2 CFR 200.305(b)(5)). Except for interest exempt under the Indian Self-Determination and Education Assistance Act (25 USC 5301 et seq.), interest earned by non-federal entities other than states on advances of federal funds is required to be remitted annually to the US Department of Health and Human Services, Payment Management System, P.O. Box 6021, Rockville, MD 20852. Up to $500 per year may be kept for administrative expenses (2 CFR 200.305(b)(9)). During testing of federal compliance, we noted the City drew federal funds for expenses paid by another funding source. This resulted in the City accumulating a federal cash balance of $2,260,553. The City inquired with the grantor about the cash balance and was instructed to pay the next few project invoices with the cash balance until fully expended. Further, we noted that two of the five remaining draws in 2025 were held by the City in excess of five days. Estimated interest earned in 2025 on the balance of federal grants held is $27,658. Estimated interest in 2024 on the balance of federal grants held is $14,811. Finally, we noted the City does not have a federal cash management policy. The City should implement additional procedures to ensure they minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the City. Further, the City should adopt a written policy regarding cash management of federal funds.
Assistance Listing, Federal Agency, and Program Name 81.086, 81.087, 81.089, and 81.255, U.S. Department of Energy, Research and Development Cluster. Federal Award Identification Number and Year 81.086 DE EE0010847 81.087 DE EE0009625 and DE EE0011103 81.089 DE FE0028979, DE FE0032172, DE FE0032176, DE FE0032239, DE FE0032287, and DE FE0032351 81.255 DE CD0000038 Pass through Entity 81.086 N/A Direct Award 81.087 N/A Direct Award 81.089 N/A Direct Award 81.255 HyVelocity LLC Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR 200.305(b), 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 of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. In accordance with 2 CFR 200.305(b)(3), when the reimbursement method is used, the federal awarding agency or pass through entity must make payment within 30 calendar days after receipt of billing, unless it is believed the request to be improper. Condition Controls in place were not sufficient to ensure subrecipients were paid consistently within 30 days of a request for reimbursement. Questioned Costs N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context Due to staff turnover during the year, controls and procedures designed to ensure subrecipients were reimbursed within 30 days were not consistently operating throughout the period. Out of a sample of 40 subrecipient disbursements tested, we noted 17 were not paid within 30 days of the organization receiving the request for reimbursement and 11 were not properly tracked on management's internal subrecipient payment tracking spreadsheet. Cause and Effect Controls were established to ensure subrecipient reimbursement requests were processed within 30 days; however, due to staff turnover during the year, these controls were not consistently performed. As a result, reimbursement requests were not always processed timely, leading to instances of noncompliance with the 30 day requirement. Recommendation We recommend management reinforce and consistently execute existing controls over the review and processing of subrecipient reimbursement requests, including clear assignment of responsibilities and oversight procedures during periods of staff transition, to ensure payments are made within the 30 day requirement. Views of Responsible Officials and Corrective Action Plan Management acknowledges the finding. Delays in approvals may occur due to multiple internal and external parties involved. to prevent recurrence, management will monitor all parties, issue email reminders with clear deadlines, and enforce compliance with the 30 day requirement.
Cash Management ALN 10:854: Rural Economic Development Loan and Grant Criteria: 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 of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. The recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs (2 CFR 200.305(b)). Condition: The Cooperative does not have written procedures that discuss minimizing the time between the transfer of funds and disbursement. Context: The funds were received by the Cooperative on February 18, 2025, and transferred to the subrecipient on February 25, 2025. The subrecipient disbursed the funds and paid the invoice for the program purposes on April 24, 2025. Effect: The Cooperative is not following federal regulations regarding written procedures for cash management. Questioned Costs: None. Cause: This is the first year the Cooperative received these loan funds, and written procedures were not in place prior to receiving the funds. Auditor Recommendation: We recommend the Cooperative create procedures addressing the requirements in 2 CFR 200.305(b). Fergus Electric Cooperative Response: Fergus worked in conjunction and regularly communicated with the local Montana USDA REDL/G office to understand program requirements, provide requested information, and meet federal guidelines. Loan agreement RD 4280-5, (Dated 10/31/2024) refers to 7 CFR part 4280, Subpart A, as (“Regulations”). Fergus was unaware that 2 CFR 200 regulations are associated with 7 CFR part 4280, Subpart A. Fergus regretfully acknowledges that we were not informed or aware of obligations to meet the regulatory requirements within 2 CFR 200. Fergus has adopted and implemented a policy, Federal Funding Compliance, to establish formal procedures and ensure ongoing compliance with applicable federal regulations, including 7 CFR 4280, Subpart A and 2 CFR 200.
Finding 2025-001: Allowable Costs - Significant Deficiency Federal Program: 93.103 - Research and Development Cluster - Education and Training Program for Outsourcing Facility Industry Award Number: 5UE5FD008142-02 Award Year: January 1, 2025 to December 31, 2025 Federal Agency: U.S. Food and Drug Administration (FDA) Pass-Through Entity: Not applicable Criteria: According to the requirements of Title 2 U.S. Code of Federal Regulations Part 200.403(e), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), allowable costs must be determined in accordance with generally accepted accounting principles (GAAP). Condition/Context: For 2 of the 40 items selected for testing, even though the expenditures were for costs that were necessary and reasonable for the performance of the program, the expense amount benefitted periods beyond the period under audit and did not meet the allowability criteria under the Uniform Guidance. The sample was not statistically valid. Cause: Management determined allowability for certain costs based on the full period of performance covered by the grant and did not account for the period over which the costs provided benefits to the program. Effect: Certain costs allowed by the grant were recognized prior to the period in which the costs provided benefit to the program. Questioned Costs: $35,262 Recommendation: To ensure compliance with Uniform Guidance, the Organization should review its policies and procedures to ensure that the costs are reported in the proper fiscal year for financial reporting purposes, and any costs that benefit future periods are appropriately amortized and reported in the period in which the program derives benefits from the costs. Management Response: Management acknowledges the improper treatment of the expenditure for the specific period. The expenditure in question was for a one-year marketing services agreement supporting activities under the FDA 503B award. The vendor required payment in advance as a condition of service delivery, and the cost was incurred for legitimate grant-related purposes within the approved scope of work and period of performance. The expenditure was fully documented, allocable to the award, reasonable in nature, and directly connected to approved programmatic objectives. Management acknowledges that the transaction involved payment for services extending across a future service period. Specifically, 2 CFR 200 does not prohibit recipients from entering into prepaid contractual arrangements for allowable services necessary to support award implementation, particularly where such arrangements reflect standard vendor business practices and operational necessity. Further, the organization’s actions must be evaluated in the context of significant federal payment administration changes that began in February 2025. Historically, the organization received advance funding under the award consistent with the cash management principles contemplated under 2 CFR 200.305. Beginning in 2025, however, the organization was required to operate under a reimbursement-based process requiring submission of supporting documentation prior to payment release. This materially altered the organization’s working capital position and limited its ability to independently finance operational expenditures for extended periods pending reimbursement. As a result, management was required to make operational decisions necessary to ensure continuity of approved grant activities while balancing vendor requirements, cash flow limitations, and evolving federal reimbursement practices. The organization did not receive excess federal cash, improperly retain federal funds, incur unallowable costs, or use award funds outside the approved project scope. The questioned transaction reflects a timing and payment structure issue rather than a violation of fundamental federal compliance requirements. Management also notes that 2 CFR 200.305 expressly contemplates advance payment methodologies and recognizes that reimbursement-only environments may create operational hardships for recipients lacking sufficient working capital. The organization’s actions were undertaken in good faith to maintain uninterrupted program operations under materially changed federal payment conditions. Importantly, the expenditure was allowable, the services supported approved award objectives, the costs were incurred during the award period, supporting documentation exists, no misuse or diversion of federal funds occurred, and no financial harm to the federal government resulted. Note also that going forward, PDA will record future services and subscriptions to prepaid and amortize based on the periods stipulated on the vendor invoices.
Information on the federal program – Assistance Listing Number 93.224/93.527; Health Center Program Cluster; Department of Health and Human Services Criteria or specific requirement – Per 2 CFR §200.305, non-federal entities must minimize the time between the transfer of federal funds from the U.S. Treasury and the disbursement of those funds for program purposes. Advance payments must be limited to the minimum amounts needed and timed to be in accordance with the entity’s actual, immediate cash requirements. Condition – During our testing of cash management, we were unable to obtain supporting documentation for one of the draws selected for testing to verify that the time between the transfer and disbursement of funds was minimized. Further, we noted the Organization does not have a formal policy for federal cash drawdowns. Cause – The Organization did not have a formal policy or sufficient internal controls in place surrounding cash management and the draw process. Effect or potential effect – Drawing funds in advance of immediate cash needs could result in noncompliance with federal requirements. Questioned costs – None Context – Out of a population of 11 draws, a sample of 2 draws were selected for testing, and 1 draw was not supportable by underlying documentation. The sample was not statistically valid. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – We recommend the Organization implement formal policies and procedures to ensure that federal funds are drawn only to meet immediate cash needs (generally within a few days of disbursement). Views of responsible officials and planned corrective actions – Management has implemented enhanced cash management and grant monitoring procedures, including strengthened review of draw requests, improved documentation requirements, and closer reconciliation of grant expenditures to amounts drawn. In addition, the Organization is undertaking process improvements to streamline grant accounting and reporting activities, improve the timeliness of expense recognition, and enhance overall oversight of federal awards. Management expects these actions will strengthen compliance with federal cash management requirements and reduce the risk of future occurrences.
Finding 2025-005 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public Housing Capital Fund Program Federal Assistance Listing Numbers: 14.872 Noncompliance - C. Cash Management Non Compliance Material to the Financial Statements: No Significant deficiency in Internal Control over Compliance for Cash Management Criteria: In accordance with 2 CFR 200.305, payment methods for federal awards must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds by the recipient. Federal funds drawn under the Public Housing Capital Fund Program should be limited to amounts needed to meet the Authority’s immediate cash requirements for allowable program expenditures. Accordingly, the Authority should implement procedures to ensure grant funds are not drawn in advance of actual or imminent eligible expenditures. Condition: The Authority drew down federal funds in advance of immediate cash needs for allowable program expenditures. As of year end, a portion of the funds drawn remained unexpended and was reported as unearned revenue in the financial statements. This indicates that federal funds were received prior to the incurrence of eligible expenditures. Context: During review of the financial statements, the Authority was noted to have unexpended federal funds on hand at year end that had been drawn prior to the disbursement of allowable program costs. Specifically, amounts recorded as unearned revenue represented federal funds received in advance of immediate cash needs. This condition was identified through review of drawdown activity, general ledger balances, and year end financial reporting records. Known Questioned Costs: $134,883 Cause: The Authority did not have adequate internal controls in place to monitor the timing of grant drawdowns in relation to actual program cash needs and allowable expenditures. As a result, federal funds were requested and received prior to the incurrence of eligible costs under the Public Housing Capital Fund Program. Effect: The Authority was not in compliance with federal cash management requirements governing the timing of federal fund drawdowns. As a result, federal funds were held in advance of immediate cash needs, increasing the risk of improper cash management and noncompliance with Uniform Guidance and HUD requirements. Recommendation: We recommend the Authority strengthen its internal controls over cash management to ensure federal funds are drawn only for immediate cash needs related to allowable program expenditures. Management should implement monitoring and review controls over grant drawdown activity, including periodic reconciliation of drawdowns to incurred expenditures, to ensure compliance with 2 CFR 200.305 and HUD requirements. Authority's Response: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Public Housing Capital Fund Program to ensure that established internal control policies are being followed on a timely basis.
Substance Abuse and Mental Health Services Projects of Regional and National Significance ALN 93.243 U.S. Department of Health and Human Services Criteria or specific requirement – Cash Management ((2 CFR 200.305(b) and 45 CFR 75.305(b)) Condition – The District is required to request reimbursement for program costs only after those costs have been incurred and paid. Certain expenditures were paid after reimbursement was received. Context – One of the two reimbursement tested had certain expenses that were not paid by the District before reimbursement was received. The sample is not and is not expected to be a statistical sample. Effect or potential effect – The District did not properly comply with the cash management requirements. Cause – The Districts internal control did not properly identify certain expenditures were not paid before reimbursement was received. Questioned costs - none Identification as a repeat finding – Not a repeat finding. Recommendation – The District should enhance controls to ensure that all expenditures included in reimbursement request have been paid prior to requesting federal funds. This may include implementing a review procedure to verify payment status before submission. Views of Responsible Officials and Planned Corrective Actions - Washington County Ambulance District agrees with the reported finding. The underlying cause was a clerical error that was determined after reimbursement had been requested. Upon identifying the issue, additional acceptable expenses were substituted for this clerical error. Additional review will be completed on each required submission. This will be overseen by Amber Coleman, Chief Administrative Officer, with a target date of completion of December 31, 2026.
Finding 2025-001 Material Instance of Non-Compliance - Cash Management of Federal Funds This finding relates to the cash management compliance requirement for the major program, Health Center Program Cluster, Assistance Listing Numbers 93.224 - Health Center Program and 93.527 - Grants for New and Expanded Services under the Health Center Program, administered by the Health Resources and Services Administration (HRSA), U.S. Department of Health and Human Services. Criteria: Pursuant to 2 CFR §200.305, non-Federal entities must minimize the time elapsing between the transfer of Federal funds from the Federal awarding agency or pass-through entity and the disbursement of those funds for program purposes. Advance payments must be limited to the minimum amounts needed, and timed to be in accordance with the actual, immediate cash requirements of the recipient. Condition: During our testing, we identified one instance in which the Center drew down $702,681 of HRSA Section 330 Base grant funds when only $351,341 of allowable expenditures had been incurred. As a result, the Center received Federal funds in advance of its immediate cash needs by approximately $351,340. Cause: The condition resulted from a lack of proper oversight to ensure that drawdown requests were based on actual, incurred, and allowable expenditures at the time of request. Effect: The Health Center was not in compliance with Federal regulations regarding cash management. Questioned costs: None. Although the timing of the drawdown was not in compliance with the cash management requirements, the funds were ultimately expended for the allowable purposes within the grant period. Was the finding a repeat of a finding in the immediately prior year? No Recommendation: Management should establish and implement procedures to ensure Federal drawdowns are based on actual, allowable expenditures or immediate cash needs in accordance with 2 CFR §200.305. Draw requests should be reviewed and approved to verify that amounts requested do not exceed current allowable expenditures or immediate cash requirements. Management Response: Management concurs with the finding. During the period under audit, the Health Center inadvertently did a duplicative Federal drawdown which was an administrative oversight. To address this deficiency and prevent future occurrences, management has implemented the following corrective actions: Duplicative Prevention Controls: Management has instituted a centralized drawdown tracking log to cross-reference and reconcile historical requests against immediate cash needs, eliminating the risk of administrative duplication. This has been fully implemented as of April 2026.
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.
Finding 2025-001 Federal Program Habitat Conservation Assistance Listing Number 11.463 Federal Agency U.S. Department of Commerce Finding Type Significant Deficiency in Internal Control Over Compliance Compliance 1. Compliance Requirements Allowable Costs/Cost Principles — Uniform Guidance requires written procedures for determining allowability of costs, tied to 2 CFR 200.302(b)(7). 2. Cash Management — 2 CFR 200.302(b)(6) requires written procedures to implement the cash management requirements in 2 CFR 200.305. 3. Procurement and Suspension and Debarment — 2 CFR 200.318–200.327 require documented procurement procedures, and 2 CFR 200.318(c) requires written standards of conduct for employees involved in contractor selection, award, and administration. Questioned Costs None Criteria Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In addition, the Uniform Guidance includes certain written policy requirements applicable to non-federal entities, which may include, as applicable, written procedures for determining the allowability of costs, written cash management procedures, written procurement procedures, standards of conduct covering conflicts of interest, and other written policies or procedures required by the specific compliance requirements applicable to the federal program. Condition During our audit, we noted that the Organization did not have a comprehensive set of written policies and procedures addressing key Uniform Guidance requirements applicable to the administration of federal awards. Cause Management indicated that the Organization has historically relied on informal practices, institutional knowledge, and existing general written accounting policies to administer federal awards. However, these policies had not been formally updated to incorporate the specific written policy and procedural requirements of the Uniform Guidance. Repeat Finding? No Effect/Potential Effect Without formal written policies and procedures that address Uniform Guidance requirements, the Organization is at increased risk that compliance with federal awards may not be maintained if laws and regulations change, if knowledgeable staff turnover occurs, and that the Organization may be required to repay federal awards if costs are questioned or disallowed. Recommendation We recommend that management review the Uniform Guidance requirements applicable to the Organization’s federal award programs and update its written policies and procedures to specifically address all required written policy areas. At a minimum, the updated policies should address the written policy and procedure requirements applicable to the Organization’s federal programs, such as: • Procedures for determining the allowability of costs charged to federal awards; • Cash management procedures, if applicable; • Procurement standards and written procurement procedures, if applicable; • Standards of conduct addressing conflicts of interest related to procurement and federal award administration; • Subrecipient monitoring procedures, if applicable; • Procedures for maintaining supporting documentation and demonstrating compliance with federal award requirements; and • Any additional written policy requirements included in the federal award terms and conditions or applicable compliance supplement. Management should ensure that the updated policies are formally approved, communicated to appropriate personnel, and reviewed periodically for continued compliance with current Uniform Guidance requirements and federal award terms and conditions. Views of Responsible Officials and Correct Action Plan Management agrees with the finding. The Organization acknowledges that it does not currently have written policies and procedures addressing certain required Uniform Guidance compliance areas. Management will develop, approve, and implement written policies and procedures designed to comply with applicable Uniform Guidance requirements, including policies over allowable costs/cost principles, cash management, and procurement, including suspension and debarment. Management will also communicate the new policies to relevant personnel and provide training as needed to support consistent implementation
Section III – Major Federal Awards Programs – Findings and Questioned Costs (Cont.) Finding 2025-009: Cash Management - Inadequate Policies for Drawdowns, Program Income, and Reconciliations (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: 2 CFR 200.305 requires documented procedures for cash management, including drawdowns, program income usage, and reconciliation processes. Condition: The Center does not have comprehensive written policies governing drawdowns, program income application, and required reconciliations. Cause: Noncompliance with Federal cash management and program income requirements may result in questioned costs or delayed reimbursements. Effect: The absence of comprehensive written policies governing drawdowns, program income, and reconciliations increases the risk of noncompliance with federal cash management requirements, potential questioned costs, and delayed or improper reimbursements. Recommendation: Management should develop and adopt formal written policies detailing drawdown procedures, program income usage, and reconciliation requirements. Repeat Finding: This is a repeat finding.
Finding 2025-002 Noncompliance over Cash Management Material Weakness/ Material Noncompliance Criteria: Federal regulations require recipients and subrecipients to maintain appropriate cash management procedures over Federal awards. Under 2 CFR § 200.305(b), advance payments of Federal funds must be limited to the minimum amounts needed and timed to coincide with the organization’s actual, immediate cash requirements. The timing and amount of Federal cash draws should be as close as administratively feasible to the organization’s actual disbursements for allowable program costs. Condition and Context: During our testing of the Organization’s compliance with cash management requirements, we noted that in January 2025, the Board approved the withdrawal of substantially all remaining funds available under the Federal award. Management indicated that the decision was made due to concerns that Federal funding for the grant could be terminated or otherwise become unavailable. At the time of the drawdown, the Organization had incurred approximately $63,000 of program expenditures. As a result, approximately $3.7 million of Federal funds were drawn in excess of expenditures incurred and the Organization’s immediate cash needs. Accordingly, the funds were drawn substantially in advance of the related program expenditures. We considered this matter to represent material noncompliance with the cash management requirements applicable to the Federal award. Cause: The Organization elected to draw substantially all available grant funds due to concerns regarding the potential premature termination or loss of Federal funding. Additionally, the Organization did not have adequate controls in place to ensure that Federal cash draws were limited to amounts necessary to meet immediate program cash requirements. Effect: The Organization maintained a significant amount of Federal funds in excess of its immediate cash needs, resulting in material noncompliance with Federal cash management requirements and the terms and conditions of the Federal award. The excess draw also exposes the Organization to potential repayment requirements and obligations related to interest earned on Federal funds. Under 2 CFR § 200.305, Federal advance payments generally must be maintained in interest-bearing accounts when applicable, and interest earned in excess of $500 per year must be remitted to the Federal government. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Recommendation: Management should strengthen its internal controls over Federal cash management and establish written procedures requiring Federal cash draws to be based on actual, immediate cash needs. Prior to each draw, management should document the expenditures incurred and anticipated near-term disbursements supporting the amount requested. Cash draw requests should be reviewed and approved by appropriate personnel and periodically reconciled to actual program expenditures. Management should also review the excess Federal funds on hand and coordinate with the awarding agency or pass-through entity, as appropriate, to determine whether amounts should be returned and whether any interest earned is required to be remitted. Although management indicated that verbal approval was received, written documentation should be obtained and retained to support the organization’s treatment and use of the interest earned. Management Response: Management concurs with this finding. See Corrective Action Plan.
Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: Due to timing constraints and a small staff size, the Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: Yes, this is a repeat of Finding 2024-003. Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.
2025-001 – Significant Deficiency in Internal Control over Cash Management and Noncompliance Identification of federal programs: United States Department of Commerce (DOC) ALN 11.463 - Habitat Conservation Grant Awards NA25NMFX463C0022, NA24NMFX463C0009 Criteria: Part 3 Compliance Supplement Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: The Organization received advanced payments of grant funding and did not minimize the time elapsing between the transfer of funds and disbursement by the Organization. Approximately $3.33 million ($3,328,150) of advanced federal funds remained undisbursed at December 31, 2025 for ALN 11.463. Cause: The Organization's written cash management policies and procedures did not adequately address Uniform Guidance requirements related to advance funding. In addition, management did not implement monitoring controls to ensure drawdowns were limited to immediate cash needs and disbursed within a timeframe consistent with 2 CFR 200.305. Effect or potential effect: Failure to minimize the time between receipt and disbursement of federal funds increases the risk that federal cash is held in excess of immediate program needs and may result in noncompliance with 2 CFR 200.305. Approximately $3.3 million of advanced federal funds remained undisbursed at December 31, 2025. Questioned Costs: None. Context: During fiscal year 2025, management drew federal funds in advance of immediate cash needs due to the economic uncertainties during that time. The matter was identified during audit procedures in September 2025, following identification of this issue, management implemented revised cash management procedures and returned excess federal funds in 2026 that were not required for immediate program needs. Identification of Repeat Finding: 2024-001 Recommendations: We recommend that the Organization continue implementation of revised cash management procedures and establish monitoring controls to ensure future drawdowns are limited to immediate cash needs and comply with 2 CFR 200.305. Views of Responsible Officials: Management agrees with this finding. See Corrective Action Plan.
2025-002 Noncompliance with Cash Management (Public Housing Capital Fund ALN 14.872) Criteria: Federal Code of Regulations, 2 CFR § 200.305 requires the Authority to maintain both written procedures that minimize the time elapsing between the transfer of funds from HUD and disbursement of those funds for eligible costs and financial management systems that meet the standards for fund control and accountability. Advance payments to the Authority must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the Authority in its Capital Fund Program. Furthermore, in accordance with 2 CFR § 905.310, the Authority shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. The Capital Fund Program rules provide guidelines of 3 business days from drawdown to expenditure. Condition: During the year, the Authority had 45 transactions in its Capital Fund Program for grants ranging from CFP 2019-2023. 22 out of the 45 transactions made during the year did not adhere to the requirements to minimize the time federal funds were drawn down to expenditures of 3 business days. Questioned Costs: None. Effect: The Authority did not properly follow the requirements of 2 CFR § 200.305 and 905.310. Cause: The Authority did not have an adequate understanding of the Capital Fund Program requirements as related to Cash Management. Recommendation: The Authority’s staff should familiarize themselves with Capital Fund Program rules and guidelines in relation to Cash Management. Management Response: We will ensure all future eligible Capital Fund draws are made within 3 business days of expenditures.
2025-001 – Cash Management and Period-of-Performance (Material Non-Compliance, Material Weakness) Capital Fund Program – Assistance Listing No. 14.872; Grant Period – Fiscal Year-End December 31, 2025 Criteria: 2 CFR §200.305 requires housing authorities to minimize the time between when federal funds are drawn down, to when the applicable funds are expended. The Capital Fund Program provides guidelines of 3 business days from draw-down of federal funds until expenditure of the federal funds. 24 CFR 905.310 states that the PHA shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule. Additionally, housing authorities must expend 100% of a Capital Fund grant within 48 months of the date the funds are made available (24 CFR Section 905.314). This 48-month period is the applicable grant’s ‘period-of-performance. Condition: On January 27, 2025, the Authority drew down a Capital Fund grant voucher of $372,824 from its Capital Grant #IL01P051501-21. The period-of-performance of this grant ended on February 22, 2025. The Authority was unable to support this grant draw-down with applicable grant expenditures incurred prior to or within 3 subsequent business days. Additionally, the Authority was unable to support this grant draw-down with applicable grant expenditures incurred prior to the period-of-performance end date of February 22, 2025. Questioned Costs – None Cause: Personnel turnover led to a failure to adequately monitor the grant funding availability dates of this grant, relative to the progress of modernization projects approved under this grant. Effect: Non-compliance with federal ‘cash management’ and ‘period-of-performance’ requirements. Recommendation: We recommend that the Authority monitor modernization activity against grant funding availability dates regularly. Additionally, we recommend that the Authority execute procedures requiring each Capital Fund grant funding request to be supported by immediate, documented, and eligible expenditures in accordance with HUD’s requirements. Management’s Response: The Authority will monitor modernization activity against grant funding availability dates regularly. Additionally, the Authority will execute procedures requiring each Capital Fund grant funding request to be supported by immediate, documented, and eligible expenditures in accordance with HUD’s requirements. The Executive Director has assumed the responsibility of executing this corrective action as of September 18, 2026.
Assistance Listing, Federal Agency, and Program Name 12.300, U.S. Department of Defense Office of Naval Research (ONR), Research and Development Federal Award Identification Number and Year N00014 24 1 2020, N00014 23 1 2389, N00014 23 1 2393, N00014 23 2 2000, N00014 24 1 2204. Pass through Entity N/A all direct awards Finding Type Significant deficiency Repeat Finding No Criteria 2 CFR section 200.305(b)(3) requires the federal agency or pass through entity to make payment to the subrecipient within 30 calendar days after receipt of the payment request unless the Federal agency or pass through entity reasonably believes the request is improper. Condition During testing of subrecipient payments, we identified 15 instances in which payments to subrecipients were made more than 30 calendar days after receipt of a complete and approved invoice. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported The finding pertains to internal control over compliance related to the timely payment of subrecipients and does not involve questioned costs. Identification of How Questioned Costs Were Computed N/A Context During the fiscal year LIFT made 117 payments to subrecipients and 15 of those payments were delayed. Payment delays ranged from 15 to 33 days beyond the required payment date which is 30 calendar days after receipt of a complete and approved invoice Cause and Effect LIFT's controls over the review, approval, and processing of subrecipient invoices were not operating effectively to ensure payments were remitted within the timeframe required by federal regulations. As a result, certain payments to subrecipients were made after the required payment deadline, resulting in noncompliance with grant requirements. Recommendation Management should evaluate procedures for funding and processing subrecipient payments to ensure compliance with the 30 day payment requirement, including consideration of circumstances in which funding from the federal awarding agency is received after subrecipient payment obligations arise. Views of Responsible Officials and Corrective Action Plan During the audit period, the organization experienced delays in processing certain subrecipient invoices. As a result, some subrecipients were not paid in accordance with the requirements of 2 CFR 200.305(b)(3). To address this finding, management has implemented the following corrective actions: • Revised internal procedures to ensure payments are made within 30 calendar days of the approval of subrecipient invoices, regardless of when reimbursement is received from the federal awarding agency. • Implemented a weekly aging report to identify subrecipient invoices approaching payment due dates and to ensure timely resolution. • Provided additional training to the program, finance and the management teams on federal payment requirements and internal procedures. • Established periodic management reviews to monitor compliance with payment timeliness requirements and identify process improvements as needed. Management fully implemented all corrective actions as of June 30, 2026.
Finding 2025-003: Cash Management – Material Noncompliance and Material Weakness in Internal Control over Compliance Federal Program: Health Center Program (Assistance Listing 93.224) and Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Assistance Listing 93.918) Criteria: In accordance with 2 CFR 200.305(b), payment methods must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds by the recipient. Further, federal cash drawdowns must be limited to the minimum amounts needed and timed as closely as administratively feasible to the organization’s actual and immediate cash requirements. Uniform Guidance also requires recipients to maintain effective internal control over federal awards and to adequately support costs charged to federal programs. Controls over reimbursement requests should provide reasonable assurance that amounts requested are based on actual allowable, allocable, and properly documented expenditures incurred under the federal award. Condition: The CFO prepares the reimbursement amount and provides the CEO with an email summarizing the expenditures included in the draw request. The CEO then submits the reimbursement request through PMS. During testing, we noted that reimbursement amounts were not consistently supported by a reconciliation to actual payroll records, invoices, or other accounting records. Management indicated that because program expenditures routinely exceed the reimbursement amounts requested, draw amounts are sometimes based on estimated or rounded amounts rather than actual expenditures recorded in the accounting records. Additionally, the CEO's review is limited to the expenditure summary provided by the CFO and does not include review of the underlying supporting documentation. Cause: Management has not established a formal review process requiring reimbursement requests to be reconciled to supporting payroll records, invoices, and accounting records prior to submission. The CEO’s review is performed using summary information prepared by the CFO rather than independently reviewing supporting documentation. Effect: Because reimbursement requests are not consistently supported by actual expenditure documentation and are not subject to an effective independent review, federal funds were received before expenditures were incurred, resulting in federal cash being drawn in excess of the Organization's immediate cash requirements. This constitutes noncompliance with federal cash management requirements and increases the risk of improper use and monitoring of federal funds. Questioned Costs: $437,575 for the Health Center Program and $190,918 for Grants to Provide Early Intervention Services with Respect to HIV Disease. Context: During our testing of reimbursement requests, we noted that reimbursement amounts were prepared based on summarized expenditure information and were not consistently reconciled to underlying payroll records, invoices, or other accounting records prior to submission. In addition, the review performed by the CEO was limited to summary information prepared by the CFO and did not include examination of supporting documentation. These conditions affected the reimbursement request process for both federal programs and indicate a systemic deficiency in controls over the preparation, support, and review of federal draw requests. Repeat Finding: This is a repeat finding. Recommendation: Management should implement procedures requiring all reimbursement requests to be supported by actual expenditures incurred prior to submission. Reimbursement requests should be reconciled to supporting invoices, payroll records, and accounting records, and evidence of supervisory review should be retained. Federal funds should not be requested until the related expenditures have been incurred and are supported by appropriate documentation. Management Response: Management concurs with the finding. The Organization acknowledges that reimbursement requests were not consistently supported by reconciliations to actual expenditures and that existing review procedures did not provide sufficient assurance that draw requests complied with federal cash management requirements. Management is implementing revised procedures requiring all draw requests to be supported by detailed expenditure reconciliations, payroll reports, invoices, and other supporting documentation prior to submission. In addition, management has formally instituted a policy requiring all reimbursement requests to be submitted on an official Request for Reimbursement form, accompanied by a written statement describing the purpose of the reimbursement and the related expenditures, and supported by appropriate source documentation. The Organization will also establish an enhanced review process requiring independent verification of supporting documentation before reimbursement requests are submitted. Each completed Request for Reimbursement form, together with the related expenditure reconciliation and supporting documentation, must be reviewed and approved by the Chief Executive Officer (CEO) before any drawdown or reimbursement request is submitted. Evidence of the CEO’s review and approval will be retained with each request to demonstrate compliance with federal cash management requirements under the Uniform Guidance (2 CFR 200.305). Management is committed to ensuring future draw-down requests (including those already submitted during the subsequent year) are based solely on actual allowable expenditures incurred and are submitted in compliance with federal cash management requirements.
Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Defense ALN: 12.002 Criteria Per 2 CFR 200.305(b)(3), pass-through entities must reimburse their subrecipients within 30 calendar days after receipt of the payment request, unless they have reasonable belief that the request is improper. Condition During our testing of subrecipient reimbursement requests, we noted that the Organization did not consistently process and remit payments to subrecipients in a timely manner. Of the 7 reimbursement requests tested, 2 were paid 48 days after receipt of properly documented reimbursement requests and approval for payment from the subrecipients. These delays exceeded the Organization’s expected processing timeframe and resulted in federal funds not being provided to subrecipients in a manner that minimized the time between reimbursement request and issuing payment. Questioned costs Not determinable. Cause The Organization’s internal controls over cash management were not adequately designed to mitigate the time elapsed between subrecipient’s reimbursement requests, and processing the reimbursement for payment. The Organization experienced a delay in payments from its federal awarding agencies, that subsequently affected its ability to reimburse its subrecipients. Effect The Organization’s failure to make timely payments to subrecipients resulted in noncompliance with 2 CFR 200.305(b)(3). Delayed reimbursement may require subrecipients to use their own resources to support federally funded activities and increases the risk that federal funds are not administered in accordance with federal cash management requirements. Repeat Finding No. Recommendation We recommend the Organization strengthen internal controls over cash management by establishing formal payment processing timelines, implementing monitoring procedures to track outstanding reimbursement requests, and conducting supervisory reviews to ensure subrecipient payments are made promptly.
2025-001: Cash Management: Federal Funds Drawn Down for Indirect Costs not yet Liquidated – Research and Development Cluster Condition During testing of cash management and indirect cost allocations, it was noted that approximately $900,000 in costs included in the entity's indirect cost pool remained recorded in accounts payable and had not been disbursed (liquidated) as of December 31, 2025. Despite these costs not yet being paid, the related federal funds had already been drawn down from the awarding agency. Criteria 2 CFR 200.305(b) requires non-federal entities operating under the advance payment method to minimize the time elapsing between the drawdown of federal funds and the disbursement of those funds for program purposes, and to limit draws to amounts needed for immediate cash requirements. Costs recorded in accounts payable but not yet paid do not represent a disbursement and therefore do not constitute an immediate cash need sufficient to support a drawdown. Additionally, 2 CFR 200.1 and 2 CFR 200.413/200.414 contemplate that costs included in the indirect cost pool and allocated to federal awards should reflect costs that are allowable, allocable, and appropriately recognized in the period in which they are incurred and settled in accordance with the entity's established accounting practices and cash management controls. Cause The Institute's process for requesting federal drawdowns is based on costs recorded on an accrual basis (i.e., invoices entered into accounts payable and included in the indirect cost pool) rather than on the actual disbursement date. As a result, drawdown requests were not reconciled to actual cash outlays, allowing draws to occur before the related liabilities were paid. Effect The Institute drew down federal cash in advance of its immediate cash needs, resulting in excess federal funds on hand for a period during which $900,000 in related costs remained unpaid. This condition represents a noncompliance with federal cash management requirements and may expose the Institute to: • Liability for interest owed to the federal government under the Cash Management Improvement Act (CMIA) for the period the funds were held prior to disbursement; • Questioned costs to the extent the $900,000 was allocated through the indirect cost rate prior to liquidation; and • A control deficiency in the reconciliation between the accounts payable subledger, indirect cost pool, and cash drawdown requests. Recommendation We recommend that the Institute: 1. Revise its drawdown procedures so that federal cash requests are tied to actual disbursement dates rather than accrual/invoice entry into accounts payable; 2. Implement a monthly reconciliation between drawdown requests, the accounts payable aging report, and amounts included in the indirect cost pool; 3. Evaluate whether the $900,000 should be removed from the indirect cost pool for the affected period until liquidated, and adjust the indirect cost rate calculation accordingly if required; 4. Calculate potential interest liability under CMIA for the period excess federal cash was held and remit if applicable; and 5. Document and implement written cash management policies and procedures addressing the timing of drawdowns relative to disbursement. Views of Responsible Officials and Planned Corrective Actions Management acknowledges the finding and the management staff of the Institute take seriously the federal compliance requirements that apply to drawing funds from the DHHS Payment Management System. The Institute recognizes that it has drawn down excess funds. The Institute plans to improve policies and procedures for cash management in 2026 that will ensure the calculation for allowable cash draw for actual immediate cash needs is complete and accurate. Action Taken Scintillon plans to improve policies and procedures for cash management in 2026 that will ensure the calculation for allowable cash draw for actual immediate cash needs is complete and accurate.
Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: Due to timing constraints and a small staff size, the Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: Yes, this is a repeat of Finding 2024-003. Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.
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.
Federal Agency: U.S. Department of Energy Federal Program: Energy Efficiency and Renewable Energy Information Dissemination, Outreach, Training and Technical Analysis/Assistance Assistance Listing Number: 81.117 Federal Award Identification Number(s) and Federal Award Year(s): DE-EE0009951 (2022), DE-EE0011801 (2025), DE-EE0011383 (2024) Pass-Through Entity: Not applicable—direct award Compliance Requirement: C—Cash Management Criteria or Specific Requirements: In accordance with 2 CFR §200.303, non-Federal entities are required to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award. In addition, 2 CFR §200.305 establishes requirements related to the management of Federal payments. Appropriate internal controls over cash management should include documented review and approval of Federal cash drawdown or reimbursement submissions prior to submission. Condition: During the review of cash management compliance for the major program, we corroborated that responsibility for preparing and reviewing Federal grant submissions was assigned to separate individuals. However, the Organization did not retain documentation evidencing review and approval prior to submission for the items tested. Accordingly, we could not verify that the review and approval control operated for those submissions. Our compliance testing did not identify exceptions to the applicable cash management requirements. Cause: Internal controls over cash management were not operating effectively to ensure that the review and approval of Federal grant submissions was consistently documented and retained. Effect: The lack of documented review and approval increases the risk that inaccurate or unsupported Federal cash drawdown or reimbursement requests could be submitted without timely detection. Perspective Information: We tested 7 Federal grant submissions for the major program during 2025 using a nonstatistical sampling method. None of the submissions tested had retained documentation evidencing review and approval prior to submission. Questioned Costs: None. Repeat Finding: None. Recommendations: We recommend that management formalize and document procedures for the review and approval of Federal cash drawdown or reimbursement submissions. The procedures should require evidence of review and approval, such as documented sign-off prior to submission. Management should also ensure that the evidence of review and approval is retained with the supporting documentation for each submission. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See attached corrective action plan.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public Housing Capital Fund Program Federal Assistance Listing Numbers: 14.872 Noncompliance - C. Cash Management Non Compliance Material to the Financial Statements: No Significant deficiency in Internal Control over Compliance for Cash Management Criteria: In accordance with 2 CFR 200.305, payment methods for federal awards must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds by the recipient. Federal funds drawn under the Public Housing Capital Fund Program should be limited to amounts needed to meet the Authority’s immediate cash requirements for allowable program expenditures. Accordingly, the Authority should implement procedures to ensure grant funds are not drawn in advance of actual or imminent eligible expenditures. Condition: The Authority drew down federal funds in advance of immediate cash needs for allowable program expenditures. As of year end, a portion of the funds drawn remained unexpended and was reported as unearned revenue in the financial statements. This indicates that federal funds were received prior to the incurrence of eligible expenditures. Context: During review of the financial statements, the Authority was noted to have unexpended federal funds on hand at year end that had been drawn prior to the disbursement of allowable program costs. Specifically, amounts recorded as unearned revenue represented federal funds received in advance of immediate cash needs. This condition was identified through review of drawdown activity, general ledger balances, and year end financial reporting records. Known Questioned Costs: $465,581 Cause: The Authority did not have adequate internal controls in place to monitor the timing of grant drawdowns in relation to actual program cash needs and allowable expenditures. As a result, federal funds were requested and received prior to the incurrence of eligible costs under the Public Housing Capital Fund Program. Effect: The Authority was not in compliance with federal cash management requirements governing the timing of federal fund drawdowns. As a result, federal funds were held in advance of immediate cash needs, increasing the risk of improper cash management and noncompliance with Uniform Guidance and HUD requirements. Recommendation: We recommend the Authority strengthen its internal controls over cash management to ensure federal funds are drawn only for immediate cash needs related to allowable program expenditures. Management should implement monitoring and review controls over grant drawdown activity, including periodic reconciliation of drawdowns to incurred expenditures, to ensure compliance with 2 CFR 200.305 and HUD requirements.
Criteria – The Uniform Guidance, 2 CFR 200.305, requires non-federal entities to minimize the time elapsing between the transfer of federal funds and their disbursement for allowable program costs. The Organization is also required to maintain effective internal controls and adequate documentation to supporting federal cash drawdowns and demonstrate that amounts requested are consistent with immediate cash requirements for allowable expenditures. Condition and Description – During our testing of federal cash management, we noted that the Organization did not consistently maintain documentation demonstrating that federal drawdowns were based on immediate cash requirements for allowable program expenditures. Specifically, in January 2025, the Organization made two federal drawdowns totaling approximately $2.8 million, representing approximately 48% of the $5.8 million of federal funds drawn during the year, while HRSA-related payroll and direct program expenditures incurred through January 31, 2025, were approximately $125,000. Accordingly, federal funds were drawn materially in advance of the Organization's immediate cash needs. Although cumulative federal drawdowns for the year did not exceed eligible program expenditures, the timing of the January drawdowns was not consistent with federal cash management requirements to minimize the time between the receipt and disbursement of federal funds. Cause/Effect – The Organization did not have sufficiently effective procedures to reconcile federal drawdown requests to current program expenditures and immediate cash requirements before requesting funds. As a result, federal funds were drawn in advance of related expenditures, increasing the risk of noncompliance with federal cash management requirements and potential repayment of interest or other amounts to the federal government.
Federal Program Information: Type of Finding: Compliance Areas: Funding Agency: Title: FAL Number: Passthrough: Award Period: Significant Deficiency, Other Non-compliance Cash Management, Allowable Costs and Cost Principles, and Reporting U.S. Department of Education Teacher Quality Partnership Grants 84.336S N/A 10/01/2024 – 09/30/2025 Criteria: Cash Management: Although 2 CFR 200.305(b)(1) permits the Foundation to draw down funds in advance, the entity utilizes a cost reimbursement approach for Federal funding. This practice ensures that funds are drawn only for immediate cash needs. 2 CFR 200.305(B)(1) Federal payment. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or projects costs and the proportionate share of any allowable indirect costs. Cost Principals and Reporting: The application of cost principles is governed by 2 CFR 200.400; specifically (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. Condition: During our review of cash management procedures, we identified the following issue: The Foundation drew down funds for the Teacher Quality Partnership Grants (TQP) prior to expenditures or when expenditures were not yet anticipated to be actually disbursed. o TQP Effective Educators grant - $771,222 o TQP Southwest grant - $572,672 Questioned Costs: None. The Foundation used all the funds drawn down according to the grant directives as it closed out the grant funds. All expenditures were in compliance with the stated objectives. Cause: During the beginning of the second Donald Trump administration, President Trump issued an executive order on January 20, 2025 that established the Department of Government Efficiency (DOGE). Individuals within the Department of Education who oversaw this program encouraged the Foundation to draw down the remaining funds on both grants as they believed the grants were going to be shut down soon by DOGE, but they wanted those entities that were already committed to staffing and programs with schools to be able to complete the school year. The Foundation did draw down those funds in order to complete the commitments to the schools. Effect: The Foundation was not in compliance with 2 CFR 200.305(b)(1) and 2 CFR 200.400(b) by drawing down funds prior to actual expenditures. Auditor’s Recommendation: We recommend that the Foundation not draw down funds prior to incurring actual expenditures or until expenditures are expected in the very near future. Grant program personnel do not have the authority to waive 2 CFR requirements or grant requirements, even in unusual situations like the DOGE occurrence. Responsible official’s view: Specific corrective action plan for the finding: Three Rivers Education Foundation’s staff will ensure that all drawdowns follow appropriate timeframes as required. TREF has already implemented this long-standing practice. The action described in this “Significant Deficiency” came about because of extenuating circumstances and advice provided from the federal government. We were assisted with disbursements by the Federal Program Officer for the TQP programs. Timeline for completion of corrective action plan: Immediately and ongoing Employee positions(s) responsible for meeting the timeline: Executive Director and Chief Financial Officer
2025-001 - Cash Management - Interest Earned on Federal Advances Not Calculated, Remitted, or Accrued Federal Agency: U.S. Department of State Program: Office of Weapons Removal and Abatement - Direct Programs, Weapons Removal and Abatement Assistance Listing Number: 19.800 Federal Award Identification Numbers: See Schedule of Expenditures of Federal Awards Compliance Requirement: Cash Management Type of Finding: Significant deficiency in internal control over compliance and instance of noncompliance Repeat Finding: No Criteria 2 CFR 200.305 requires recipients and subrecipients other than states to minimize the time elapsing between the transfer of Federal funds and disbursement by the recipient or subrecipient. Advance payments must be limited to the minimum amounts needed and timed as close as administratively feasible to actual, immediate cash requirements. Recipients are also required to maintain advance payments of Federal funds in interest-bearing accounts unless an exception applies. Recipients may retain up to $500 per year of interest earned on Federal funds for administrative expenses; interest earned in excess of $500 per year must be returned annually to the Department of Health and Human Services Payment Management System, regardless of whether the recipient was paid through that system. 2 CFR 200.516 requires audit findings to include the Federal program identification, criteria, condition, cause, effect, questioned costs when applicable, perspective, repeat finding status, recommendation, and views of responsible officials. Condition During our testing of cash management for Assistance Listing 19.800, we noted that the Foundation received Federal advance payments and maintained Federal funds in interest-bearing accounts during the year ended December 31, 2025. However, the Foundation did not calculate the amount of interest earned on Federal advance balances, did not determine the amount required to be remitted to the Federal government, and did not accrue an interest payable as of December 31, 2025. As a result, the Foundation did not have controls in place to ensure that interest earned on Federal advance payments was identified, calculated, recorded, and remitted in accordance with Uniform Guidance requirements. 2025-001 - Cash Management - Interest Earned on Federal Advances Not Calculated, Remitted, or Accrued (Continued) Context The Foundation reported Federal expenditures of $2,389,325 under Assistance Listing 19.800 for the year ended December 31, 2025. The condition was identified during cash management testing for the major program when reconciling total cash drawdowns to total expenditures. The exception applied to the Foundation’s overall process for calculating and remitting interest earned on Federal advances. Cause The Foundation did not have a formal process or assigned control owner to periodically identify Federal advance balances, calculate interest earned on those balances, compare the interest earned to the annual $500 retention allowance, record any required payable, and remit excess interest to the Federal government. Effect The Foundation did not comply with the cash management requirements applicable to Federal advance payments. Interest earned on Federal funds in excess of the annual amount permitted to be retained may not have been timely returned to the Federal government. In addition, because the Foundation did not calculate the interest required to be remitted, the Foundation did not record an interest payable as of December 31, 2025, which could result in liabilities being understated and net assets being overstated. Known Questioned Costs Interest and Dividends earned on Federal funds totaled $51,526. Recommendation We recommend that the Foundation establish and implement written cash management procedures to ensure compliance with Uniform Guidance requirements for Federal advances. The procedures should include: 1. Identifying Federal advance balances by award and bank or investment account. 2. Calculating interest earned on Federal advance balances at least annually, and more frequently if advance balances are significant. 3. Comparing annual interest earned on Federal funds to the $500 retention allowance. 4. Recording interest payable for amounts required to be remitted as of year-end. 5. Remitting excess interest annually through the required Federal payment system. 6. Assigning review and approval responsibility to an individual independent of the preparer. Views of Responsible Officials Management agrees with the finding. The Foundation will implement written cash management procedures to calculate interest earned on Federal advance balances, record any required payable at year-end, and remit amounts due to the Federal government in accordance with Uniform Guidance requirements..
Documentation of Costs Claimed for Reimbursement and Cash Management Significant Deficiency in Internal Control Over Compliance; Noncompliance; Known Questioned Costs - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles; Cash Management; Reporting Type of Finding: Significant deficiency in internal control over compliance; noncompliance; known questioned costs Known Questioned Costs: $64,969 (contract 049 and contract 082 combined; the Organization’s records do not allocate administrative cost claims between the two agreements) Criteria: 2 CFR 200.303 requires a non-federal entity to establish and maintain effective internal control over the federal award providing reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations and the terms and conditions of the award. 2 CFR 200.403 requires that costs charged to a federal award be necessary and reasonable, allocable to the award, adequately documented, and otherwise allowable under the cost principles in 2 CFR 200 Subpart E. 2 CFR 200.305(b) requires that payments made in advance of expenditures be limited to the minimum amounts needed and be timed in accordance with the actual, immediate cash requirements of the entity in carrying out the purpose of the approved program. 2 CFR 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards for the period covered by the audit. Condition: We identified the following related conditions, each arising from the concentration of the program’s administrative, accounting and monitoring functions in a single individual without documented independent review: (a) Costs claimed without supporting documentation. The Organization submitted requests to the two awards under Assistance Listing No. 10.719 totaling $170,700 for administrative costs for the year ended December 31, 2025. The Organization’s accounting records and supporting documentation substantiate administrative costs of $105,731 applicable to those awards. The remaining $64,969 was claimed, and reimbursed by the grantor, without supporting documentation. The personnel component of the administrative costs claimed was based on estimated allocations rather than records of work performed, as described in Finding 2025-004. (b) Federal funds drawn and unspent at year end. At December 31, 2025 the Organization held $15,735 of federal funds that had been drawn but not disbursed for program purposes. A subrecipient returned its award on December 22, 2025 and the funds were not re-granted until January 30, 2026. (c) Advance payments. The Organization received advance payments under the awards totaling $1,155,000 during the year ($300,000 received September 24, 2025; $500,000 received October 30, 2025; and $355,000 received December 10, 2025). No documented determination of the program’s immediate cash requirements supports the amount or the timing of these advances, and the Organization does not monitor the elapsed time between receipt of advanced funds and their disbursement for program purposes. (d) Preparation and review of program records. The log of amounts requested for reimbursement and amounts received, the monthly reconciliation of that log, and the schedule of expenditures of federal awards are prepared by the same individual who prepares the requests and records the related receipts in the general ledger. Neither the reconciliation nor the schedule is subject to a documented review by an individual independent of its preparation. Cause: The Organization administers the award with limited administrative staff and has not adopted written policies and procedures governing federal grant administration, including the documentation required to support costs claimed for reimbursement, the determination of immediate cash needs before requesting or accepting advance payments, and independent review of the reimbursement log, the monthly reconciliation and the schedule of expenditures of federal awards. Effect or Potential Effect: Costs of $64,969 were claimed and reimbursed without documentation supporting their allowability, and $15,735 of drawn funds remained unspent at year end. Amounts totaling $127,373, of which $64,969 relates to this program, were recorded as due to the grantor through an audit adjustment, and $15,735 was recorded as a refundable advance. A deficiency in internal control over compliance exists that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Context: All administrative cost reimbursement requests submitted under the awards for the year ended December 31, 2025 ($170,700), all three advance payments received ($1,155,000), and the year-end balance of drawn but undisbursed funds were examined in their entirety and compared to the Organization’s accounting records; no sampling was used. Known questioned costs of $64,969 represent 38 percent of the administrative costs claimed and 5.2 percent of total program expenditures of $1,244,996, and exceed the $25,000 threshold in 2 CFR 200.516(a)(3). Our tests of compliance did not disclose instances of noncompliance that are material to the program, and our opinion on compliance for the major federal program is unmodified. Recommendation: We recommend that the Organization: (1) submit requests only for costs incurred and documented at the date of the request, and retain the request, the expenditure listing and the underlying support together in a single referenced file with the allowability review evidenced by preparer and reviewer sign-off; (2) prepare and retain, for each advance requested or received, an analysis of the program’s immediate cash requirements supporting the amount and timing of the advance, and monitor the period between receipt and disbursement of advanced funds; (3) require documented review of the monthly reimbursement log reconciliation and of the schedule of expenditures of federal awards by an individual not involved in preparing requests or recording receipts; and (4) coordinate with the USDA Forest Service program contact regarding repayment or offset of the amount recorded as due to the grantor. Repeat Finding: No Views of Responsible Officials: Management agrees that reimbursement requests should be subject to a more structured review and that an individual who did not prepare the request should independently review the supporting documentation and costs claimed. Cash needs are currently discussed and assessed based on factors including the number and status of applications, anticipated award amounts, and the timing of expected payments. Going forward, management will document its cash requirement determination when preparing each federal cash draw request, including the factors considered and the amount determined to be needed.
Programs: Research and Development Cluster. The condition was identified on the following awards within the cluster: Basic and Applied Scientific Research (ALN 12.300, Awards N00014-24-1-2000, N00014-22-1-2706, and N00014-22-1-2833; U.S. Department of Defense, Office of Naval Research), Biological Sciences (ALN 47.074, Award 2316379; National Science Foundation), and Gulf Coast Ecosystem Restoration Science, Observation, Monitoring, and Technology (ALN 11.451, Award NA23NOS4510310; U.S. Department of Commerce, National Oceanic and Atmospheric Administration). Criteria: 2 CFR § 200.305 requires recipients to minimize the time between receipt and disbursement of federal funds. Advances must be limited to actual, immediate cash needs. Condition: NMMF requested advances for certain federal awards that exceeded actual or near-term program cash needs. We examined all 21 federal drawdown transactions during 2025, totaling $1,235,184 across five awards; no sampling was used. Advances exceeded costs incurred on five awards, and $471,412 of federal cash remained on hand at December 31, 2025 in excess of costs incurred to date. Cause: The year ended December 31, 2025 was the first year NMMF drew federal funds in advance of costs incurred; in prior years these awards operated on a cost-reimbursement basis. Effect: Federal funds may have been held longer than permitted, increasing the risk of noncompliance with federal cash management requirements and unremitted interest on excess cash. Questioned Costs: None reported. The issue relates to timing of cash draws, not the allowability of program costs. Recommendation: Management should document a cash needs calculation before each federal draw and monitor federal cash on hand, including any interest earned on advances. Repeat Finding Status: This is not a repeat of a finding reported in the immediately preceding audit.
Criteria: Under 2 CFR § 200.305(b) of the Uniform Guidance, advance payments to a non-federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-federal entity in carrying out the purpose of the approved program. Under 2 CFR § 200.302(b)(6), the entity must maintain written procedures to implement these payment requirements. Additionally, 2 CFR § 200.346 provides that any federal funds paid in excess of the amount the entity is entitled to under the award constitute a debt to the federal government, and 2 CFR § 200.344 requires the entity to promptly refund any balance of unobligated cash advanced that it is not authorized to retain. Condition: During our testing of cash management for the Part C Capacity Development award, we noted that the Institution requested an advance of $15,000 from the federal awarding agency for the purchase of equipment. The equipment was ultimately acquired at a cost lower than the amount requested. As a result, the $15,000 advanced remained undisbursed as of December 31, 2025. At the time of our audit, the Institution had not returned the excess funds to the federal awarding agency. Effect: The Institution held federal cash in excess of its immediate needs, which is not in compliance with the cash management requirements of the Uniform Guidance. The undisbursed balance represents a liability to the federal government and may generate interest that must be remitted. Failure to return these funds could result in the federal agency disallowing costs or requiring repayment, imposing other remedies for noncompliance under 2 CFR § 200.339, potentially jeopardizing future funding Cause: The Institution does not have adequate policies and procedures to monitor federal cash advances against actual expenditures, nor to identify and return excess advanced funds on a timely basis. In addition, there was no review process to reconcile drawdowns to the actual cost of the items purchased once the transaction was completed. Recommendations: We recommend that the Institution take the following actions: 1. Return of Excess Funds: Promptly return the undisbursed $15,000 to HRSA through the Payment Management System (PMS) in accordance with the agency’s refund procedures, and determine whether any interest earned on the advance must be remitted under 2 CFR § 200.305(b)(9). 2. Drawdown Procedures: Develop and implement written cash management procedures to ensure that advance requests are limited to immediate cash needs and are supported by current quotes, purchase orders or invoices. 3. Reconciliation and Review: Establish a periodic reconciliation, at least monthly, of federal drawdowns against actual disbursements for each award, so that any excess cash is identified and either applied to allowable costs within the required time frame or returned to the awarding agency. 4. Monitoring and Oversight: Assign responsibility for monitoring federal cash balances to a designated officer, with review by senior management, to ensure timely compliance.
Finding 2025-003: Federal Cash Advance Management and Liquidity Monitoring Federal Programs: Marine Sanctuary Program, Congressional Identified Awards and Projects, Office for Coastal Management, Marine Debris Program Assistance Listing Numbers: 11.429, 11.469, 11.473, 11.999 Federal Agency: U.S. Department of Commerce. Compliance Requirement: Cash Management Type of Finding: Significant Deficiency over Internal Controls over Compliance and Noncompliance Criteria: Under 2 CFR 200.305(b), payment methods for recipients and subrecipients (other than states) must minimize the time elapsing between the transfer of Federal funds and the recipient’s disbursement of those funds. Advance payments must be limited to the minimum amounts needed and must be timed to correspond with the recipient’s actual, immediate cash requirements in carrying out the purposes of the approved program or project.Condition: At December 31, 2025, the Foundation reported approximately $7.75 million of refundable advances attributable to Federal awards. Total cash and cash equivalents and investments available to satisfy these obligations totaled approximately $6 million. Accordingly, approximately $1 million of Federal cash advances was no longer available to fund the applicable Federal programs or to be returned to the Federal awarding agencies or pass-through entities. Accordingly, our procedures determined that the Foundation drew Federal funds in advance of actual, immediate program cash requirements and used approximately $1.75 million of those funds to finance expenditures not attributable to the applicable Federal awards. Cause: During 2025, the Foundation experienced increased financial pressure resulting from rising operating costs, constraints on unrestricted resources, and uncertainty regarding the timing and continued availability of Federal and other funding. These conditions placed additional strain on the Foundation’s liquidity and contributed to operating cash-flow shortfalls. As these pressures developed, management’s liquidity-monitoring processes were not sufficiently robust to identify the extent of the developing shortfall and facilitate timely corrective action. The Foundation's pooled cash management practices resulted in available cash balances falling below refundable advance obligations associated with certain Federal awards. While no questioned costs were identified and program expenditures were not charged improperly, the Foundation was not in a position to demonstrate that cash balances equal to outstanding Federal advance obligations were maintained as of year-end. Effect or Potential Effect: The deficiency creates a risk that the Foundation would be unable to satisfy grant-related obligations or return excess Federal advances when required. Questioned Costs: None, as charges to the specific programs have not occurred. Context: The amounts described above were determined by evaluating the total population of Federal grants for which cumulative cash draws exceeded cumulative expenditures as of December 31, 2025; accordingly, the results were not based on a sample. Collectively, these grants had approximately $7.75 million in refundable advances, compared with total cash and cash equivalents and investments of approximately $6 million. The resulting $1.75 million shortfall represents the amount by which the Foundation’s total cash and cash equivalents and investments were insufficient to satisfy the refundable advances. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that management, with appropriate Board oversight, strengthen its budgeting, cash-flow forecasting, and liquidity-monitoring processes to provide timely and reliable information regarding the Foundation’s ability to meet its operating and grant-related obligations. Management should evaluate the appropriate measures necessary to address the deficiency in funds available to satisfy refundable advances and establish controls that provide for effective monitoring of Federal award activity, refundable advances, available financial assets, and overall liquidity. These processes should be designed to enable management and the Board to identify and respond to emerging cash-flow concerns, evaluate potential repayment exposures, and appropriately consider the related financial-statement presentation and disclosures, including liquidity and going-concern considerations.
Finding No. 2025-002 - Cash Management - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: Low-Income Home Energy Assistance 93.568 Federal Award Identification Number and Years: 23DSS4301EW 9/25 and 9/26 Name of Passthrough Entity: Connecticut Department of Social Services Criteria - In accordance with 2 CFR 200.305, payment methods must minimize the time elapsing between the transfer of funds from the Federal awarding agency or the pass-through entity and the disbursement of funds by the recipient . Additionally the grant agreement requires vendor invoices to be processed and paid within the specified timeframe established by the awarding agency. Condition - For the year ended December 31, 2025, 2 invoices were not paid within the required distribution requirements as defined by the grant agreement. In addition, supporting documentation for one invoice selected for testing could not be located. Cause - The Organization experiences a high volume of invoices requiring processing during the energy assistance season, which resulted in the delay of processing for the two invoices, in excess of the established 10-day payment standard from date of invoice. Additionally, documentation for one invoice could not be located due to a filing error. Effect or Potential Effect - Payments were not made within the required time as noted in the grant agreement. The inability to locate supporting documetation prevented verification that one payment was made in accordance with applicable program and grant requirements. Questioned Costs - None. Context - Of 40 disbursements selected for testing, two invoices were not paid within the required timeframe and supporting documentation for one invoice could not be located. Identification as a Repeat Finding - This is not a repeat finding. Recommendation - We recommend that management strengthen procedures over invoice processing and document retention to ensure vendor invoices are reviewed and paid within the timeframes required by the grant agreement; and supporting documentation is retained and remains accessible in accordance with record retention requirements, including during system conversions or transitions from legacy systems. Views of Responsible Officials - Management continues to identify opportunities to streamline invoice processing and maximize recruitment efforts to fill vacant staffing positions.
Finding number: 2025-001 Federal Agency: U.S. Department of Agriculture Federal program: 10.727 – Inflation Reduction Act Urban & Community Forestry Program Compliance requirements: C. Cash Management; L. Reporting Type of finding: Cash Management - Instance of Noncompliance; Reporting - Significant deficiency Criteria: Cash Management: 2 CFR 200.305(b) requires that advance payments to a non-Federal entity be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. Section E of the award agreement (Advance and Reimbursable Payments) states: "Advance payments must not exceed the minimum amount needed or no more than is needed for a 30-day period, whichever is less. If the Recipient receives an advance payment and subsequently requests an advance or reimbursement payment, then the request must clearly demonstrate that the previously advanced funds have been fully expended…" Reporting: 2 CFR 200.328 and the terms of the award require the submission of periodic financial reports. 2 CFR 200.302(b) requires the non-Federal Organization financial management system to provide for accurate, current, and complete disclosure of the financial results of each Federal award in accordance with the reporting requirements. Condition: Cash Management: The Entity submitted a Request for Advance or Reimbursement (SF-270) for $91,453, the total remaining balance of certain lease agreements charged to the award. Lease payments to the lessors continued on a monthly basis. Of the amount received: • $5,175, three monthly payments, fell within the 30-day cash needs allowed under the award. • $86,278 exceeded the Organization immediate cash needs. • During the year, $34,635 of the excess was used to cover eight monthly lease payments made after the 30-day period. • As of December 31, 2025, $51,643 remained unexpended and was recorded as deferred revenues. Reporting: The semiannual financial reports submitted to the Federal agency for the periods ended December 31, 2025 reported the $91,453 received as cash disbursed, rather than the actual disbursements. As a result, reported cash disbursements were overstated by $51,643. Context: During the year ended December 31, 2025, the Entity submitted 18 payment requests totaling $1,347,437. We selected a nonstatistical sample of 4 payment requests (2 reimbursements and 2 advances) totaling $458,699. The sample was not intended to be, and was not, a statistically valid sample. Cash Management: The condition was noted in 1 of the 4 payment requests tested. The exception was in 1 of the 2 reimbursement requests tested, which included $91,453 for lease payments that had not been made at the time of the request. After receiving these funds, the Entity did not request additional funds for the vehicle leases and has applied the advanced funds to the monthly lease payments. Reporting: We examined the 2 semiannual financial reports submitted during the year. The condition was noted in 2 of the 2 reports examined. Cause: The Organization requested the full amount of a valid lease obligation in advance due to uncertainty surrounding the potential termination or interruption of the federally funded program. The advance exceeded the Organization's immediate cash requirements. Additionally, in its semiannual expenditure report, the Organization reported the full lease amount as cash disbursed although only the periodic lease payments had actually been made. The reporting process did not include an adequate reconciliation of reported cash disbursements to actual payments. Cash Management: The Organization payment request process does not include a review to verify that costs included in reimbursement requests have been paid, that advances are limited to 30-day cash needs, and that prior advances have been fully expended before additional funds are requested. Reporting: The Organization's financial reporting process relies on drawdown records rather than on actual disbursements recorded in the accounting records, and reports are not reconciled to the general ledger before submission. Effect: The Organization held Federal funds in excess of its immediate cash needs for most of the year, contrary to 2 CFR 200.305(b) and the terms of the award, which limited the Federal government's use of those funds. The semiannual financial reports provided the Federal agency with inaccurate information on award disbursements, affecting its ability to monitor the award. Questioned cost: None Identification as a repeat finding: Not applicable Recommendation: We recommend that the Organization: 1. Contact the Forest Service to determine whether the unexpended advanced funds may be returned or may be applied to future cash needs and document the determination. 2. Establish a review and approval procedure, performed before each SF-270 is submitted, to verify that the amount requested does not exceed 30-day cash needs and that previously advanced funds have been fully expended. 3. Correct the affected semiannual financial reports and prepare future reports based on actual disbursements recorded in the accounting records, with an independent review before submission. Views of responsible officials and planned corrective action: Management concurs with the findings. See Corrective Action Plan.
Finding #SA2025-001: Reimbursement Requested In Advance of Payment Assistance Listing Number: 97.047 Assistance Listing Title: BRIC: Building Resilient Infrastructure and Communities Name of Federal Agency: Department of Homeland Security Pass Through Entity: California Governor's Office of Emergency Services (CalOES) Pass Through Identifying Number: LPM-PJ-09-CA-2023-005 Federal Award Identification Numbers: EMF-2023-PD-0004 Criteria: Under 2 CFR 200.305 (b), a grant recipient must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of the funds. Advance payment must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the grantee or subrecipient carrying out an eligible activity. In addition, under 2 CFR 200.305 (b)(8), a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work. Condition: During our testing of program expenditures charged to the PDM (2024) project, we noted one charge to the grant included a retention payable in the amount of $7,119 that was not disbursed to the vendor as of December 31, 2025. We also noted one other charge to the grant for the same vendor that included a retention payable in the amount of $3,739 that had not been disbursed to the vendor as of December 31, 2025. Cause: We understand the retentions were included in the grant drawdowns due to a misinterpretation of the grantor’s drawdown form that indicated the “full, total grant expenditures incurred to date…(including applicable local share)” should be included on the reimbursement request. Questioned Costs: We question costs in the amount of $10,858, of which $9,772 has been reimbursed by the grantor. Effect: Drawing down funds in advance does not minimize the time elapsing between receipt of funds and expenditures and is not in compliance with the cash management provisions of 2 CFR 200.305. Recommendation: The Park District should not draw down funds until expenditures have been paid in cash and in the event, drawdowns occur prior to disbursement, ensure that the time elapsing between the draw down and the expenditure is minimized. In addition, the Park District should determine whether the interest earned on the grant funds advanced need to be returned to the grantor. View of Responsible Officials and Planned Corrective Actions: The reporting of project expenses in the amount of $10,858 was due to a misinterpretation of the grantor reimbursement form and was not intended to be an advanced payment. The grantor’s drawdown form indicates the grantee should report “project expenditures.” When Accounts Payable (AP) receives the vendor invoice to process, AP applies the full amount of the invoice to the associated Purchase Order (and its budgeted project/fund source) and withheld retention is tracked in a “retentions payable” liability account. When the Grants Department Accounting Technician prepares a drawdown (reimbursement) request, a Project Summary Report and the Project Cost Summary report are pulled from Finance Enterprise. Both reports reflect the full invoice amount as expenditures incurred. The Account Technician reconciles the summary reports with the cleared checks/electronic payments to confirm the actual amount paid to the vendor and if retention was taken out. The amount of any retention will be noted on the Project Summary Report, and the copy of the retention report will be attached as backup documentation when preparing the SEFA. In accordance with the Park District’s Federal Compliance Procedure, the Park District generally does not accept federal funds on an advancement basis. If an advance were to be required by the granting agency, the advancement of funds would be handled in accordance with any requirements of the grant contract and the C.F.R. part 200, 200.305(b). For future federal grant reimbursements, the Park District will only report project expenditures once they have been reconciled with the corresponding cleared checks/electronic payments. This will ensure retention withheld from contractor invoices is excluded from reported project expenses. Please also see Corrective Action Plan separately prepared by the Park District.
Criteria - Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Citation - 2 CFR 200.305(b) Condition - During our test, we noted that the Organization drew down a significant portion of the remaining available budget on each of the federal contracts during February 2025 totaling $1,892,108 for GUSNIP and $1,536,701 for GUSCRR prior to incurring any allowable program expenditures. The full drawdown was not supported by a documented cash need assessment, and there was no evidence of prior written approval from the awarding agency authorizing an advance of the full award amount ahead of need, as required under the award's specific terms and conditions. Cause - Management drew down a significant portion of the remaining available budget on each award based on an informal understanding of the grant timeline rather than the entity's documented cash management procedures. The entity lacked a formal policy requiring drawdown requests to be limited to immediate cash needs, and no one was assigned responsibility for confirming agency pre-approval before requesting funds outside the normal reimbursement cycle. Effect - The Organization held federal funds in excess of immediate cash needs for an extended period, in noncompliance with the cash management standards of 2 CFR 200.305(b). This condition resulted from management's override of the entity's cash management procedures when requesting the February 2025 drawdown, without a documented cash need assessment or confirmation of agency pre-approval, notwithstanding board authorization of the drawdown amount. Board approval addressed governance authorization of the funding request but did not substitute for the entity's control requiring drawdowns to be limited to immediate cash needs. As a result, the advance earned interest of $20,163 on federal funds held in excess of need, which the Organization subsequently identified, segregated, and remitted to the agency on August 12, 2026, net of the $500 per year/award administrative retention allowed under 2 CFR 200.305(b)(12). The entity also remains exposed to the risk that the awarding agency disallows or requires return of the advance if it determines the drawdown was inconsistent with award terms or 200.407(f) prior-approval requirements. Questioned Costs - None. Repeat Finding - No. Recommendation - We recommend that the Organization establish a process to identify and obtain any required prior written agency approval before requesting funds outside the normal, need-based drawdown cycle, per the compliance requirement and the specific award terms, as well as consult with the awarding/pass-through agency regarding the appropriate resolution of the drawdown already received, including whether any portion must be returned. Views of Responsible Officials - See Corrective Action Plan.
Finding No. 2025-001 Cash Management U.S. Department of the Housing and Urban Development Economic Development Initiative – ALN #14.251 Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has developed written procedures to follow regarding expenditures of federal funds
Assistance Listing, Federal Agency, and Program Name - 14.251, U.S. Department of Housing and Urban Development, Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Federal Award Identification Number and Year - B-24-CP-MI-1192 and B-22-CP-MI-0444 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - The City must establish and maintain effective internal controls to ensure compliance with federal requirements including written procedures for processing of federal payments as outlined in 2 CFR 200.305. Condition - The City did not have established written cash management procedures for processing of federal payments. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During the year, the City received cash payments from federal sources and had no written procedures to ensure compliance with the requirements of federal payments. Although the written procedures were not established, there was no noncompliance identified with cash management requirements. Cause and Effect - The City did not have a control in place to ensure the required written cash management proecedures for processing federal payment are in place. Recommendation - Written procedures for processing of federal payments should be established, as required by 2 CFR 200.305. Views of Responsible Officials and Corrective Action Plan - The City will develop and implement written cash management procedures for processing federal payments.
Cash Management - Significant Deficiency in Internal Controls over Major Programs Condition: The Organization requested reimbursement of certain federal grant awards in excess of actual, allowable expenditures incurred at the time of the request. Major Programs: ALN 93.138 - Protection and Advocacy or Individuals with Mental Illness; ALN 84.240A - Program of Protection and Advocacy of Individual Rights. Criteria: 2 CFR §200.305(b) requires non-federal entities to minimize the time elapsing between the transfer of federal funds and disbursement or incurrence of costs. Under the reimbursement method, drawdowns should be limited to actual, allowable expenditures incurred and not estimates or projections of future expenditures. Cause: The Organization did not follow their internal control procedures in place to ensure that reimbursement requests were supported by expenditures incurred prior to submission. Management relied on estimated expenditures rather than reconciling to actual amounts incurred at the time of the request. Effect: Federal funds were drawn in excess of actual expenditures incurred, increasing the risk of noncompliance with Uniform Guidance cash management requirements. Questioned Costs: While funds were drawn in advance, all amounts were subsequently expended on allowable program costs. Ultimately no questioned costs were noted, however, the excess funds were matched against allowable costs incurred after the grant period end of September 30, 2025. Recommendation: The Organization should follow internal control procedures necessary to ensure requests for reimbursement are based solely on allowable expenditures that have been incurred prior to the date of the request. View of Responsible Officials: The Organization agrees with the finding and will implement corrective action necessary to address the condition.
Interest Earned on Federal Funds. Criteria: 2 CFR 200.303 provides that non-federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. 2 CFR Section 200.305 sets forth the requirements for the return of interest earned on federal funds. Recipients of federal grants are required to establish internal controls to minimize the time that elapses between the receipt of federal funds from the grantor, and the payment of those funds to vendors who provide goods or services. Interest earnings that exceed $500 per year from excess cash balances must be paid to the federal grantor. Condition: CASIS did not calculate interest earnings on the federal cash balance to determine if any earnings should be repaid to the grantor. Cause: CASIS does not have a policy to monitor federal cash balances for cash management requirements, including the calculation of interest earnings. Effect: CASIS did not take steps to reduce the time elapsing from the date it received federal funds to the date it spent the funds on program costs. The lapse resulted in interest earned on federal funds. Questioned Costs: Fontana calculated that CASIS earned approximately $17,000 of interest on the federal funds balance for the fiscal year ended September 30, 2025. Interest earnings on federal funds of more than $500 must be returned to the grantor. Perspective: Interest was not calculated or returned to the grantor for fiscal year ended September 30, 2025. Recommendation: Fontana recommends that CASIS: o Implement controls to minimize the time between receipt of funds from the granting agency and disbursement of those funds. o Compute interest earned on advance funds and remit amounts in excess of $500 to the grantor when required.
2025-003 – Written Policies Year Initially Occurring: 2025 CONDITION: The Town does not have certain written policies required by the Uniform Guidance. CRITERIA: 2 CFR 200.302 (b) (6) states, in part, “written procedures to implement the requirements of section 200.305” and (7) states, in part, "Written procedures for determining the allowability of costs…” CAUSE: The condition results from the failure to design and implement policies and procedures which are in accordance with the Uniform Administrative Requirements. EFFECT: The Town is not in compliance with the Uniform Administrative Requirements. RECOMMENDATION: We recommend that the Town adopt written policies required under the Uniform Guidance.
Criteria – In accordance with 2 CFR 200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and the disbursement of those funds for program costs. Condition and Description – During testing of cash management procedures for the program, we noted a few instances where federal funds received from the pass-through entity were not timely disbursed. Questioned Costs – None identified. Identification of a Repeat Finding – This finding was not reported in the prior year. Cause - The delay resulted primarily from timing differences between receipt of federal reimbursement funds and processing of vendor payments associated with program expenditures. Effect – Holding federal funds for extended periods prior to disbursement may result in noncompliance with federal cash management requirements and increases the risk that federal funds are not utilized in accordance with program guidelines.
Year Finding Originated: 2025 Title and Assistance Listing Number of Federal Program: Staffing for Adequate Fire and Emergency Response 97.083 Federal Award Identification Number and Year: EMW-2022-FF-00974 Name of Federal Agency: Department of Homeland Security Questioned Costs: $13,801 Criteria: Per 2 CFR § 200.305, non-Federal entities must minimize the time between the transfer of federal funds and the disbursement of those funds for program purposes. Federal regulations and the SAFER grant terms require that reimbursement requests be based on allowable expenditures that have been incurred by the District. Additionally, 2 CFR § 200.303 requires non-Federal entities to establish and maintain effective internal controls over Federal awards to ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal awards. Condition: During testing of SAFER reimbursement requests, one reimbursement request contained an error in the benefits calculation formula, resulting in the employer insurance costs being included twice in the request. The District received funds in excess of allowable costs incurred during the reimbursement period due to the calculation error. The District’s control designed to prevent such errors, management review and approval of SAFER reimbursement requests prior to submission, did not operate effectively. Although reimbursement requests are prepared and submitted by District personnel, documentation supporting management’s review and approval of the reimbursement calculations was not maintained, and the error in the reimbursement calculation was not detected prior to submission. Cause: The reimbursement request was prepared using a manual spreadsheet containing a formula error that duplicated certain benefit costs. The District’s reviewed procedures were not formally documented or designed to ensure the accuracy of reimbursement calculations prior to submission. Effect: The District requested and received federal funds in excess of allowable expenditures incurred during the reimbursement period. Additionally, the lack of effective review controls increases the risk that reimbursement requests may contain errors or unsupported amounts. Recommendation: We recommend that the District strengthen controls over reimbursement calculations and implement review procedures to ensure reimbursement requests are based solely on allowable costs incurred prior to submission. Views of responsible officials: See management’s response to finding on Page 59.
Finding: 2025-002 – Cash Management – Significant Deficiency in Controls over Compliance and immaterial instance of non-compliance Department: United States Department of Health and Human Services Program Name: Assistance for Torture Victims Federal Assistance Listing Number: 93.604 Criteria: 2 CFR 200.303: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by COSO. 2 CFR 200.305 mandates that federal payments, including reimbursement, must minimize the time elapsing between fund transfer and disbursement. Condition/Context: During our walkthroughs of the cash draw process, the Organization indicated that evidence supporting preparation of the draw and review of the draw is not retained in its books and records. Additionally, the Organization drew funds in excess of their immediate cash needs, totaling approximately $350,000. Cause: Management did not have a documented policy and set of documented procedures in place to ensure consistent application of an independent review and memorializing that review. Effect: Draws in excess of amounts incurred may not be spent within three days. Further, any amounts claimed that are not allowable grant expenditures may be disallowed by the granting agency. Questioned Costs: None Repeat finding: This is a repeat finding – see prior year 2024-002. Recommendation: We recommend that the Organization establish a written policy and procedures for cash management that should be reviewed and approved by those charged with governance. The policy should require that all draws be reviewed by someone independent of the individual calculating the draw. The review should be documented in the Organization’s books and records. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has established a written policy and implemented a documented process for the preparation and review of federal drawdowns, including clear evidence of review such as signoffs or electronic approvals.
Non-compliance with Cash Management Requirements of the Capital Fund Program (Other Noncompliance) Capital Fund Program – Assistance Listing No. 14.872, Grant Period- Fiscal Year-End September 30, 2025 Criteria Uniform Guidance Cash Management requirements of the Capital Fund Program require the Authority to minimize time elapsing between the transfer of funds from the U.S. Treasury and disbursement to the applicable contractors or vendors (2 CFR Section 200.305.b). Condition As of the beginning of fiscal year 2025 the Authority held $179,995 of unexpended Capital Fund Program grant draws. Instead of funding Capital Fund Program expenditures from these unexpended funds during the fiscal year 2025, the Authority continued to draw funds from Capital Fund Program grants to fund fiscal year 2025 expenditures. Further, during fiscal year 2025 the Authority drew an additional $475,945 of Capital Fund Program grant proceeds, which were not expended during the fiscal year and resulted in cumulative unexpended grant draws (unearned grant revenue) as of September 30, 2025 of $655,940. Questioned Costs - None Cause Lack of sufficient understanding of Cash Management Requirements of the Capital Fund Program. Effect Non-compliance with Uniform Guidance Cash Management requirements of the Capital Fund Program. Recommendation With the exception of Capital Fund Program grant authorizations budged for Public Housing Program operating assistance (Capital Fund Grant Budget Line Item 1406), we recommend that the Authority expend the unexpended Capital Fund Program grant proceeds held prior to drawing down additional funding from Capital Fund Program grants.Management’s Response Management's Response- With the exception of Capital Fund Program grant authorizations budged for Public Housing Program operating assistance, the Authority will expend the unexpended Capital Fund Program grant proceeds held prior to drawing down additional funding from Capital Fund Program grants. Jebidiah Jackson, Executive Director, has assumed the responsibility of executing this corrective action as of August 1, 2026.
Finding 2025.003: Cash Management - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program Grants for New and Expanded Services under the Health Center Program COVID-19 - Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS11299 - 2024 and 2025, Q8MCS49109 - 2024, H2ECS45512 - 2024 and H8LCS51634 - 2024 Criteria In accordance with §200.305, Federal Payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Organization's drawdowns did not illustrate review and approval by management. Cause The Organization did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect or Potential Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected 7 drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for all 7 drawdowns. Identification of Repeat Finding Not a repeat finding. Recommendation The Organization should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.
Special Supplemental Nutrition Program for Women, Infants and Children (WIC) ALN No. 10.557 U.S. Department of Health and Human Services Criteria or Specific Requirement – Cash Management (2 CFR 200.305(b) and 45 CFR 75.305(b)) Condition – The Organization is required to request reimbursement for program costs only after those costs have been incurred and paid. Certain expenditures were paid after reimbursement was received. Questioned Costs - None Context – One of nine cash reimbursement was tested and determined that not all expenses were paid by the Entity before reimbursement was received. This sample is not and is not expected to be a statistical sample. Effect – The Organization did not properly comply with the cash management requirements. Cause – The Organization’s internal controls did not properly identify certain expenditures were not paid before reimbursement was received. Identification as a repeat finding – Not a repeat finding. Recommendation – The Organization should enhance controls to ensure that all expenditures included in reimbursement requests have been paid prior to requesting federal funds. This may include implementing a review procedure to verify payment status before submission. Views of Responsible Officials and Planned Corrective Actions – Management acknowledges the importance of cash management policies with regards to reimbursable programs. Day Kimball Healthcare is committed to full compliance with federal cash management requirements and takes seriously its obligation to request reimbursement only after program expenditures have been both incurred and paid. During fiscal year 2025, the employee responsible for previous reporting of these expenses retired, and the job function of submission and review of this grant passed on to other individuals. Management recognizes that our existing review process did not include a sufficient control step to verify payment status prior to submission of reimbursement requests, and employees have now been trained on proper procedure, which includes confirmation of payment of expenses before submission is allowed. In addition, the reviewer is now aware of this requirement and confirmation of payment is now a part of this individual’s responsibilities as well. Going forward into fiscal year 2026 Management believes these controls will prevent similar findings from occurring. Sheena Farner, Director of Budget & Financial Reporting, will oversee this corrective action plan to be fully implemented by September 30, 2026.