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.
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.
Cash Management Moving to Work Demonstration Program AL No. 14.881 Other matter required to be reported in accordance with 2 CFR 200.516(a) Repeated from 2024 audit (see prior year finding 2024-003) Condition: Out of the 66 grant drawdowns during the year, 19 drawdowns were tested and it was noted that one of the drawdowns was made in advance of the supporting invoices being paid to the vendors and subsequently the invoices were not paid within three business days, as required. Context: The auditor haphazardly selected 19 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Agency is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Agency to be properly spent within three business days of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Agency experienced staff turnover in the finance department as well as difficulty replacing personnel that were knowledgeable with HUD and grant reporting requirements. Effect: The Agency did not disburse the capital funds in a timely manner for one of the draws made during the year. Questioned Costs: $19,232 Auditor’s Recommendations: The Agency should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan.
Finding Number: 2025-004 Prior Year Finding Number: N/A Compliance Requirement: Cash Management; Reporting Program: U.S. Department of Defense National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: Various Award Year: 10/01/2024 – 09/30/2025 Government Department/Agency: District of Columbia National Guard (DCNG) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Uniform Guidance at 2 CFR Section 200.305 requires payment methods to align with actual, immediate cash requirements and support allowability of costs. Additionally, 2 CFR Section 200.305(b) requires non-Federal entities to minimize the time elapsing between the transfer of funds from the Federal government and the disbursement of those funds for program purposes. 2 CFR Section 200.302(b)(6) requires financial management systems to provide accurate, current, and complete disclosure of financial results, including proper recording of cash transactions. When entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request (2 CFR Section 200.305(b)(3)). Federal awarding agency regulations and grant award terms require recipients to submit the Request for Advance or Reimbursement (SF-270) timely to support reimbursement requests and proper cash management under the award. Condition – BDO selected four (4) out of twelve (12) months for cash management testing and identified a total of 44 drawdowns within the sampled period. The following findings were noted during testing: • Twenty-four (24) out of forty-four (44) sampled drawdowns were not submitted on a timely or regular basis, occurring beyond the grant period and inconsistent with prescribed monthly timelines. • In three (3) out of forty-four (44) instances, no drawdowns were submitted for the Facility Sustainment Restoration Modernization project (main Federal grant), indicating incomplete initiation of reimbursement requests. • In twenty-three (23) out of forty-four (44) instances, no evidence of submission of reimbursement requests (SF-270) to the Federal officers was available, and forms lacked DCNG Director approval. In addition, in 2 instances (out of 3 noted), although DCNG Director approval existed, no evidence of submission was available. • In three (3) instances, amounts in billing authorization did not match the amounts requested on SF-270, indicating lack of reconciliation control. • In one (1) instance, a grant award was excluded from the billing authorization worksheet, but a corresponding SF-270 existed, which was neither Director-approved nor supported by submission evidence, indicating drawdowns processed outside the established authorization framework. • Evidence of cash receipt was available for only six (6) out of forty-four (44) instances; for the remaining instances, no supporting documentation was provided, and funds were reportedly not received. Questioned Costs – Not determinable. Context – These deficiencies were identified during testing of forty-four (44) cash drawdown and reimbursement transactions performed as part of the audit of internal control over compliance and compliance with Federal cash management requirements. Effect – The identified deficiencies result in noncompliance with Federal cash management requirements and increase the risk of delayed reimbursements. They also create a heightened risk of unsupported, inaccurate, or unauthorized drawdowns being processed. Furthermore, the lack of adequate documentation and controls over cash receipts and grant activity weakens tracking mechanisms, thereby impacting the reliability and accuracy of financial reporting. Cause – These issues are primarily due to a lack of adherence to established controls over the review and approval of drawdowns, along with inadequate monitoring of timelines and completeness across grants. Additionally, the absence of effective reconciliation controls between billing authorizations, SF-270 forms, and cash receipts contributes to inconsistencies. Weak implementation of approval workflows and insufficient documentation retention practices further exacerbate the control deficiencies. Recommendation – We recommend that DCNG strengthen internal controls over Federal reporting compliance by: • Establishing and enforcing a formal drawdown schedule aligned with actual cash needs. • Ensuring all eligible expenditures are included in billing authorizations and drawdowns. • Requiring documented supervisory review and certification of SF-270 prior to submission. • Strengthening approval workflows (e.g., BOX routing) with complete audit trails. • Performing routine reconciliations between billing authorizations, drawdowns, and recorded receipts. • Implementing procedures to track and document receipt of funds for all submitted drawdowns. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – DC Government Operations concurs with this finding and acknowledges the deficiencies identified during the audit period. We want to provide important operational context that speaks to the shared nature of the SF-270 drawdown process and how corrective actions will be distributed across responsible parties. The SF-270 reimbursement cycle is a multi-agency process. The Office of the Chief Financial Officer is responsible for generating the drawdown reports that serve as the prerequisite data source for DC Government Operations’ Grants Management Specialist to develop and route SF-270 forms for Director approval and submission to the Grants Officer Representative and U.S. Property and Fiscal Officer. Deficiencies identified in this finding reflect breakdowns at multiple points across that workflow. The corrective action plan assigns responsibility accordingly and includes a designated section for OCFO’s response. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
2025-002 Cash Management ALN 93.224 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) US Department of Health and Human Services Contract Numbers H80CS30749-06, H80CS30749-07, and H8NCS54017-01-02 Contract Periods September 1, 2024 – August 31, 2025 and April 1, 2024 – March 31, 2025 Conditions and Criteria: The requirement under 2 CFR 200.305 provides requirements for the timely disbursement of funds after receipt of federal grant funds. 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. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMBapproved, government-wide information collections to request payment. In the 2025 audit, for 4 of the 10 samples selected for testing, OCHS did not disburse federal funds within the required one business day after receipt. Effect: The effect is that federal funds were not disbursed within the OMB Compliance requirement of one business day after receipt of the federal funds. Cause: There were staffing changes in Grant Management and CFO positions. OCHS has policies in place to minimize time elapse between disbursement of federal funds after receipt, however there was a lack of monitoring to ensure timely disbursement of federal funds as required under 2 CFR 200.305. Auditor Recommendation: We recommend a procedure be added to ensure there is additional monitoring over federal grant cash timely remittance. Planned Corrective Action: See the following Corrective Action Plan section for management’s planned corrective action.
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. 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: $270,215 Cause: The Authority did not have adequate procedures 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 cash management procedures 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. 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.
Assistance Listing, Federal Agency, and Program Name 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year CE1HS52674 & CE1HS53568 2025 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Under 2 CFR 200.305, the Corporation is required to maintain and follow documented cash management procedures that are consistent with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance requirement is that cash drawdown and disbursement practices for federal awards are governed by formal written policies and procedures designed to ensure compliance with applicable cash management requirements. Condition The Corporation’s cash management policies were not in conformance with Uniform Guidance requirements. Although cash management transactions tested were performed in accordance with existing practices, the Corporation did not have a written cash management policy that met Uniform Guidance requirements. 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 - For all cash management transactions selected for testing, controls and procedures were followed in practice; however, no written policy existed that met Uniform Guidance requirements. Accordingly, the finding reflects a formal policy deficiency rather than identified transaction-level exceptions within the items tested. Cause and Effect The Corporation did not have a written cash management policy and related procedures in place that were aligned with Uniform Guidance requirements. As a result, compliance in this area was not supported by a formal policy framework. Without documented cash management policies and procedures, the Corporation cannot demonstrate that its cash management practices are formally designed and administered in accordance with federal requirements. This increases the risk of inconsistent application of cash management practices and noncompliance with federal cash management requirements, and it resulted in material noncompliance over the major program Recommendation The Corporation concurs with the finding. The Corporation will implement and formally adopt written cash management policies and procedures that conform to Uniform Guidance requirements and ensure those procedures are consistently followed and documented.
Finding 2025-002 – Cash Collateralization (Repeat Finding 2024-004) Criteria: Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Coalition’s cash, it was noted that as of September 30, 2025, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $510,432 were uninsured at September 30, 2025. Unearned revenue was reported at $7,516,280 which includes advance payments of Federal funds. Questioned Costs: None. Cause: The Coalition has not entered into a cash collateralization agreement with their financial institution. Effect: The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Coalition discuss with their financial institution about insured cash sweep services or certificate of deposit account registry services. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Material Weakness in Internal Control over Compliance and Material Instance of Noncompliance (Scope Limitation) Federal Agency: U.S. Department of Health and Human Services Federal Program: Centers for Independent Living Assistance Listing Number: 93.432 Direct Award Numbers: 2322CAILCL-00 and 2338CAILCL-00 Pass-Through Entity: California Department of Rehabilitation Grant Identifying Number: 32594 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance – Payroll Expenditures, Cash Management and Reporting Criteria: Pursuant to 2 CFR §200.303, the Organization is required to establish and maintain effective internal control over the federal award 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 federal award. Under 2 CFR §200.403 and 2 CFR §200.405, costs charged to the Federal award must be allowable, allocable, reasonable, and adequately documented. Under 2 CFR §200.403(h) and 2 CFR §200.309, costs must be incurred within the approved period of performance. Under 2 CFR §200.305, for cash management using the reimbursement method, the Organization must maintain records sufficient to support amounts requested for reimbursement and demonstrate that reimbursement requests are based on allowable program expenditures. Under 2 CFR §200.328 (financial reporting) and §200.329 (performance reporting) recipients are responsible for monitoring activities under federal awards and must submit required performance and financial reports at the intervals required by the federal award, which may be no more frequent than quarterly and no less frequent than annually. Condition and Context: The Organization did not have adequately designed internal controls over the review and approval of allowable payroll activities and payroll expenditures, cash management activities and federal reporting requirements. Specifically, there were no documented review and approval procedures or supervisory controls in place to ensure the accuracy and completeness of time and effort tracking of payroll expenditures, reimbursement requests or financial reports under the federal program. Additionally, sufficient appropriate audit evidence was not available to support compliance with the Activities Allowed or Unallowed and Allowable Costs/Cost Principles-Payroll Expenditures, Cash Management and Reporting compliance requirements. The lack of documentation and supporting records resulted in a scope limitation that prevented the auditors from performing necessary procedures to determine whether the Organization complied with applicable federal requirements related to allowed or unallowed payroll activities and allowable costs/cost principles for payroll expenditures, cash management transactions and financial reporting submissions for the population selected for testing. The condition affected the administration of the Centers for Independent Living federal program for the fiscal year ended September 30, 2025.Cause: Management did not design and implement documented internal controls requiring supervisory review and approval of allowable payroll activities and payroll expenditures, cash management activities and federal financial reporting. In addition, management did not maintain adequate supporting documentation to demonstrate compliance with federal requirements. Effect: The lack of effective internal controls increased the risk that errors, omissions, or noncompliance related to allowed or unallowed payroll activities and allowable costs/cost principles for payroll expenditures, cash management and reporting could occur and not be detected in a timely manner. Furthermore, because sufficient appropriate audit evidence was unavailable, the auditors were unable to determine whether the auditee complied with applicable federal compliance requirements related to - allowable payroll activities and payroll expenditures, cash management and reporting. Questioned Costs: Questioned costs could not be determined due to the scope limitation. Repeat Finding: No Recommendation: We recommend that management design and implement formal internal controls over - allowable payroll activities and payroll expenditures, cash management and reporting activities, including documented supervisory review and approval procedures for all time and effort tracking of payroll expenditures, federal reimbursement requests and financial reports. Management should also establish policies and procedures to ensure adequate supporting documentation is retained and readily available to support compliance with federal program requirements and facilitate audit testing. This should include comprehensive training for staff involved in federal program administration, regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems. Views of Responsible Officials: Management Position: Management agrees with this finding. Adequate internal controls over payroll, cash management, and federal reporting were not in place during FY2025 as a direct result of inconsistencies in procedures and internal controls.Corrective Actions: Accountability & Role Clarity: The Executive Director and Program Manager have mapped compliance requirements for each federal award—including expenditure review, reporting, receivables, and deliverables—and assigned clear ownership across management positions to eliminate single points of failure and reinforce segregation of duties. Training & Ongoing Monitoring: All management staff will receive annual training on federal grant requirements (allowable/unallowable costs, period of performance, cash management, and reporting) at the start of each fiscal year. Monthly monitoring meetings among the Executive Director, Program Manager, and Accountant will precede Finance Committee meetings to review grant spending. Periodic internal reviews and a final year-end reconciliation will be conducted. Documentation & Continuity: All grant-related records will be maintained on a shared organizational drive accessible to all responsible staff. Formal onboarding and off boarding procedures for federal grant management will be developed to ensure continuity regardless of personnel changes. The Finance Manual will be updated to reflect all procedures. Hood & Strong has been retained suggests proper internal controls necessary to achieve full federal compliance. All federal award information will be regularly reported to the Board of Directors.
02 Cash Management - Significant Deficiency Federal agency: Department of State Assistance Listing Number: 19.015 Program: Cultural, Technical and Educational Centers Criteria: Per 2 CFR §200.305(b), recipients must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient regardless of whether the payment is made by electronic funds transfer or by other means. Per 2 CFR §200.305(b)(1), advance payments to the recipient must be limited to the minimum amounts needed and should be timed with the actual, immediate cash requirements of the recipient 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 recipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During our audit, we noted one (1) instance in which a draw of $5,570,800 was requested and executed, which represented the remaining balance of the grant award near fiscal year end. The drawdown was made in anticipation of a potential federal government shutdown. Management was aware that the drawdown would exceed the Center’s immediate cash requirements, however the Center was concerned that access to federal funds could be delayed or unavailable during the shutdown period, potentially impacting program operations and reimbursement of allowable costs. Cause: The Center drew down the remaining funds in anticipation of a potential government shutdown and to mitigate the risk of delayed or unavailable access to federal funding during the shutdown period. Additionally, the Center did not have a formal protocol in place for addressing situations in which regulatory requirements may conflict with operational risks from events such as a potential government shutdown.Effect: Federal funds were received in advance of the Center’s immediate cash needs, which is inconsistent with the timing requirements of 2 CFR §200.305(b). Although the funds were drawn based on guidance from the awarding agency and in anticipation of a potential government shutdown, the timing of the advance did not minimize the time between receipt and disbursement. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should ensure its cash management policies and procedures fully adhere to 2 CFR §200.305. Specifically, the Center should formalize protocol for addressing situations in which operational risks, such as a potential government shutdown, may conflict with Uniform Guidance requirements or other applicable federal regulations. In such circumstances, the Center should continue to comply with Uniform Guidance requirements unless formal regulatory exception from the awarding agency is obtained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.
Improper Timing of MTW Capital Fund Program (CFP) Drawdowns (ALN 14.881) Condition: During testing of the Capital Fund Program (CFP) component of the Moving to Work (MTW) Demonstration Program, we determined that the Authority drew down CFP funds in advance of need. As of September 30, 2025, $1,891,326 of CFP funds drawn during the fiscal year remained unearned (undisbursed) and were carried as restricted/unearned amounts at year end. The drawdowns were not aligned with immediate, allowable obligations or expenditures at the time the funds were requested. This condition is a repeat of prior year finding 2024-002. Criteria: Under 2 CFR §200.305(b), non-Federal entities (other than states) must minimize the time elapsing between the transfer of funds from HUD and their disbursement; funds may be drawn only when needed for immediate disbursement (HUD’s “just-in-time” funding requirement). 2 CFR §200.302(b)(6) requires written procedures for payment consistent with §200.305. Under the MTW Demonstration Program (ALN 14.881), the Authority is subject to the financial management and cash management requirements applicable to non-MTW agencies; the 2025 Compliance Supplement (4- 14.881) states that “No flexibility under the MTW demonstration permits an agency to waive any requirements regarding cash management” and that MTW agencies “are subject to the same cash management requirements as non-MTW agencies.” HUD controlled-disbursement and eLOCCS drawdown requirements apply (Notice PIH 2017-06). Cause: The Authority lacked effective internal controls to ensure CFP drawdowns were tied to immediate, documented, and allowable obligations and expenditures at the time of request, and did not reconcile amounts drawn to amounts earned and expended during the year. Effect: Federal cash was drawn in advance of need, contrary to the cash management standards of 2 CFR §200.305(b), resulting in $1,891,326 of undisbursed federal funds held by the Authority at year end. Holding undisbursed federal funds increases the risk of improper use, may give rise to an interestremittance obligation under 2 CFR §200.305(b)(9) to the extent interest earned exceeds the $500 de minimis, and exposes the Authority to recapture or repayment. Questioned Costs: None. Recommendation: The Authority should (1) implement written drawdown procedures requiring each CFP request to be supported by immediate, documented, and eligible obligations or expenditures in accordance with HUD’s “just-in-time”/eLOCCS requirements; (2) perform periodic reconciliations of amounts drawn to amounts earned and expended, and promptly return or properly apply funds drawn but not needed; (3) monitor and remit any interest earned on undisbursed federal cash above the de minimis; and (4) provide staff training on federal cash management requirements under 2 CFR Part 200 and HUD guidance. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-002 involving cash management and drawdown procedures. Revise cash management procedures; require documented support and approval for drawdowns; perform monthly reconciliations; monitor interest earned on undisbursed federal cash; provide staff training; and report compliance status to the Board of Commissioners.
Improper Timing of MTW Capital Fund Program (CFP) Drawdowns (ALN 14.881) Condition: During testing of the Capital Fund Program (CFP) component of the Moving to Work (MTW) Demonstration Program, we determined that the Authority drew down CFP funds in advance of need. As of September 30, 2025, $1,891,326 of CFP funds drawn during the fiscal year remained unearned (undisbursed) and were carried as restricted/unearned amounts at year end. The drawdowns were not aligned with immediate, allowable obligations or expenditures at the time the funds were requested. This condition is a repeat of prior year finding 2024-002. Criteria: Under 2 CFR §200.305(b), non-Federal entities (other than states) must minimize the time elapsing between the transfer of funds from HUD and their disbursement; funds may be drawn only when needed for immediate disbursement (HUD’s “just-in-time” funding requirement). 2 CFR §200.302(b)(6) requires written procedures for payment consistent with §200.305. Under the MTW Demonstration Program (ALN 14.881), the Authority is subject to the financial management and cash management requirements applicable to non-MTW agencies; the 2025 Compliance Supplement (4-14.881) states that “No flexibility under the MTW demonstration permits an agency to waive any requirements regarding cash management” and that MTW agencies “are subject to the same cash management requirements as non-MTW agencies.” HUD controlled-disbursement and eLOCCS drawdown requirements apply (Notice PIH 2017-06). Cause: The Authority lacked effective internal controls to ensure CFP drawdowns were tied to immediate, documented, and allowable obligations and expenditures at the time of request, and did not reconcile amounts drawn to amounts earned and expended during the year. Effect: Federal cash was drawn in advance of need, contrary to the cash management standards of 2 CFR §200.305(b), resulting in $1,891,326 of undisbursed federal funds held by the Authority at year end. Holding undisbursed federal funds increases the risk of improper use, may give rise to an interest-remittance obligation under 2 CFR §200.305(b)(9) to the extent interest earned exceeds the $500 de minimis, and exposes the Authority to recapture or repayment. Questioned Costs: None. Recommendation: The Authority should (1) implement written drawdown procedures requiring each CFP request to be supported by immediate, documented, and eligible obligations or expenditures in accordance with HUD’s “just-in-time”/eLOCCS requirements; (2) perform periodic reconciliations of amounts drawn to amounts earned and expended, and promptly return or properly apply funds drawn but not needed; (3) monitor and remit any interest earned on undisbursed federal cash above the de minimis; and (4) provide staff training on federal cash management requirements under 2 CFR Part 200 and HUD guidance. Reply and Corrective Action Plan: The Authority concurs with the finding and acknowledges it is a repeat of finding 2024-002 involving cash management and drawdown procedures. Revise cash management procedures; require documented support and approval for drawdowns; perform monthly reconciliations; monitor interest earned on undisbursed federal cash; provide staff training; and report compliance status to the Board of Commissioners.
Assistance Listing, Federal Agency, and Program Name - 93.837, U.S. Department of Health and Human Services, Cardiovascular Disease Research (Research and Development Cluster) Federal Award Identification Number and Year - 93.837 - U01HL146245 (2024) Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal 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 the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.305(b)(3), when the reimbursement method is used, the Federal agency or pass through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass through entity reasonably believes 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 - Out of a sample of 29 subrecipient disbursements tested, we noted 6 were not paid within 30 days of the LLC receiving the request for reimbursement. Cause and Effect - A lack of effective internal controls resulted in material noncompliance with this requirement. Recommendation - We recommend management establish robust controls over subrecipient activity to ensure the 30 day requirement is met. Views of Responsible Officials and Planned Corrective Actions - 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 timely processing to ensure compliance with the 30 day requirement.
Criteria Under 2 CFR 200.305(b), the non-Federal entity must minimize the time between the receipt of federal funds and their disbursement, limiting advances to immediate cash needs. Additionally, 2 CFR 200.302(b) requires the non-Federal entity must maintain financial management systems that provide accurate, current, and complete disclosure of financial results and permit the tracing of federal funds to ensure they are used in accordance with applicable federal requirements. Condition Higher Education Institutional Aid From a sample of sixty-eight (68) disbursements selected for testing, the following were identified: Eight (8) instances in which the elapsed time between receipt of federal funds and the related disbursement exceeded three (3) business days. Six (6) instances in which vendor payments could not be traced to a corresponding federal funding request due to lack of supporting documentation. One (1) instance where the disbursement was requested twice within two separate federal funding requests. TRIO Cluster From a sample of ten (10) disbursements selected for testing, the following were identified: Three (3) instances in which disbursements could not be traced to a corresponding federal funding request due to lack of supporting documentation. One (1) instance where the disbursement was requested twice within two separate federal funding requests. This is a repeat finding. Refer to finding 2024-002. Cause The condition occurred because the existing cash management process does not contain the level of detail or structure needed to ensure federal cash activity is fully and consistently accounted for. Also, the University lacks clearly defined monitoring procedures to ensure federal cash transactions were timely processed. Effect The instances where disbursements occurred for more than three business days after receipt of federal funds, and the instance where the same disbursement was considered in two separate drawdowns, resulted in actual noncompliance with federal cash management requirements. In addition, for instances where vendor payments could not be traced to a specfic funds request, the University is unable to substantiate compliance with federal requirements, resulting in potential noncompliance. Continued noncompliance could result in additional administrative oversight by the U.S. Department of Education, including potential reconsideration of the University’s eligibility to operate under the advance payment method. Questioned Costs None. Recommendation We recommend that the University strengthen its reconciliation procedures, including enhancing the content and review of the Funds Request Form and consistently retaining appropriate documentation for each federal funding request. Additionally, the University should establish monitoring procedures, such as periodic reviews of federal cash balances and funding requests, to ensure that disbursements are issued within regulatory timeframes. Views of Responsible Officials Refer to Management's unaudited corrective action plan.
2025-003 – Cash Management, United States Department of Health and Human Services, Native Hawaiian Health Care Systems 93.932 Criteria: Under federal regulation (Uniform Guidance, 2 CFR §200.305), grantees are required to minimize the time between the drawdown of federal funds and the disbursement of those funds. To ensure proper cash management, recipients may draw funds up to three (3) business days in advance of incurring expenses. The timing of drawdowns must be as close as administratively feasible to immediate cash requirements. Funds held longer than three business days are generally considered excessive. Additionally, interest earned in excess of $500 annually on advanced funds must be remitted to the HRSA Payment Management System. Condition: During testing of federal expenditures for Uniform Guidance compliance on major programs, it was noted that the Organization withdrew over $1,300,000 in February 2025 to cover estimated expenses for the remainder of the fiscal year. The funds were fully expended on allowable program costs by fiscal year-end. Cause: Due to concerns regarding potential disruptions to access the Federal Payment Management System (e.g., government shutdown or policy changes), the Organization drew down a significant amount of funds in advance to ensure sufficient operating resources for the remainder of the fiscal year. Potential Effect: Drawing funds significantly in advance of allowable expenditures may result in excess cash on hand, which could negatively impact cash management practices and increase the risk of noncompliance with federal regulations, including potential misuse of federal funds. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its cash management practices by limiting federal fund drawdowns to amounts needed within three (3) business days of allowable expenditures, in accordance with federal requirements. Repeat Finding: No. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling drawdowns on federal funds based on timely allowable expenses incurred. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.
Federal Program: U.S. Department of Education: Fund for the Improvement of Postsecondary Education, ALN 84.116Z Criteria: Federal regulations (2 CFR section 200.305) require that recipients minimize the time between the drawdown of federal funds and their disbursement for allowable project costs. Advances of federal funds must be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the project. Condition: The College drew down federal funds in April 2025 for project expenses that were not spent until May and June 2025. Cause: The issue occurred due to internal miscommunication regarding which account code should be used to record the grant activity. The incorrect code was used when processing the April drawdown, which led to drawing funds before eligible expenditures were incurred. Effect: Although the funds were ultimately spent within the same fiscal year, the timing of the drawdown did not meet the requirements for advance drawdowns. Questioned Costs: None Context: The College requested and received two drawdowns related to this award. This error occurred in only the first drawdown. Project expenses reimbursed by the second drawdown were appropriately incurred prior to the drawdown request. Repeat Finding: No Recommendation: Crowe recommends the College establish clear guidance and training on the proper use of organization codes for federal grants. Views of Responsible Officials and Planned Corrective Actions: College officials acknowledge the error and attribute it to the misclassification of the grant under an incorrect organization code. They note that the funds were ultimately expended for allowable project costs within the same fiscal year. The College agrees to enhance training and implement additional review procedures to ensure compliance with cash management requirements going forward.
Program Name: Literacy Excellence Accelerates Performance – 84.215G Magnet Schools Assistance ARC – 84.165 Awarding Agency: U.S. Department of Education Finding Type: Significant Deficiency on Internal Controls over Compliance and Noncompliance Questioned Cost Amount: None Context / Criteria: The School District should maintain internal controls to retain documentation that is available to support the expenditures that were paid prior to the request for reimbursement based on Uniform Guidance. The internal controls should provide reasonable assurance that the expenditures are accurate, allowable, and properly allocated as to grant and period. Condition: We noted one reimbursement request for the Literacy Excellence Accelerates Performance program and one for the Magnet Schools Assistance ARC program where supporting documentation did not match the amounts requested for reimbursement. Cause / Effect: The School District has not established appropriate controls for all cash reimbursement requests to have a report retained that reflects the supporting expenditures. The School District may undercharge or overcharge the grant as a result. Recommendation: We recommend that the School District implement a process to ensure the School District is following and complying with 2 CFR 200.305(b)(3). Views of Responsible Officials and Corrective Actions: Management is in agreement with the finding. See accompanying corrective action plan.
Finding 2025-001: Cash Management Federal Agency-U.S. Department of Health and Human Services ALN: 93.297 and 93.217 Criteria: 2 CFR 200.305(b) states for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Condition: The Council receives federal money to provide teen pregnancy prevention and family planning services. In order to carry out those services, the Council enters into sub-awards with providers throughout its service territory. Providers submit their invoices to the Council monthly, and the Council submits a request for payment to the grantor for reimbursement. The audit revealed that the non-federal entity did not consistently minimize the time between the transfer of federal funds from the U.S. Treasury and the disbursement of those funds for program purposes. Questioned Costs: None. Context: The Council provided services under grants received directly from the U.S. Department of Health and Human Services. In order to provide the services, sub-awards are made with providers within the Council’s service territory. Providers were to be paid based off the invoices submitted to the Council. The Council submits a request for payment to the U.S. Department of Health and Human Services and once the funds are received, the Council is to pay its providers in a timely manner. Cause: The finance department initiated drawdowns based on projected expenditures rather than actual, immediate disbursement needs, leading to early receipt and holding of funds. Effect: Holding federal funds for extended periods may result in noncompliance with federal cash management regulations, potential interest liabilities, and reduced efficiency in program execution. Repeat Finding: This is a repeat finding. Recommendation: We recommend updates in the payment process to ensure that all providers are paid timely after receipt of grant funds. Management Response: We acknowledge the finding and take full responsibility for ensuring compliance with federal cash management requirements. The delay in provider payments during the audit period was primarily due to a temporary halt in government disbursements, which created uncertainty and the potential for funding gaps. To prevent recurrence, we have implemented the following corrective actions: • Payment Process Update: Provider disbursements are now prioritized immediately upon receipt of federal funds. • Compliance Calendar: A centralized calendar with automated reminders ensures timely processing of all payments. • Contingency Planning: A reserve allocation for provider payments has been established to mitigate risks associated with government-related payment interruptions.
Assistance Listing, Federal Agency, and Program Name - 93.566, U.S. Department of Health and Human Services, Refugee and Entrant Assistance State/Replacement Designee Administered Programs Federal Award Identification Number and Year- FCSAK00843 2025 Pass- through Entity - Illinois Department of Human Services Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - Yes 2024-001 Criteria - In accordance with 2 CFR 200.305 2(b), for nonfederal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass through entity and the disbursement by the nonfederal entity whether the payment is made by electronic funds transfers or issuance or redemption of checks, warrants, or payments by other means. In accordance with 2 CFR 200.305(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 the request is believed to be improper. Condition - Controls in place did not minimize the time elapsing between the transfer receipt of billing from the subrecipient and disbursement of federal dollars to the subrecipient in accordance with the guidance above. Questioned Costs - None. If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable as there are no questioned costs. Identification of How Questioned Costs Were Computed - Not applicable as there are no questioned costs. Context - Of the three transactions tested, two of the subrecipients were not paid within 30 days of receipt of billing. Cause and Effect - Policies, procedures, and related internal controls did not ensure compliance with federal payment requirements under Uniform Guidance. Recommendation - We recommend the Federation review its procedures and controls to ensure disbursement of funds to its subrecipients is consistent with applicable laws and regulations. Views of Responsible Officials and Corrective Action Plan - As a pass-through recipient, the Federation relies on the timeliness of the State for reimbursement. In all transactions tested, the Federation reimbursed the subrecipients within 30 days of receipt of funds from the State. As a pass-through entity, the Federation understands the requirement to reimburse subrecipients within 30 calendar days after receipt of a billing. However, Federation does not have the financial means to advance cash to subrecipients before funds are collected from the State. Therefore, Federation has requested an advance from the State of Illinois in order to comply with the 30 day requirement.
Specific Requirements: 2 CFR 200.302(b) requires non-Federal entities to provide the following – 1) identification, in its accounts, of all Federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each Federal award program; 3) records that identify adequately the source and application of funds for federally-funded activities; 4) effective controls over, and accountability for all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of the Federal payment section of Uniform Guidance (200.305); 7) written procedures for determining the allowability of costs in accordance with the cost principles as listed in Uniform Guidance. Best practices under generally accepted accounting principles require an organization to establish internal controls over financial reporting over federal awards, which includes tracking of federal dollars within the detailed general ledger by federal programs. Condition: We noted that internal controls over tracking federal funds in the general ledger by federal programs was not being executed to clearly identify which expenditures were for the federal program. Program expenses included both federal and non-federal dollars which made it difficult to ensure the expenditures for federal programs were accurately presented on the SEFA and to identify the specific expenditure to test for compliance. Cause: For the second year the accounting department had significant turnover and went through a software conversion in the current year. The software was not set up to track the expenditures by Federal grant. Effect or Potential Effect: Lack of controls over coding federal programs in detailed general ledger may result in either overstating or understating federal expenditures which could cause a material misstatement of the financial statements and SEFA. Repeat Finding: No Recommendation: We recommend the Organization update its coding process in their financial system. Begin including Project codes for expenses for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See Corrective Action Plan.
2025-004 Inadequate Cash Management Procedures and Noncompliance with Period of Performance Requirements Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Cash Management Criteria: Per 2 CFR §200.305(b), non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes under the period of performance. Furthermore, entities must have written procedures that clearly outline the timing and methods for drawing down federal funds in accordance with cash management requirements. These procedures should be documented, reviewed, approved, and periodically revised to ensure ongoing compliance. Condition: During our testing of cash management procedures, we noted the following: 1. UMADAOP of Lucas’ written procedures lacked key information, including dates of preparation, approval, implementation, review, and revision. 2. For Grant ID 24001119 (budget period 9/30/2023–9/30/2024; NOSA received 5/22/2024), funds were drawn before the start of FY 2025: First drawdown: 6/6/2024 – $1,125,000 Second drawdown: 7/22/2024 – $375,000 Total expenditures as of 12/31/2024: $352,021 expended before FY 2025 start; $990,223 July–Sept 2024; $157,756 Oct–Dec 2024 The timing of these drawdowns did not fully align with the requirement to minimize the time elapsed between the receipt of federal funds and their disbursement for program expenditures, resulting in funds being held in advance of actual cash needs. Cause of Condition: Management has not developed formal policies and procedures for subrecipient monitoring or consistent documentation standards. Cause of Condition: Funds were drawn before the start of FY 2025 because the Notice of Subaward (NOSA) for Grant ID 24001119 was received on 5/22/2024, which was prior to the beginning of the fiscal year. UMADAOP of Lucas’ written procedures did not provide guidance on aligning drawdowns with actual cash needs, and there was no documented review or update of the procedures to ensure compliance with federal cash management requirements. As a result, funds were held in advance of actual program expenditures, reflecting a gap in internal controls over cash management. Potential Effect of Condition: The use of a predetermined drawdown schedule that is not based on actual cash needs could lead to excess federal funds being held unnecessarily, increasing the risk of non compliance with cash management requirements. Additionally, the absence of comprehensive documentation for cash management procedures could result in inconsistencies in implementation, a lack of accountability, and difficulties in ensuring that policies remain current and effective. Questioned Cost: Not quantifiable. Recommendation: UMADAOP of Lucas should revise its cash management procedures to ensure they are in full compliance with federal requirements. UMADAOP of Lucas should adopt a drawdown process that is based on actual cash needs, minimizing the time elapsing between the drawdown of federal funds and their disbursement for program expenditures. Additionally, the organization should update its written procedures to include documentation of when the policies were prepared, approved, implemented, reviewed, and revised. This will help ensure that cash management practices are transparent, consistent, and compliant with applicable regulations. Finally, the organization should consider training relevant staff on the updated procedures and the importance of compliance with cash management requirements. Description of the Nature and Extent of Issues Reported: Funds were drawn and held longer than necessary, and the organization lacks adequate cash management procedures, constituting noncompliance with 2 CFR §200.305. Management Response: Management concurred with the finding. The organization will revise its current draw-down procedures to reflect timing and methods for drawing down federal funds that are in compliance with cash management requirements.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: PA0433L3T002312 - FY25, PA0433L3T002413 - FY25, PA0504L3T002211 - FY25, PA0504L3T002312 - FY25, PA0010L3T002316 - FY25, PA0004L3T002310 - FY25, PA0004L3T002411 - FY25, PA0681L3T002209 - FY25, PA0681L3T002310 - FY25, PA0911L3T002204 - FY25, PA0911L3T002305 - FY25, PA1067L3T002200 - FY25, PA1067L3T002301 - FY25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: - Material Weakness in Internal Controls over Cash Management - Noncompliance Criteria or specific requirement: Per the Uniform Guidance (2 CFR §200.305), nonfederal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement of program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: The entity drew down federal funds in excess of the amounts incurred for allowable expenses. Specifically, cash management procedures did not ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned Costs: Known: $3,547,358 Context: Through discussions with management and other required audit procedures, we noted that Pathways had drawn down $3,547,358 of advanced funding due to uncertainty of access to these funds in the future. The excess of these funds was subsequently returned to the funder. Cause: Due to pending changes in federal funding, the entity was concerned about its access to funding for contracts that were already executed. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed to entity to potential interest liabilities and reputational risk. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat Finding: No Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expense. This should include: - Pre-drawdown verification of expense documentation - Monthly reconciliations of drawdown activity to actual expenditures - Training for staff involved in federal fund management on Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding. See Corrective Action Plan.
Finding Type. Immaterial Noncompliance / Significant Deficiency in Internal Control over Compliance (Cash Management). Program. Research and Development Cluster; all Assistance Listing Numbers; all Award Numbers. Criteria. Per 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds and disbursement. Entities must also ensure that drawdowns are based on actual, allowable expenditures and supported by adequate documentation. Condition. The University did not have documented review procedures in place for federal grant drawdowns under the Research and Development cluster. Drawdowns were processed without a formal review or approval process to verify that amounts requested were based on allowable expenditures. Cause. The University lacked formal internal controls and oversight mechanisms to ensure drawdowns were reviewed prior to submission. The process relied on informal practices without documented policies or designated reviewers. Effect. This deficiency increases the risk of drawing federal funds in excess of actual expenditures or for unallowable costs, potentially resulting in noncompliance with federal regulations. Questioned Costs. No costs were questioned related to this finding. Recommendation. The University should implement formal review procedures for all federal grant drawdowns, including documented policies, designated reviewers, and system controls to ensure drawdowns are accurate, allowable, and properly supported. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
Criteria: Under Uniform Guidance (2 CFR §200.302, §200.303, §200.305, §200.318–§200.326, and §200.430), a non-federal entity must establish, document, and maintain written policies and procedures for the management of federal awards. Effective internal control over federal awards provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the awards. Condition: The Town did not have written policies and procedures required by Uniform Guidance (2 CFR 200) for the administration of its federal programs. Specifically, the Town has not formally documented policies and procedures addressing key areas required under the Uniform Guidance, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. While informal processes exist, they are not sufficiently documented to ensure consistent application or compliance with federal requirements. Cause: The Town has not developed or formally adopted written federal grant management policies and procedures. Effect: Without formal written policies and procedures, there is an increased risk of noncompliance with federal program requirements. This condition exposes the Town to potential noncompliance with federal regulations, increases the risk of unallowable costs being charged to federal awards, and may affect the Town’s ability to properly administer, monitor, and report federal program activity. Additionally, the lack of documentation may impair continuity of compliance in the event of change in key personnel. Recommendation: The Town should develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). The policies should address all major compliance areas, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. The Town should ensure that staff responsible for federal grant administration are properly trained to ensure adherence to these policies and that the policies are reviewed periodically and updated as needed. Views of responsible officials: See management’s responses to findings on Page 78.
Assistance Listing Number, Federal Agency, and Program Name - ALN 93.914, Department of Health and Human Services (HHS), HIV Relief Project Grants Federal Award Identification Number and Year - 6 H89HA00021 32 01 2024 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 the Committee of Sponsoring Organizations of the Treadway Commission. Per 2 CFR 200.305(b)(3), when the reimbursement method is used, the federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request, unless the federal agency or pass-through entity reasonably believes the request to be improper. Condition - A lack of effective controls resulted in noncompliance with federal payment requirements, specifically for payments made to subrecipients. 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 testing over a sample of 40 payments to subrecipients, we noted 3 payments that were made more than the required 30 days after the City received a reimbursement request from the subrecipient. Cause and Effect - A lack of effectively operating controls could result in the untimely disbursement of funds to subrecipients and material noncompliance with federal payment requirements. Recommendation - We recommend that the City design and implement controls to ensure compliance with federal payment requirements, including establishing timelines for processing subrecipient payments and review to ensure adherence to federal payment requirements. Views of Responsible Officials and Planned Corrective Actions - The three payments made were paid 1 to 2 days after the 30 day reimbursement requirement. The City will review its subrecipient payment terms and implement additional processes to help ensure compliance with federal payment requirements.
Federal Agency: U.S. Department of Treasury Federal Program Name: Community Development Financial Institutions Equitable Recovery Program Assistance Listing Number: 21.033 Federal Award Identification Number and Year: 22ERP061061 – 2022 Award Period: April 10, 2023 through December 31, 2028 Type of Finding: - Significant Deficiency in Internal Control Over Compliance - Other Matters Criteria or specific requirement: The CDFI ERP Grant Agreement requires recipients to track the use of award funds, maintain separate accounting records, and ensure that the initial payment is fully expended within 12 months of the award announcement date. Furthermore, 2 C.F.R. § 200.305(b)(7) requires entities to deposit advance payments in interest-bearing accounts and remit any interest earned to the federal government, with appropriate documentation retained. Condition: The Credit Union did not maintain supporting documentation to demonstrate that interest earned on unused CDFI ERP funds held in interest-bearing accounts was remitted to the federal government as required. Additionally, the full amount of the initial grant payment was not fully expended within the 12-month period specified in the grant agreement. Questioned costs: None Context: The deficiency was identified during the audit of the SEFA and reconciliation of unearned grant revenue. The original SEFA lacked sufficient documentation, and the timing of expenditures did not align with the grant agreement’s 12-month requirement. The absence of documentation regarding interest earned and remitted may result in audit findings or repayment obligations. Cause: The Credit Union did not implement adequate internal controls to ensure timely and complete documentation of grant expenditures and to monitor compliance with grant terms regarding expenditure timing and interest remittance. Effect: Failure to maintain adequate documentation and comply with grant terms increases the risk of noncompliance with federal requirements. This could result in audit findings, repayment obligations, or other sanctions imposed by the federal awarding agency. Repeat finding: Not a repeat finding. Recommendation: We recommend that the Credit Union implement and enforce internal controls to track and document interest earned on federal funds, ensure timely remittance to the federal government, and monitor compliance with all grant terms, including the 12-month expenditure requirement. Views of responsible officials and planned corrective actions: Management concurs with the finding and acknowledges the significance of the deficiency. They are committed to strengthening internal controls and ensuring full compliance with grant requirements.
Finding 2025.002: Cash Management - Significant Deficiency Grantor: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Community Mental Health Services Federal Assistance Listing Number: 93.958 Federal Award Identification Number and Year: 24MHA2102 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 three drawdowns for testing of cash management procedures. We noted that for all three drawdowns, there was no formal approval or evidence of review. Identification of Repeat Finding No Recommendation The Organization should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials and Planned Corrective Actions 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.
Assistance Listing Number(s): 14.239 and 21.027 Name of Federal Program or Cluster: Home Investment Partnerships Program and COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Housing and Urban Development and Department of the Treasury Name of Pass-Through Entity: Milwaukee County Department of Health and Human Services Criteria or Specific Requirement: Subparts D and E of 2 CFR Part 200 require a nonfederal entity to establish written policies, procedures, and standards of conduct, including procedures to implement the cash management requirements of 2 CFR section 200.305, procedures that comply with the procurement standards of 2 CFR sections 200.318 through 200.326, and procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200. Specifically, 2 CFR sections 200.430, 200.431, and 200.475 require written policies concerning compensation for personal services, fringe benefits, and travel costs, respectively. Condition: Policies and procedures with requirements in accordance with 2 CFR Part 200 for cash management, procurement, compensation, including fringe benefits, and travel were not maintained. Cause: The Agency is not aware of the requirements of Subparts D and E of 2 CFR Part 200 for written policies, procedures, and standards of conduct. Effect or Potential Effect: A lack of written policies, procedures, and standards of conduct may result in noncompliance with the requirements of federal programs and/or disallowed costs. Repeat Finding: No Recommendation: The Agency should become familiar with the requirements of Subparts D and E of 2 CFR Part 200 and establish appropriate written policies, procedures, and standards of conduct. Views of Responsible Officials: Management has established written policies and procedures after year end that were the policies and procedures followed during the year under audit and meets the requirements of Subparts D and E of 2 CFR Part 200.
Finding Number: 2025-001 Federal Program: Student Financial Assistance Cluster Federal Award Identification Number and Year: Various, 2024-2025 Assistance Listing Number (ALN): 84.268, 84.038, 93.342, 93.925 Federal Awarding Agency: U.S. Department of Education and U.S. Department of Health & Human Services Pass-through Entity: N/A Repeat Finding: No Significant Deficiency and Noncompliance – Cash Management Criteria: 2 C.F.R. § 200.305 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. All other Federal funds must be returned to the payment system of the Federal agency. Returns should follow the instructions provided by the Federal agency. Condition: The University operates on a reimbursement basis; however, the University overdrew federal funds and did not return the overdrawn funds in a timely manner. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Through testing of cash management draws during the year, we identified one instance where the University overdrew federal funds in the amount of $210,077. After discussion with personnel in the Bursar office, the University further reported that it overdrew additional funds of $349,952. In addition, the University did not return the funds timely, with return times ranging from three days to thirty days. Cause and Effect: The University experienced turnover in the Bursar office, which resulted in a misunderstanding of the procedures related to cash draws. As a result, three draws were made in a onemonth period that exceeded the cash needed for disbursements to students. Recommendation: We recommend management implement procedures and processes to ensure that all cash draws are for expenses incurred and any overdrawn funds are returned promptly. Views of Responsible Officials and Corrective Action Plan: See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name - ALN 66.202, U.S. Environmental Protection Agency - Congressionally Mandated Projects Federal Award Identification Number and Year - CG-00E03697-0, 2024 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.319(d), the recipient is required to maintain a written procurement policy that adheres to procurement standards and requirements specified in 2 CFR 200.317 through 2 CFR 200.327. Per 2 CFR 200.305, the recipient is required to maintain a written cash management policy that addresses the requirements of the aforementioned code section. Condition - The Village did not have written policies for cash management or procurement that adhered to the requirements of the Uniform Guidance. 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 - While the Village has written policies in place to address procurement and cash management, the policies do not address the requirements of 2 CFR 200.317 through 2 CFR 200.327 and of 2 CFR 200.305, respectively. Cause and Effect - The Village was not in compliance with grant requirements related to procurement and cash management, nor did it have proper controls in place to ensure these policies had the required elements. The absence of these requirements in the Village's policies increases the potential for further noncompliance because the Village's procedures may not adequately address relevant compliance requirements. Recommendation - We recommend that the Village create and put in place a procurement policy that addresses the requirements of 2 CFR 200.317 through 2 CFR 200.327 and a cash management policy that addresses the requirements of 2 CFR 200.305. Views of Responsible Officials and Planned Corrective Actions - The Village is currently reviewing existing policies to determine the best course of action and updating them for compliance. Some updates may require voter approval, as certain provisions are in the village charter.
2025-001: Cash Management Assistance Listing Number: 14.872, Capital Fund Program Condition and Criteria: 24 CFR 905.310 has the following conditions for the cash management regulation: 1) The PHA shall initiate a fund requisition only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. 2) The PHA shall maintain detailed disbursement records to document eligible expenditures (e.g., contracts or other documents), in a form and manner prescribed by HUD. During the current year audit, the following were noted: 1) One drawdown was deposited 2/5/2025, payment was made 2/27/25. 2) A drawdown dated 12/16/24 for $53,475 – The Housing Authority did not have any invoice documentation attached to the drawdown. 3) The Authority drew down funds from their 501-23 year program in February 2025. As of June 30, 2025, $256,674.13 remains unspent and is shown as an unearned revenue on the Statement of Net Position. Type of Finding: Material Weakness Cause: The Housing Authority experienced turnover in the Executive Director Position. Proper communication and training was not done in the internal control structure to allow compliance with HUD rules and regulations. Effect: The Housing Authority is not in compliance with the Cash Management requirements. Questioned Costs: None known Auditors’ Recommendation: We recommend that the Housing Authority strengthen its internal control structure in relation to the Cash Management requirements.
Program: 14.872 - Capital Funds Criteria: 2 CFR 200.305 requires PHAs to minimize the time federal funds are drawn down to expenditure. The Capital Fund Program provides guidelines of three business days from draw down to expenditure to minimize the interest accrued by the PHA. 24 CFR 905.310 states the PHA 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. Condition: The Housing Authority had drawn down Capital Funds and did not expend within three days. Cause: The Housing Authority was not aware that Capital Funds drawn needed to be expended within three days. Questioned Costs: Not applicable. Effect: The Housing Authority is not in compliance with cash management requirements. Prior Year Finding: N/A Information: Isolated instance. Recommendation: Traditionally we would recommend that the Housing Authority implements appropriate controls over voucher draws to ensure compliance with Public Housing Capital Fund cash management requirements. We recognize that the Capital Funds have been fully expended as of June 30, 2025, so the recommendation does not apply. When receiving Capital Funds in the future, we recommend to follow this recommendation. Management’s Response: Management concurs with the recommendation to implement timely LOCCS fundings that coincides with our normal accounting cycle when receiving Capital Funds in the future.
Finding 2025-003: Cash Management Assistance Listing Number 84.126A Rehabilitation Services - Vocational Rehabilitation Grants to States Award Period: July 1, 2024 – June 30, 2025 Criteria: In accordance with 2 CFR 200.305 (b)(3) and per the terms of the underlying grant agreements, the College is funded under the reimbursement method and therefore, cash drawdowns/reimbursement requests made during the period from the federal agency or pass-through entity should be for expenditures incurred prior to the date of the reimbursement request. Condition: While reimbursement requests submitted by the College were for expenditures incurred prior to the date of the reimbursement requests, certain reimbursement requests were not submitted within the specific time frames and with the requisite documentation required per the grant agreements. Cause: Staff turnover within the Finance and Office of Grants and Sponsored Research (OGSR) prevented adequate levels of detailed review and understanding of the specific due dates and information requirements for reimbursement requests per the grant agreements. Effect: While reimbursement requests submitted by the College were for expenditures incurred prior to the date of the reimbursement requests, certain reimbursement requests were not submitted within the specific time frames and with the requisite documentation required per the grant agreements. Questioned Costs: None. Context: Final reimbursement request for the “I Can Connect (ICC)” grant was not submitted within 12 days of the grant end date as indicated in the initial grant agreement. Final reimbursement request for the “I Can Connect (ICC)” grant was due by July 19, 2025 but it was not submitted until November 17, 2025. The reimbursement requests were missing certain required documentation elements outlined in the underlying grant agreements. Repeat Finding: No. Recommendation: It is recommended that management conduct a more thorough review of the grant agreements to ensure that all timing and supporting documentation requirements are met as they relate to reimbursement requests submitted to granting agencies. Views of Responsible Individuals: In response, the College strengthened control processes as it relates to reimbursement processing, including enhanced month-end procedures, hiring a staff member for additional oversight, strengthening communication, and establishing a grant-specific reimbursement tracker. In addition, a mandatory annual training will be implemented beginning in fiscal year 2026. Refer to the Corrective Action Plan for Current Year Findings.
SA 2025-002: Develop Written Policies and Procedures Assistance Listing Number: 20.509 Federal Program/Cluster Name: Formula Grants for Rural Areas and Tribal Transit Federal Agency: U.S. Department of Transportation – Federal Transit Administration Federal Award Number: 64BA24-02507/64CA17-02442/64HC22-02180/64RO21-01648/64TO21-01865/64MO21-01910/64HC21-01500 Federal Award Year: July 1, 2024 to June 30, 2025 Compliance Requirement Others Criteria 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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 the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Equipment Management Requirements Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e). Condition MARTA does not have comprehensive written policies and procedures concerning the following key compliance areas which are required by the Uniform Guidance: Cash Management MARTA does not have written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. Equipment and Real Property Management MARTA has an Asset Inventory Policy and Procedures, however, it does not clearly define the policies and procedures that are in place for the use, management and disposition of equipment acquired under a Federal award in accordance with 2 CFR sections 200.313(c) through (e). Cause MARTA’s reliance on informal business practices leads to inconsistencies in its internal controls. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Repeat Findings Yes, see the Summary Schedule of Prior Year Audit Findings, SA 2024‑001. The Cash Management and Equipment and Real Property Management policies have not been updated since last year’s audit. Recommendation MARTA should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action MARTA has grown substantially in the last several years. This progress includes identifying areas that need to be updated or developing new processes and documentation. MARTA has an Asset Inventory Policy and Procedures in which the purpose is to ensure that fixed assets are properly accounted for, identified, and tracked. MARTA also has Cash Handling Policy and Procedures which addresses safeguarding public funds and maximizing the available resources. This is designed to reduce the risks associated with the collection, receipts storage and reporting of cash transactions and to safeguard and maintain the security and integrity of MARTA's fiscal assets. MARTA will review and update these policies and/or create new policies to make sure that they are compliant with the Uniform Guidance. Personnel responsible: Sandy Benson, General Manager Anticipated completion date: October 2026
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Community Project Funding/Congressionally Directed Spending ‐ Construction Assistance Listing Number: 93.493 Federal Award Identification Number and Year: 6-CE1HS52375-07 - 2023 Award Period: September 30, 2023, through September 29, 2026 Type of Finding: • Material Weakness in Internal Control over Compliance – Cash Management – Subrecipient Payments • Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.305 specifies that payments to subrecipients must minimize the time between the transfer of funds and their disbursement for program purposes. Subrecipients must be able to demonstrate proper use of funds, maintain records, and be subject to audit. Condition: During testing, it was noted that subrecipient payments were being directly remitted to vendors rather than subrecipients. Questioned costs: None. Context: Of the thirteen samples selected for testing, we noted that nine samples were paid directly to the vendor, rather than the subrecipient. Cause: The Association did not have internal controls in place to ensure subrecipient payments were being remitted directly to the subrecipients. Effect: The Association is noncompliant with federal regulations related to the federal award. Subrecipients do not receive or manage the federal funds, undermining their responsibility for programmatic and financial oversight. Repeat Finding: N/A. Recommendation: We recommend that the Association implement formal policies and procedures requiring remittance of federal funds directly to subrecipients, rather than paying vendors on the subrecipient's behalf. Views of responsible officials: There is no disagreement with the audit finding.