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.
2025-002: Compliance Finding – Cash Management Low-Income Home Energy Assistance Program (LIHEAP) (ALN 93.568) Condition: During audit testing of LIHEAP cash management, we noted the entity drew the maximum allowable 50% advance at the onset of the grant period. The advance was drawn solely because it represented the maximum amount permitted under the award rather than being based on documented immediate or near-term cash requirements. At the time of the draw, the entity did not prepare or retain cash flow projections, disbursement schedules, or other documentation demonstrating that the amount requested was limited to minimum cash needs. Approximately 30 days after receipt of the advance, a significant portion of the funds remained unexpended. Criteria or specific requirement: Per 2 CFR 200.305(b), advances of federal funds must be limited to the minimum amounts needed and timed in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program. In addition, 2 CFR 200.305(b) requires that the timing and amount of cash drawdowns minimize the time elapsing between transfer of funds and disbursement by the non- Federal entity. Cause: Management did not design or implement effective procedures to ensure that federal cash draws were based on documented cash needs. Instead, staff interpreted the maximum allowable advance percentage under the award as the default draw amount, without performing a cash flow analysis or documenting anticipated disbursement needs. Effect: The entity received federal cash in excess of immediate program needs, resulting in idle federal funds on hand for approximately 30 days. This practice is not consistent with the requirements of 2 CFR 200.305, which require advances to be limited to minimum amounts needed and disbursed in close timing with program expenditures. This increases the risk of noncompliance with federal cash management requirements and may create potential exposure to interest liability depending on aggregate interest earned and applicable thresholds. Questioned costs: No questioned costs were identified. Recommendation: We recommend the entity strengthen cash management procedures to ensure compliance with 2 CFR 200.305 by requiring all federal drawdowns to be supported by documented cash flow forecasts or near-term disbursement schedules, ensuring cash draws are based on actual, immediate cash needs rather than maximum allowable advance limits, implementing supervisory review and approval of draw requests to confirm alignment with anticipated expenditures, and periodically reconciling cash balances to expected disbursement timing to ensure advances are minimized and timely utilized.
Federal Assistance Listing Number: 97.036 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: US Department of Health and Human Services Federal Award Number:4499DRORP 00008961 Federal Award Year: 2025 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions Criteria: Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E, Section 200.403(a) states that costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, Section 200.514(d), auditors must test compliance with Special Tests and Provisions. Under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 44 CFR 206.205, the recipient shall make an accounting to the Regional Administrator of eligible costs for each approved large project. In submitting the accounting the recipient shall certify that reported costs were incurred in the performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, and that payments for that project have been made in accordance with 2 CFR 200.305. Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart D, Section 200.303), the non- Federal entity must 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. Conditions Found: In six of 40 sample items selected for testwork over activities allowed or unallowed and allowable costs/cost principles related to the program, $469,054 in expenditures out of a total of $1,368,522 expenditures (or 34%) were submitted for reimbursement to the Federal Emergency Management Agency (FEMA) but were related to the same invoices and therefore were duplicate expenditures. Upon further investigation, management identified that a total of $2,636,044 expenditures out of a total of $14,470,349 expenditures related to the program were duplicate expenditures. Further, management’s review that was performed over the underlying program details was not designed at a sufficient level of precision that enabled the identification of the duplication errors. Further, in management’s review for the completed project certification for one of two projects for the program these duplication errors were not identified. Cause: In discussing these conditions with management, they stated the Entity did not have adequate controls in place that were designed appropriately to ensure that all the expenditures submitted for reimbursement and certified to FEMA under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program represented allowable costs. Effect: Expenditures could be reimbursed by the program that were not allowable or certified incorrectly, resulting in material non-compliance with program requirements. Questioned Costs: Known questioned costs of $2,636,044. Statistical Sample: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding:This finding is not a repeat finding. Recommendation:We recommend that management strengthen processes and controls in place to ensure expenditures submitted for reimbursement and certified under the program are appropriately reviewed prior to submission to ensure they represent allowable costs. Views of Responsible Officials: Management agrees with the finding and acknowledges that duplicate expenditures were submitted for reimbursement under the FEMA program. The error resulted from insufficient controls over the tracking, reconciliation, and review of specific expenditures included in reimbursement requests, which allowed certain invoices to be claimed more than once. Upon identification of the issue, management conducted a comprehensive review of all reimbursement requests submitted under the program and identified the full population of duplicate expenditures. Management is committed to maintaining full compliance with federal award requirements and has implemented corrective actions to strengthen reimbursement controls, including enhanced expenditure tracking, independent secondary review procedures, reconciliation of submitted costs to prior claims, and updated policies and staff training. Management does not believe the finding resulted from an intentional misuse of federal funds, but rather from a limited lapse in internal controls over the reimbursement process. Management is working with FEMA, as appropriate, to resolve the duplicate claims.
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.
FINDING 2025-004 Subject: COVID-19 - Education Stabilization Fund - Cash Management Federal Agency: Department of Education Federal Program: COVID - 19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-009. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Cash Management compliance requirement. Reimbursement requests for the program were prepared by one employee and reviewed by another employee; however, the supporting documentation that was provided to the reviewer did not give a clear distinction as to what expenditures were included in the reimbursement. As the documentation provided was not adequate that accompanied the reimbursement request, and the reimbursement requests, as noted below, did not agree to the ledger, the reviewer could not have ensured expenses were paid prior to requesting reimbursement. For 5 of 25 expenditures tested, the School Corporation was unable to provide supporting documentation traceable to the reimbursement request. There were 2 of those expenditures, totaling $1,715, that were for ESSER II's final reimbursement which requested the remainder of the grant award and expenses could not be traced to the documentation provided for the reimbursement amount. There were 3 of the expenditures, totaling $6,665, that were not traceable to an ESSER III reimbursement request. Therefore, as the expenditure could not be traced to a reimbursement request, it could not be determined if the School Corporation paid for the expense prior to requesting reimbursement. INDIANA STATE BOARD OF ACCOUNTS 21 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, 1 of 25 expenditures tested, for $154, was an expense that occurred after the School Corporation requested reimbursement. The lack of internal controls and noncompliance were systemic issues throughout the audit period for ESSER II and ESSER III. Criteria 2 CFR 200.303 states in part: "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 the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.305(b) states in part: "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. . . . (3) Reimbursement is the preferred method when the requirements in this paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per § 200.208, or when the non-Federal entity requests payment by reimbursement. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation had not developed any policies that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Cash Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Cash Management compliance requirement. Noncompliance with the grant agreement and the Cash Management compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Cash Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-013: Improve Financial Management of Federal Grants Applicable to: Department of Wildlife Resources Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Material Weakness Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Sport Fish Restoration - 15.605; Wildlife Restoration and Basic Hunter Education and Safety - 15.611; Enhanced Hunter Education and Safety - 15.626 Federal Award ID (Year): F20AF10048 (2020); F20AF11897 (2020); F21AF02409 (2021); F22AF01121 (2022); F23AF00654 (2023); F23AF03173 (2023); F23AF03185 (2023); F24AF02770 (2024); F24AF02896 (2024); F24AF02903 (2024) Federal Agency: U.S. Department of the Interior Compliance Requirement: Allowable Costs/Cost Principles - 2 CFR § 200.302; 2 CFR § 200.303(a); 2 CFR § 200.305; 2 CFR § 200.510(b); 31 CFR § 205.33 Known Questioned Costs: $0 The Department of Wildlife Resources (Wildlife Resources) should improve its financial management of federal grants and documentation of internal controls to ensure compliance with state and federal requirements. Wildlife Resources has experienced recent turnover in its grants staff positions. Wildlife Resources has hired new staff; however, there was no transition period with the previous staff, and the previous grants staff did not sufficiently document internal controls over the federal programs. Staff have started documenting desk procedures, but agency-wide policies and procedures remain lacking. As such, grants staff did not appear to have sufficient knowledge of statewide policies and procedures to adequately perform the federal grants management processes in accordance with federal regulations and the Commonwealth Accounting Policies and Procedures (CAPP) Manual. We identified the following issues: Wildlife Resources should amend its procedures to comply with CAPP Manual requirements for cash management of federal funds. CAPP Manual Topic 20605 states that two methods of recording "split" funded expenses are acceptable. The method preferred by the State Comptroller is to establish procedures to "split code" the expenses by allocating the disbursement between a state fund and the federal fund at the matching ratio prescribed by the grant or contract. A second, and temporary, funding method allows the agency to charge the original expense to a state fund and subsequently, within seven business days, prepare and submit a general ledger journal in the Commonwealth’s accounting and financial reporting system to charge the federal fund for the federal portion of the original expense, referencing the original voucher in the journal reference line for transparency. If a state agency cannot comply, the agency must request approval from the State Comptroller. Wildlife Resources follows the temporary funding method to record its federal expenses. Wildlife Resources spends from state funds and then performs journal entries to move transactions to the federal fund in bulk with some journal entries representing hundreds of individual transactions, which does not allow for transparency regarding the nature of Wildlife Resources federal expenses. Further, our analysis found that Wildlife Resources enters journal entries for federal drawdowns up to three months after the original transaction date which is not consistent with the seven-day requirement in CAPP Manual Topic 20605. Per 2 Code of Federal Regulations (CFR) § 200.302, a recipient must comply with state laws and procedures for expending and accounting for the State's funds. Additionally, the untimely performance of these extensive journal entries may result in Wildlife Resources recording journal entries in the wrong fiscal year, which could result in inaccurate information within the Commonwealth’s Annual Comprehensive Financial Report. Wildlife Resources does not maintain adequate support for its journal entries. CAPP Manual Topic 20405 requires the agency to retain sufficient supporting documentation to provide auditable records containing evidence of required coding elements for journal entries. Wildlife Resources’ journal entries lack documentation related to changes in coding. Further, Wildlife Resources does not maintain supporting documentation for journal entries in one accessible location which would allow for sufficient supervisory review. Not maintaining adequate supporting documentation over journal entries increases the risk of inaccurate or fraudulent transactions. Wildlife Resources also does not have policies and procedures in place that detail how it creates the journal entries, what type of documentation to retain to support journal entries, or how Wildlife Resources ensures it only moves allowable costs to the federal fund. Title 2 CFR § 200.303(a) requires recipients to 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. During fiscal year 2025, in response to our Office’s 2024 Internal Control Questionnaire Review, Wildlife Resources established a bimonthly drawdown and journal entry schedule to ensure timely drawdown of federal funds to reimburse expenses originally incurred within state funds and to assist in remediation of its cash flow issues. Per 31 CFR § 205.33, a state must minimize the time between the drawdown of federal funds from the federal government and their disbursement for federal program purposes in accordance with the actual, immediate cash requirements of the state. The timing and amount of funds transfers must be as close as is administratively feasible to a state's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs. However, based on our analysis of drawdowns, while Wildlife Resources has made progress in the rate of drawdowns since the previous review, due to staff shortages, Wildlife Resources has not fully followed its drawdown schedule to ensure timely drawdowns of federal funds, which could exacerbate the agency’s cash flow issues. Specifically, the drawdown schedule included twenty planned drawdowns, however Wildlife Resources completed only eleven (55%) in accordance with that schedule. Furthermore, Wildlife Resources does not have policies and procedures in place over the completion of drawdowns as required by 2 CFR § 200.302, which requires a recipient to have written procedures to implement the requirements of 2 CFR § 200.305 regarding federal drawdowns. Wildlife Resources did not record program income revenue of approximately $2.3 million in the correct fiscal year for the Fish and Wildlife Cluster. Wildlife Resources recorded the program income received in fiscal year 2025 in a suspense account and did not distribute the income to the proper revenue account until fiscal year 2026. CAPP Manual Topic 20205 requires recording of all state receipts in the Commonwealth’s accounting and financial reporting system in a timely manner within three business days of the deposit. Additionally, the Department of Accounts (Accounts) Fiscal Year-End Closing Procedures require agencies to certify that they properly distributed balances to the correct accounts before final close of Commonwealth’s accounting and financial reporting system. By not properly recording program income, Wildlife Resources may misrepresent financial information to the federal government and report information that does not agree with its accounting records. Wildlife Resources reported federal expenses on its Schedule of Expenditures of Federal Awards (SEFA), a schedule that details Wildlife Resources’ federal expenses for fiscal year 2025, that did not agree to its underlying accounting records. Wildlife Resources reported federal expenses in the SEFA that it recorded as state funds in the Commonwealth’s accounting and financial reporting system due to considering journal entries that they did not record in the system until the next fiscal year. Due to these issues and preparation of the SEFA by a member of management on long-term leave who was not available during the audit, Wildlife Resources could not support amounts totaling over $660,000 in its SEFA. Additionally, Wildlife Resources does not have documented procedures outlining its process for preparing the SEFA in accordance with 2 CFR § 200.510(b), which states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Accounts’ Office of the Comptroller’s Directive No. 1-25 (Comptroller’s Directive) also provides specific directions for compiling the SEFA and supporting schedules to support its preparation of the Commonwealth’s SEFA and related disclosures. Furthermore, the Comptroller’s Directive states that an agency must ensure that it has internal controls in place to avoid material misstatements and/or misclassifications in the attachments and other financial information submitted to Accounts for inclusion in the Commonwealth’s Single Audit. By not implementing adequate internal controls over financial reporting, Wildlife Resources cannot provide reasonable assurance that the financial information it submits to Accounts for inclusion in the Commonwealth’s Single Audit is free of material misstatements. Because of the scope of the matters and errors noted above, we consider this finding to be a material weakness in internal control. Wildlife Resources should improve its financial management of federal funds and documentation of internal controls to ensure compliance with state and federal requirements. The need for strong internal controls is especially important given that Wildlife Resources is exploring additional federal funding opportunities. Wildlife Resources should work with Accounts to develop and implement a federal grants management process that complies with the CAPP Manual. Wildlife Resources should improve its process and controls related to federal fund drawdowns to ensure timely reimbursement of expenses within federal limitations. Further, Wildlife Resources should also improve its controls and procedures related to journal entry processing to ensure it retains adequate support for all entries and enters the entries timely. Additionally, Wildlife Resources should perform a thorough review of its SEFA before submitting it to Accounts and retain supporting documentation to support the SEFA. Finally, Wildlife Resources should develop policies and procedures over all federal grants processes including all compliance requirements. These improvements combined are necessary to ensure accurate accounting and financial reporting in accordance with the CAPP Manual, the Code of Federal Regulations, the Comptroller’s Directives, and applicable accounting standards. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
Program: AL 12.401 – National Guard Military Operations and Maintenance (O&M) Projects – Cash Management & Reporting Grant Number & Year: Appendices – W91243-23-2-1001, FFY 2023; W91243-24-2-1001, FFY 2024; W91243-25-2-1024, FFY 2025; W91243-25-2-1001, FFY 2025; W91243-25-2-1021, FFY 2025 Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR § 1128.100 and 2 CFR § 1128.200 (January 1, 2024, and January 1, 2025), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR § 200.303 (January 1, 2024, and January 1, 2025), a non-Federal entity must establish and maintain effective internal control over the Federal award to provide 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. Title 2 CFR § 200.302 (January 1, 2024, and January 1, 2025) requires financial management systems of the State be sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Per Title 2 CFR § 200.305(a) (January 1, 2024, and January 1, 2025), payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205. National Guard Policy (NG Policy) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states in part, “[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days).” GCAPL 20-02 AQ-A Policy (February 4, 2020) turned NGR 5-1 into NG Policy 5-1. It generally maintained the principles and operational aspects of NGR 5-1, except as provisions of the document were adjusted in the AQ-A Policy. The AQ-A Policy did not make any changes to the 45-day requirement found in NGR 5-1. The instructions for OMB Standard Form 270 (REV. 1/2016) include the following for line 11a: Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients. A good internal control plan would include procedures to ensure the time between the drawdown of Federal funds and disbursements is minimized and in compliance with National Guard Regulations. Condition: The Agency was noncompliant with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2024-066 Questioned Costs: None Statistical Sample: No Context: We tested five drawdowns of Federal funds to support the Agency’s operations. We tested to determine whether the Agency had expended the cumulative amounts drawn down for the awards tested within the required timeframe and noted the following: • Three drawdowns were noncompliant with NG Policy 5-1. Cumulative drawdowns for one of the draws were expended 63 days after the drawdown of the Federal funds. Cumulative draws for the other draws had yet to be fully expended as of January 8, 2026. The table below provides a summary of the three draws: See Schedule of Findings and Questioned Costs for chart/table. • For 5 of 5 SF-270’s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Agency reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an overreporting of $2,764 to an overreporting of $3,530,797, with a net total overreporting of expenditures by $4,074,284 for the five reports tested. Cause: Inadequate procedures for estimating fund needs for the upcoming month. Regarding SF-270 reporting, the Agency has stated it agrees with the finding; however, it has yet to implement corrective action. Effect: The Agency is noncompliant with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with National Guard requirements. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The Agency agrees with the finding. The drawdown timeline is a partial result of the variances in federal reimbursement functionalities and the advance state requirement function. Program obligations and liquidations are reconciled and reported on at least a quarterly basis with federal constituents.
Lack of Review over Financial Status Reports Finding Type. Significant Deficiency in Internal Control over Compliance (Cash Management and Reporting). Program. Epidemiology and Laboratory Capacity for Infectious Diseases (ELC); U.S. Department of Health and Human Services; Assistance Listing Number 93.323; Award Number E20242798-00. Criteria. Per 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds and disbursement, and also must maintain accurate financial records and submit required Federal Financial Status Reports ("FSR"). Entities must also ensure that drawdowns and FSRs are complete, based on actual, allowable expenditures, supported by underlying accounting records, and prepared in accordance with Federal requirements. Condition. The University did not have documented review procedures in place for federal grant drawdowns nor review over monthly Financial Status Reports. Drawdowns were processed and Financial Status Reports were submitted without a formal review or approval process to verify that amounts reported and requested were based on allowable expenditures. Cause. The University lacked formal internal controls and oversight mechanisms to ensure drawdowns and FSRs 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 and reporting federal funds in excess of actual expenditures or for unallowable costs, potentially resulting in noncompliance with federal regulations. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. The University should implement formal review procedures for all federal grant drawdowns including monthly FSRs, including enhancing policies around reviewing drawdowns, 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.
Assistance listing number: 21.027 Program name: Coronavirus State and Local Fiscal Recovery Funds Pass-through entity: State of Michigan EGLE Project numbers: A7588-01 and A5817-01 Finding type: Material weakness and material noncompliance with laws and regulations Repeat finding: No Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-federal entities to maintain specific written policies to ensure accountability for federal awards. Minimum mandatory policies include procurement procedures, allowability of costs, conflict of interest, cash management, and internal controls. Conditions: The City did not have written policies, as are required by Uniform Guidance, that adhered fully to the requirements of Uniform Guidance. Questioned Costs: None Why Questioned Costs Not Determinable: N/A How Questioned Computed: N/A Context: The City has some written policies or resolutions that address procurement and conflict of interest. The procurement policy, however, did not fully address the requirements of UG Section 200.318. In addition, the City had developed some procedures for cash management, allowability costs and internal control but did not adopt the written policies for cash management, allowability of costs and internal control that would fully address the requirements of UG Sections 200.305, 200.302, 200.400 and 200.303. Cause: The City was not in compliance with the UG requirements to have the correct written policies related to procurement, cash management, allowability costs and internal control. Effect: The absence of those properly prepared written policies increases the potential for further noncompliance because the City’s procedures may not adequately address the relevant compliance requirements. Recommendation: We recommend that the City create and put in place the written policies that address the requirements of 2 CFR 200.318-Procurement, 200.305-Cash Management, 200.302 & 200.400-Allowability of Costs, 200.303-Internal Control. View and Response of Responsible Officials: The City is reviewing existing documents and the requirements of UG for written policies to determine the best course of action to create and put in place the written policies required by UG.
Findings and Questioned Costs – Major Federal Programs Finding 2025-001: Internal Control over Compliance and Compliance with Cash Management Federal Programs: ALN 93.575/93.596, 93.558, 93.667 Criteria: In accordance with the grant agreement and 2 CFR 200.305(8) and (9), the non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts. Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services. Condition: The Coalition has a cash management policy in accordance with federal regulations, however, the policy was not followed. Federal funds were deposited into non-interest-bearing accounts. Cause: Lack of effective controls surrounding cash management and review of controls to ensure compliance with federal regulations. Effect: The Coalition has not accrued interest on DEL grant funds in accordance with federal regulations. Recommendation: We recommend the Coalition transfer all DEL grant funds to its interest-bearing account and return accrued interest to DEL. Management’s Response: See Management’s Corrective Action Plan beginning on page 25.
Department of Human Services Finding 2025 – 008: ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Department of Human Services’ Program Monitoring of the Social Services Block Grant Subrecipients (A Similar Condition Was Noted in Prior Year Finding 2024-008) Federal Grant Number(s) and Year(s): 2501PASOSR (10/01/2024 – 9/30/2026), 2401PASOSR (10/01/2023 – 9/30/2025) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirements: Cash Management, Subrecipient Monitoring Condition: Our examination of the Department of Human Services’ (DHS) procedures for monitoring Social Services Block Grant (SSBG) subrecipients revealed that DHS did not adequately risk assess and monitor the SSBG Mental Health, Homeless Assistance, and Child Welfare subrecipients to ensure that SSBG awards are used in compliance with laws and regulations, which include allowable costs, period of performance, and other requirements. Although DHS performed risk assessments of these subrecipients, the risk assessments did not include a consideration of all of the items outlined in 2 CFR Section 200.332 (c) (1)-(4). Further, the risk assessments did not define the course of action to be taken for each assigned risk level. DHS program personnel indicated that they performed on-site monitoring of eight subrecipients with seven final monitoring reports issued and one report in progress. The remaining 67 subrecipients were not monitored during the audit period. Expenditures for Mental Health, Homeless Assistance, and Child Welfare subrecipient programs not monitored totaled $21.7 million (or approximately 23.2 percent) of total SSBG program expenditures of $93.6 million reported on the Schedule of Expenditures of Federal Awards (SEFA). While we noted that DHS monitored eight of the 75 Mental Health County/County Joinder subrecipients which included Mental Health, Homeless Assistance and Child Welfare services, this coverage was not adequate. In addition, our review of the risk assessments completed for all of the aforementioned subrecipients identified several instances where subrecipient monitoring was warranted but was not conducted, including several subrecipients assessed as high risk for which no monitoring procedures were performed. In addition, for the compliance requirement related to cash management, we noted that DHS advanced funds to SSBG subrecipients in four of nine program areas, representing $34.0 million (or approximately 36.3 percent) of SSBG program expenditures, without adequately monitoring the reasonableness of the subrecipient cash balances. In particular, for the program areas related to Mental Health, Intellectual Disabilities, Homeless Assistance, and Child Welfare, DHS advanced funds to subrecipients on a quarterly basis. Our inquiries with applicable DHS program administrators disclosed that DHS did not adequately monitor the four program areas’ subrecipients for cash management compliance either at the time of payment or at any other time during the fiscal year ended June 30, 2025. Furthermore, while Single Audits of SSBG subrecipients may be conducted each year, this auditing activity does not compensate for the lack of during-the-award program monitoring, since the timing, focus, and scope of subrecipient auditing activities after year end are different than compliance monitoring to be performed by program officials during the year. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states: (c) Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following: Finding 2025 – 008: (continued) (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. Finding 2025 – 008: (continued) 2 CFR Section 200.305 (b)(1), applicable for recipients and subrecipients, states in part: …Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. 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 and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: DHS management indicated that risk assessment and monitoring documents were created for use during on-site monitoring of SSBG subrecipients. However, due to staffing issues, on-site monitoring was not performed for all SSBG subrecipients. Consistent with prior year audits, DHS management noted that there have been no changes to the payment methodology for the Homeless Assistance, Mental Health, Intellectual Disabilities, and Child Welfare components of SSBG. These programs provide subrecipients with advances to comply with Commonwealth law and also to ensure that adequate funds are available to provide services to participants on a timely basis. DHS officials believe that their in-house payment review procedures for the SSBG program are as efficient as administratively feasible and that controls exist in each of the program areas. Without on-site program monitoring visits by funding agency officials, we consider DHS’s limited in-house reviews of subrecipient status reports or other documents to be insufficient to detect potential subrecipient noncompliance, including excess cash violations. DHS does not adjust payments to the subrecipients based on in-house reviews. Effect: Since DHS does not adequately perform during-the-award monitoring of subrecipients, including the monitoring of subrecipient cash on hand, subrecipients may not be complying with applicable grant requirements and federal regulations, including cash management standards. Recommendation: DHS should perform risk based during-the-award monitoring procedures for all SSBG subrecipients to ensure timely compliance with all applicable federal regulations. On-site monitoring visits by state officials should be supported by documentation to show the monitoring performed, areas examined, conclusions reached, and that the monitoring was performed in compliance with applicable regulations. As recommended in previous Single Audits and supported by the United States Department of Health and Human Services, DHS should either consider changing their current subrecipient payment procedures from advancement basis to reimbursement basis or establish procedures to adequately monitor subrecipient cash on hand to ensure it is limited to immediate needs, but no longer than one month. The implementation and strengthening of these controls should provide DHS with reasonable assurance as to compliance with cash management requirements at the subrecipient level. Agency Response: DHS agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined.
Federal Agency: U.S. Department of Transportation Federal Program Name: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: 2025; FAIN not available. Pass-Through Agency: State of Vermont Agency of Transportation and Tribal Transit Program Pass-Through Numbers: EA#FT202201-704 EA#FT25FLEX-054 EA#FT25FLEX-954 EA#FT23FLEX-954 EA#FT25FLEX-454 EA#FT23FORM-704 EA#FT25FLEX-554 EA#FT24FORM-924 EA#FT25FLEX-854 EA#FT24FORM-934 EA#FT25FLEX-924 Award Period: July 1, 2024 through June 30, 2025 Compliance Requirement: Cash Management Type of Finding: Significant deficiency in internal control over compliance; other matter Criteria or Specific Requirement: The United States Code of Federal Regulations (CFR) 200.305 indicates reimbursement requests must be based on records that accurately reflect expenses being incurred prior to the reimbursement of funds. Condition: We identified the District submitted certain requests for reimbursement which were not supported by documentation of eligible expenses being incurred. Questioned Costs: Questioned costs total $140,757; which represent the total amounts submitted for reimbursement in fiscal year 2025 in excess of eligible expenses incurred. Context: CLA noted two (2) out of five (5) selections were submitted for reimbursement based on inaccurate expense information. The $140,757 represents the total amount of reimbursements submitted during the year based on inaccurate expense information. The expenses for which these reimbursements were submitted are not included in the schedule of expenditures of federal awards. Cause: Procedures were not implemented effectively to ensure invoices submitted for reimbursement were supported by accurate evidence of eligible expenses incurred. Effect: Noncompliance with the requirements of the federal program occurred. Repeat Finding: No. Recommendation: We recommend management enhance procedures and controls to ensure that the reimbursement requests are reconciled to accurate evidence of eligible expenses incurred. Views of Responsible Officials: Management agrees with the finding.
Assistance Listing, Federal Agency, and Program Name R&D Cluster: 10.500, U.S. Department of Agriculture, Cooperative Extension Service 12.800, U.S. Department of Defense, Air Force Defense Research Sciences Program 47.074, National Science Foundation, Biological Sciences Federal Award Identification Number and Year 10.500: 2021 48709 35659, 2021 12.800: FA9550 21 1 0202, 2021 47.074: DBI 2335029, 2024 Pass through Entity N/A all direct funded awards Finding Type Significant deficiency Repeat Finding Yes 2024 003 Criteria As outlined in 2 CFR 200.305(b)(3), 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. Further, when the reimbursement method is used for payment, organizations must make a payment within 30 calendar days after receipt of the billing unless the federal awarding agency or pass through entity reasonably believes the request to be improper. Condition The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30 calendar day requirement. 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, no questioned costs. Identification of How Questioned Costs Were Computed There were no questioned costs identified. Context Out of 40 payments to subrecipients that were tested, 4 were made after the 30 calendar day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 33 to 190 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation The University should implement a control to ensure that payments made to subrecipients are completed within the 30 calendar day requirement. Views of Responsible Officials and Corrective Action Plan Penn State concurs with the audit finding. Penn State has already implementing stronger internal controls to ensure its subrecipients are paid timely. This was a repeat finding and after receiving the finding last year, Penn State created a new Subaward Administration and Compliance Office to provide oversight over key subaward compliance processes. This office was created more than halfway through the current audit period and was not anticipated to be fully implemented, per our corrective action plan, until FY2026, therefore a portion of the audit period did not have central oversight from the new office. Penn State created a new Subaward Administration and Compliance Office (SACO), which is part of the new Post Award Contractual Compliance Office. The SACO is led by its own director and provides central oversight over key subaward compliance processes, such as subrecipient payments, and provide training to campus on subrecipient processes. This function has already implemented new changes and workflows in the financial system to allow for better tracking and reporting of subaward compliance activities, and continues to refine subaward processes. The creation of this office demonstrates Penn State’s commitment to compliance for subaward activities.
Section II – Federal Award Findings and Questioned Costs Finding Number: 2025-001 Cash Management – Advance Drawdown Held 81 Days Federal Agency: Department of Education Federal Program: ALN 84.362A – Native Hawaiian Education Repeat Finding: No Type of Finding: Significant Deficiency Criteria According to 2 CFR Part 200.305, the Department pays grantees in advance of their expenditures if the grantee demonstrates a willingness and ability to minimize the time between the transfer of funds to the grantee and the disbursement of the funds by the grantee. Condition During testing of cash drawdowns from the G5 system, we noted that the grantee received an advance drawdown of $1,370,000 on February 7, 2025 but note disbursed to vendor until 81 days later on April 29, 2025. As a result, the grantee maintained excess Federal cash on hand for an extended period. Cause The grantee did not have effective controls to ensure Federal drawdowns were limited to immediate disbursement needs for draw requests were not consistently supported by a near-term disbursement schedule. Effect Maintaining Federal funds in advance of actual disbursement increases the risk that Federal funds are not managed in accordance with cash management requirements and interest liability may arise, if funds were maintained in an interest-bearing account. Recommendation We recommend the grantee implement and document controls to ensure drawdowns are limited to immediate cash needs for requesting draw requests to be supported by a disbursement forecast covering no more than 5 business days of expected payments and establishing written procedures for addressing delayed project timelines (e.g., reducing or returning funds, revising draw schedules).
Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Research and Technology Development; Fossil Energy Research and Development; and HIV-Related Training and Technical Assistance ALN #s: 12.630; 12.910; 81.089; 93.145 Award Numbers (Federal Award Year): ARMY W911NF-17-2-0196 (2024-2025); DARPA HR0011-23-2-0004 (2024-2025); DOE DE-FE0031581 (2024-2025); and HRSA 5 U1OHA32109-07 (2024-2025) Questioned Costs: None 2025-003. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of seventeen subrecipient payments tested which were made by the University of Illinois Urbana-Champaign under the Research & Development Cluster, three payments (18%) were not made within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-79 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the HIV-Related Training and Technical Assistance Program, two payments (25%) were not made within 30 days after receipt of the billing from the subrecipient. The payments were made 34 and 40 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Criteria: Under Uniform Guidance (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 the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with workload caused the exceptions noted. University of Illinois Chicago officials stated the subrecipient payments were late due to competing priorities. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2025-003, 2024-002, 2023-006, 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the receipt of billings from the subrecipient and the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records. Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable. Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively. Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $30,316,384 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "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 the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: ". . . Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 35 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $30,316,384 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change and that all reimbursement requests are properly supported by detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
TRIO Cluster U.S. Department of Education Trio Student Support Services, ALN 84.042; TRIO Talent Search, ALN 84.044; TRIO Upward Bound, ALN 84.047; TRIO Educational Opportunity Centers, ALN 84.066; TRIO McNair Post-Baccalaureate, ALN 84.217 Applicable Institution: Jackson State University (JSU), University of Southern Mississippi (USM) Program Year 2024-2025 Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement – Cash Management – 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 (2 CFR 200.305(b)). Condition – JSU and USM drew funds in advance that were not disbursed within 3 business days. Cause – JSU's internal controls did not ensure that disbursements were reconciled prior to drawing funds. USM changed from a monthly draw to a bi-weekly draw schedule and inadvertently included some of the prior months expenses in the draw that had already been drawn. Effect or Potential Effect – JSU: funds were drawn in March and not fully disbursed within 3 business days. USM: funds were drawn in January and not fully disbursed for 30 days. Questioned costs – $25,250 - ALN 84.042; $22,499 - ALN 84.217; $123,618 - ALN 84.047. Calculated as the amount of cumulative draws in excess of cumulative disbursements. Context –Out of 376 draws, a sample of 25 were selected for testing. Our sample was not, and was not intended to be, statistically valid. 3 draws were not fully expended within 3 business days (JSU - 2 draws; USM - 1 draw). Identification as a Repeat Finding, if Applicable – N/A Recommendation – The institutions should update policies and procedures to ensure the time is minimized between the transfer of funds from US Treasury and disbursement by the non-federal entity. Views of Responsible Officials and Planned Corrective Actions – There is no disagreement with the audit finding. See corrective action plans.
Dairy Business Innovation Initiatives—Cash Management Background: During FY 2024-25, UW-Madison expended $9.3 million in federal funds for the DBII grant, which is administered by the U.S. Department of Agriculture. At least one-half of each award is used for grants to farmers or dairy processors to diversify farming activities, create value-added products, or enhance dairy export programs. During FY 2024 25, UW-Madison’s payments to the subrecipient accounted for approximately 60.0 percent of the $9.3 million expended. This subrecipient assisted UW Madison in administering the grants to farmers and dairy processors under the program. During our FY 2023-24 single audit (report 25-04), we reported three concerns with UW Madison’s cash management procedures for making payments to the subrecipient. First, UW Madison did not ensure that the time between the subrecipient receiving funds and disbursing the funds to grant recipients was appropriately minimized. Second, UW-Madison did not ensure that the reimbursement method was used when subsequent payments were made following an advance payment to the subrecipient. Third, UW-Madison did not ensure that it adequately monitored interest that had accrued on the subrecipient’s cash balance. We recommended that UW Madison ensure that disbursements to the subrecipient complied with all federal cash management requirements (Finding 2024 713), including revising and documenting its procedures for making payments to the subrecipient, incorporating applicable federal requirements in its subrecipient agreements when advanced cash payments are made, and monitoring interest earnings that accrue to the subrecipient when advanced payments are made in order to return any interest that exceeds federal limits in a timely manner. Criteria: Under 2 CFR s. 200.305 (b), UW-Madison is required to implement procedures to ensure that the time between payments it makes to the subrecipient and the subrecipient’s disbursement of the funds to the grant recipients is minimized. Under 2 CFR s. 200.305 (b) (4), UW-Madison is permitted to provide advanced payments to a subrecipient if it determines that the subrecipient lacks sufficient working capital. However, if such an advanced payment is made, the payment should be aligned to the anticipated disbursements and subsequent payments are required to be on a reimbursement basis. Condition: In January 2025, UW-Madison remitted to the federal government interest earnings that had accrued by the largest subrecipient when UW-Madison made advanced payments to this subrecipient in prior years. This action resolved one of the concerns we included in report 25-04. However, two concerns were still present during FY 2024 25 because UW Madison did not modify its payment process for the subrecipient until June 30, 2025. As a result, UW-Madison again made advance payments to this subrecipient during FY 2024 25 that did not ensure the time between the subrecipient receiving funds and the subrecipient disbursing the funds to the grant recipients was appropriately minimized nor did it use a reimbursement basis for subsequent payments. Context: UW-Madison made payments totaling $5.4 million to the DBII subrecipient during FY 2024-25, which included advancing funding to enable the subrecipient to make payments as requested from grant recipients. We discussed UW-Madison’s updated procedures for providing funding to its DBII subrecipient and the timing of its corrective actions. We obtained documentation related to the subrecipients cash on-hand as of June 30, 2025, which was $1.4 million. Questioned Costs: None. Effect: UW-Madison did not comply with federal requirements to ensure that time was minimized between payments to its subrecipient for the DBII grant and when the subrecipient disbursed the funds to grant recipients. Cause: UW-Madison indicated that it changed it process for making payments to the subrecipient effective June 30, 2025. As a result, these changes were not in place for all of FY 2024 25. In addition, UW-Madison did not develop a policy and procedure on approving cash advances until December 2025. Additional corrective actions, such as developing a cost reimbursement agreement and training on the new policy and procedures, had not occurred as of December 31, 2025. Recommendation: We recommend the University of Wisconsin-Madison: -stop issuing any additional advanced payments to the Dairy Business Innovation Initiatives subrecipient until all federal cash management requirements are met; and -fully implement the December 2025 procedures and provide training on them. Finding 2025-700: Dairy Business Innovation Initiatives—Cash Management Dairy Business Innovation Initiatives (Assistance Listing number 10.176) Award Numbers Award Years 21DBIWI1006 2021 AM21DBIWI1010 2022 AM22DBIWI1014 2022 23DBIWI1019 2023 Questioned Costs: None Type of Finding: Material Weakness, Material Noncompliance As a result, we qualified our opinion on compliance for the cash management compliance requirement. Response from the University of Wisconsin-Madison: The University of Wisconsin-Madison agrees with the audit finding and recommendations.
(2025-034) Title: Internal control over Health Disparities program subrecipient cash management needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Health Disparities) program was implemented to address disparities in access to healthcare in populations that are at high-risk and underserved, including racial and ethnic minority groups and people living in rural communities. The Health Disparities program is administered by the Maine Center for Disease Control & Prevention’s (MeCDC) Division of Population Health Equity. The Department makes equal advance monthly payments to subrecipients and then reconciles those amounts to quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. As a result, MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: MeCDC provided $3.2 million from a total of $6.2 million to Health Disparities program subrecipients during fiscal year 2025. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the Health Disparities program. Corrective Action Plan: See F-20 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of the funds. Payments are made as close as is administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1) ... that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Eden Hale, Associate Director, Division of Population Health Equity, MeCDC, 207-441-1090 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation emphasizes a single sentence from the broader paragraph, omitting context that informs the regulation’s full intent. According to the 2025 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR 200.305(b)(1)). 2 CFR 200.305(b)(1) states that 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. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. 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 and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. The finding remains as stated. (State Number: 25-1123-05)