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)
(2025-040) Title: Internal control over PDG subrecipient cash management needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Every Student Succeeds Act/Preschool Development Grants Assistance Listing Number: 93.434 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 Every Student Succeeds Act/Preschool Development Grants (PDG) program assists states in helping low-income and disadvantaged children enter kindergarten prepared and ready to succeed in school and helps improve the transitions from the early care and education setting to elementary school. PDG is administered by the Department of Health and Human Services’ Office of Child and Family Services (OCFS). 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 OCFS’ subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. As a result, OCFS procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: OCFS provided approximately $910,000 from a total of $11.5 million to PDG 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 OCFS 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 PDG program. Corrective Action Plan: See F-22 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: Tara Williams, Associate Director of Early Care & Education, OCFS, DHHS, 207-557-2342 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. Furthermore, in finding 2025-036, Internal control over PDG subrecipient monitoring procedures needs improvement, the Office of the State Auditor identified that 1 PDG subrecipient received equal advance monthly payments that significantly outpaced the subrecipient’s spending of PDG funds throughout fiscal year 2025. Payments to the subrecipient were withheld after April 2025 for the subrecipient’s inability to meet performance goals, not due to the Department’s monitoring of subrecipient cash management, and OCFS allowed the subrecipient to retain the excess PDG funds. This exception corroborates that controls are not in place over subrecipient cash management. The finding remains as stated. (State Number: 25-1122-03)
(2025-053) Title: Internal control over CCDF subrecipient cash management needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Office of Child and Family Services Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: CCDF Cluster Assistance Listing Number: 93.489, 93.575, 93.596 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 Child Care and Development Fund (CCDF) program is administered by the Office of Child and Family Services (OCFS) and provides funding to increase the availability, affordability, and quality of childcare services in the State. 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 consider the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and OCFS’ subrecipient monitoring procedures do not include a review of subrecipient compliance with cash management requirements. As a result, OCFS procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: OCFS provided $2.8 million from a total of $45.1 million to CCDF 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 OCFS 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 CCDF program. Corrective Action Plan: See F-27 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: Tara Williams, Associate Director of Early Care & Education, OCFS, DHHS, 207-557-2342 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: 25-1114-04)
Finding 2025-011 – C. Cash Management Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.305(b)(1) indicates that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition – The University was not able to provide reconciliations of funds drawn to expenditures incurred for certain funds drawn down during the current year that reconciled the amounts properly. Additionally, as formal draw down to expenditure reconciliations were not properly performed for certain draw dawns, instances were identified in which the University drew down funds twice for the same expenditure. The combination of the above also resulted in the University not minimizing the time between the date of drawdowns and the date the funds were used. Cause - Administrative oversight and insufficient internal controls. Effect or Potential Effect – The University was not in compliance with cash management requirements. Questioned Costs – None. Context – For 9 of 28 cash draws, the University did not properly perform formal reconciliations of funds drawn to expenditures. Additionally, 3 of 28 cash draws included certain expenditures for which funds were previously drawn, resulting in duplicative cash draws for the same expenditures. The above resulted in excess cash being drawn during the year ended June 30, 2025. Indication of Repeat Finding – No similar finding identified in the prior year. Recommendation – We recommend that the University enhance its procedures and internal controls over compliance to ensure that cash draws are properly reconciled to expenditures, that cash draws are only made once for each expenditure, and that time is minimized between cash draws and payment of expenditures incurred. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the cash draws during fiscal year 2025 were lacking and needed to be reinforced for future fiscal years. With the hire of the new CFO and Senior Accountant post June 30, 2025 – these enhanced controls and processes have been put in place.
Finding 2025-001 Cash Management Identification of the federal program: U.S. Department of Health and Human Services National Institutes of Health Research and Development Cluster Assistance Listing No. Federal Program Title 43.014 Congressionally Directed Programs 47.049 Mathematical and Physical Sciences 93.172 Human Genome Research 93.393 Cancer Cause and Prevention Research 93.396 Cancer Biology Research 93.837 Cardiovascular Diseases Research 93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research 93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders 93.865 Child Health and Human Development Extramural Research Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303(a) requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.305(b)(3) requires that 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: The College did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by the College within 30 days of requests for reimbursements received by the College. Cause: The College did not ensure that its established internal control processes were operating effectively to verify that invoices from subrecipients were paid within the required 30‑day period from the date the payment request was received. Effect or potential effect: The College did not comply with the cash management requirements of Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursements. Questioned costs: None. Context: EY selected and tested a sample of 44 payments to subrecipients with expenditures totaling $5,843,778 from a population of $56,294,523 during the year ended June 30, 2025. Of the 44 samples selected for testing, 12 payments to subrecipients totaling $3,490,135 were made outside the required 30‑day payment window. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: The College should strengthen its disbursement controls by ensuring that invoices received from subrecipients are promptly identified, logged, and tracked against the 30‑day payment requirement. Views of responsible officials: Management agrees with the finding and has developed a plan to ensure subrecipients are paid within 30 days of their requests for reimbursement.
Federal Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Federal Program Name: Research and Development Assistance Listing Number: 10.215 and 93.433 Federal Award Identification Number and Year: 90RTEM0009 - 2025, 20213864034724 - 2025, 90RTST0002 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: The Federal Government requires that 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 (2 CFR section 200.305(b)(3)). Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Questioned costs: None. Context: During our testing we identified 4 out of 14 subrecipient payments that did not process payment requests from the subrecipients timely. Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: Subrecipients on federal awards do not receive timely payment for federal contract work. Repeat Finding: Yes, 2024-001 Recommendation: We recommend the University review and update policies and procedures to allow for more timely payment to subrecipients for work the University contracts them to perform. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Department of Agriculture Assistance Listing Number: 10.310 Program Expenditures: $1,328,494 Program Name: Oilseed Pennycress: A New Cash Cover-Crop for the Midwest Award Number(s): 2019-69012-29851 Questioned Costs: None CONDITION: Western Illinois University (University) did not have adequate procedures in place to complete a timely disbursement of requested pass-through funds to subrecipients within the required time period. During our testing of payments made on requests from subrecipients, there were 2 out of 8 (25%) tested instances of the University not disbursing funds within 30 days of the payment request, as required. For the samples mentioned, the funds were sent 32 days and 120 days after the request. The sample was not a statistically valid sample. CRITERIA: Uniform Guidance (2 CFR 200.305(b)(3)) states that 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. Uniform Guidance (2 CFR 200.303(a)) requires non-Federal 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 the timely disbursement of funds to subrecipients. CAUSE AND EFFECT: The University did not have adequate procedures in place to ensure all payments to subrecipients were made within the 30 day requirement. Without sufficient controls around return over subrecipient payments and overall cash management, there is a greater risk that the school will miss a payment to be passed through to the subrecipient, thus understating expenditures on the Schedule of Expenditures of Federal Awards. (Finding Code No. 2025-003) RECOMMENDATION: We recommend the University implement controls to ensure that all payments to be passed through to subrecipients are identified and paid within the required time frame. UNIVERSITY RESPONSE: The University agrees with the finding. The University is committed to developing a comprehensive plan to ensure compliance with payment of pass-through funds policies and procedures.
2025-008. FINDING - Noncompliance with Reimbursements to Subrecipients Federal Agency: National Science Foundation Assistance Listing Numbers: 47.070 Program Names and Award Numbers: Research and Development Cluster: CISE-MSI: RPEP: S&CC: Information Systems meet Cultural Competencies; CISE-MSI: DP: IIS-III: ACOSUS: An AI-driven counseling System for Underrepresented Transfer Students Award Numbers: 2131291 – 2021; 2219623 – 2022 Questioned Costs: None Northeastern Illinois University (University) did not pay reimbursements within 30 days for certain subrecipients in the Research and Development Cluster. CONDITIONS FOUND & CRITERIA: For three of 10 (30%) subrecipient invoices selected for testing in the Research and Development Cluster, the University made payments in a time period greater than 30 days. The sample was not intended to be, and was not, a statistically valid sample. Uniform Guidance (2 CFR 200.305(b)(3)) requires, 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. CAUSE: University officials stated the department did not timely enter invoices into the Accounts Payable system which resulted in delayed processing by Accounts Payable, thus the payment was not made in accordance with the Uniform Guidance. EFFECT: Failure to meet subrecipients payment requirements is noncompliance with federal regulations and could result in loss of grant funding in future years. (Finding Code No. 2025-008) RECOMMENDATION: We recommend the University implements processes and controls to ensure that payments to subrecipients are made in accordance with the Uniform Guidance. UNIVERSITY RESPONSE: The University agrees with the recommendation. This issue was due to one department’s oversight in maintaining and providing appropriate documentation. The department was sent a reminder of the expectation of timely filing all required documentation to ensure payments to subrecipients are made in accordance with the Uniform Guidance.
Federal agency: U.S. Small Business Administration Federal program name: Congressional Grants Inclusive Ventures Small Business Program Assistance listing number: 59.059 Pass-through agency: Anne Arundel County, Maryland Pass-through number: SBAHQ23I0140 Award Period: September 1,2023 through August 31, 2028 Compliance Requirement: Cash Management/Program Income Type of Findings: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: 2 CFR 200.305(b)(8) requires that non-Federal entities must maintain advance payments in interest-bearing accounts and must remit interest earned on Federal advances in excess of $500 annually to the Federal agency. 2 CFR 200.80 defines program income as gross income earned that is directly generated by a supported activity or earned as a result of the Federal award. 2 CFR 200.307(e) requires program income to be properly accounted for, used, and reported in accordance with the terms and conditions of the Federal award. 2 CFR 200.302(b)(3) requires entities to maintain records that identify the source and application of funds, including program income. Condition The Corporation did not track, record, or report program income generated from interest earned on Federal funds received in advance. Interest accumulated in the bank account holding Federal advances was not segregated, monitored, or reported to the Federal awarding agency. As a result, the Corporation could not determine whether interest exceeded the $500 annual threshold requiring remittance. Questioned Costs Total program income identified during the audit was $61,226. Context The Corporation received Federal funds in advance for program activities but did not implement procedures to track interest earned on those funds. Cause The Corporation has not historically received federal funding so tracking program income earned from funds received in advance was not deemed necessary. Effect The Corporation may have retained Federal interest income that should have been remitted to the awarding agency. The Federal awarding agency was not informed of program income generated. Repeat Finding No Recommendation We recommend that management develop and implement written procedures to track, record, and report program income, including interest earned on Federal advances. Views of Responsible Officials Management agrees with finding. See corrective action plan for additional information.
Federal Agency: National Science Foundation, U.S. Department of Transportation, U.S. Department of Energy, U.S. Department of Commerce Federal Program Name: Research & Development Assistance Listing Number: 11.469, 20.000, 47.083 and 81.089 Federal Award Identification Number and Year: 1946093 - 2025, 692Ml5-20-T-00029 - 2025, DEFE0031776 - 2025, NA23NWS4690009 – 2025 Pass-Through Agency: Iowa State University Pass-Through Number: 692M15-20-T-00029 PASS THRU 023063C Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR Section 200.305(b)(3)) requires that 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. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: Oklahoma State University Stillwater (OSU STW) did not make payments to subrecipients within 30 days after receipt of invoices. Questioned costs: None. Context: During our testing we identified 7 subrecipient payments from OSU STW out of 40 payments that did not process payment requests from the subrecipients timely. Cause: OSU STW did not process payment requests from the subrecipient timely. Effect: Subrecipients on federal awards do not receive timely payment for federal contract work. Repeat Finding: No Recommendation: We recommend OSU STW review and update policies and procedures to allow for more timely payment to subrecipients for work the University contracts them to perform. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria: The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) allow non-Federal entities to request advance payments, provided that the timing and amount of such advances are limited to the entity’s immediate cash needs and that funds are expended only for allowable costs incurred within the approved period of performance. Under cash management requirements, advance payments must be limited to the minimum amounts needed and timed to align with the actual, immediate cash requirements of the non-Federal entity (2 CFR §200.305(b)(1); 2025 OMB Compliance Supplement, Cash Management). Additionally, regarding the period of performance, federal awards may only be charged for obligations incurred during the approved period of performance stated in the Notice of Award, and costs incurred outside that period are considered unallowable unless specifically authorized by the federal awarding agency (2 CFR §200.309; 2025 OMB Compliance Supplement, Period of Performance). Condition: During the fiscal year ended June 30, 2025, NeoMed Center requested and received advance payments through the Payment Management System (PMS) under the Health Center Program (93.224). The advances included funds related to a grant budget period running from May 2025 through April 2026; however, management intended to use a portion of these funds to support operations in the subsequent fiscal year (July 1, 2025 through June 30, 2026). As of June 30, 2025, a portion of the advanced federal funds had not been expended for allowable costs incurred within the applicable period of performance. While advance payments are permitted under federal regulations, the timing of the drawdowns exceeded NeoMed Center Inc.’s immediate cash needs for allowable expenditures incurred during the approved period of performance. Effect: As a result of this condition, federal funds were drawn earlier than necessary relative to allowable expenditures as of and for the yar ended June 30, 2025 and were held to be expended and recorded as revenues in the next fiscal year ending June 30, 2026. This situation exposed NMCI to an increased risk of noncompliance with federal cash management and allowability requirements. Additionally, cash balances as of June 30, 2025, included federal funds that were not eligible to be recognized as expenditures as of that date. Cause: Management stated that the advance payments were requested as a preventive measure in response to uncertainty related to federal funding disruptions during calendar year 2025. However, lack of internal controls to ensure that advance drawdowns were limited only to immediate cash needs and aligned with the applicable grant period of performance permitted excess drawdown with no support. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Strengthen internal controls over federal cash management and grant expenditure monitoring to ensure compliance with Uniform Guidance requirements. 2. Revise policies and procedures manuals and Implement procedures to ensure that advance drawdowns from the Payment Management System (PMS) are limited to the entity’s immediate cash needs. 3. Ensure that federal funds are drawn only for allowable expenditures expected to be incurred within the approved period of performance. 4. Provide training to relevant personnel on federal cash management requirements and the proper administration of advance payments.
Criteria: In accordance with 2 CFR § 200.305(b)(12), a recipient or subrecipient may retain up to $500 per year in interest earned on Federal funds for administrative expenses. Any interest earned in excess of $500 per year must be remitted annually to the Department of Health and Human Services (HHS) through the Payment Management System (PMS) via the Automated Clearing House (ACH) network or Fedwire Funds Service. This requirement applies regardless of whether the recipient or subrecipient was paid through PMS. Condition: For the fiscal year ended June 30, 2025, the entity earned interest on Federal funds in excess of the $500 allowable retention limit. The entity did not remit the excess interest to the Payment Management System (PMS) within the required timeframe. The amount of excess interest retained and not remitted totaled $1,417.45. Effect: Noncompliance with 2 CFR § 200.305(b)(12) may result in several consequences, including questioned costs, required reimbursement of federal funds, findings or enforcement actions by the federal awarding agency, and potential sanctions or the imposition of additional compliance requirements. Cause: The entity did not have adequate internal controls or formal procedures in place to periodically monitor interest earned on federal funds, identify when interest exceeded the $500 allowable threshold, and timely remit excess interest to HHS through the Payment Management System (PMS). Recommendations: We recommend that the Institution implement the following corrective actions: 1. Develop and implement formal written policies and procedures for monitoring interest earned on federal funds in accordance with 2 CFR § 200.305(b)(12). 2. Establish internal controls to periodically calculate and track interest earned on federal cash balances throughout the fiscal year. 3. Implement a process to identify when interest earned exceeds the allowable $500 annual retention threshold. 4. Assign responsibility to designated personnel for reviewing interest calculations and ensuring compliance with federal requirements. 5. Provide training to relevant staff on federal cash management requirements related to interest earned on federal funds.
Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster, Child Care Access Means Parents in School, TRIO Cluster, and Higher Education Institutional Aid Assistance Listing Number: R&D, 84.335, 84.TRIO, and 84.031 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.305(b), when using the reimbursement method, Federal drawdowns must be limited to allowable costs that have been incurred and supported. Additionally, 2 CFR §200.302(a) requires non Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award. Condition/Context: During our testing of Cash Management, we selected a sample of 85 reimbursement requests, consisting of 40 R&D Cluster samples, 12 Child Care Access Means Parents in School samples, 23 TRIO Cluster samples, and 10 Higher Education Institutional Aid. The following exceptions were noted: R&D Cluster, TRIO Cluster, and Higher Education Institutional Aid: For 4 of the 40 R&D samples tested, 9 of the 23 TRIO samples tested, and 1 of the 10 Higher Education Institutional Aid samples tested, instances of noncompliance were identified. • For 4 of the 4 R&D samples, 8 of the 9 TRIO samples, and 1 of the 1 Higher Education Institutional Aid samples with instances of noncompliance noted, a portion of the reimbursement drawn down during fiscal year 2025 related to expenses incurred outside to the current fiscal year. Additionally, 1 of the 4 R&D samples included expenses incurred as far back as October 2020. • For 1 of the 9 TRIO samples with instances of noncompliance noted, supporting documentation (such as invoice support, indirect cost recalculations, or payroll registers) was not provided for a portion of the expenses included in the reimbursement requests. As a result, we were unable to determine the period to which the funds drawn down related. Child Care Access Means Parents in School (Control Finding Only): • For 1 of the 12 samples tested, the UEC was ultimately in compliance with cash management requirements; however, internal controls did not operate effectively. Specifically, there was an approximate six‑month delay between the incurrence of program costs and the submission of the reimbursement request. Questioned Costs: $68,759 Effect: Reimbursement requests that include costs incurred outside the applicable fiscal period or costs that are not supported increase the risk that Federal expenditures are not recorded in the proper accounting period and that Federal financial reporting is not accurate. Additionally, delays in submitting reimbursement requests increase the risk that expenditures are not timely reported in accordance with Federal requirements. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that costs included in reimbursement requests are recorded in the appropriate fiscal period, supported by adequate documentation, and submitted timely in accordance with Federal cash management and financial reporting requirements. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its cash management and financial reporting procedures to ensure reimbursement requests include only costs incurred in the appropriate fiscal period, are supported by adequate documentation, and are submitted timely. The UEC should also enhance review controls to verify proper period recognition of costs prior to submission of reimbursement requests. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Further, 2 CFR §200.303 requires non Federal entities to establish and maintain effective internal control over Federal awards to ensure transactions are recorded in the proper accounting period and in accordance with applicable Federal requirements.
Finding No: 2025-001 Cash Management Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.493 Federal Program: Congressional Directives Federal Award Year: September 30, 2023 – September 29, 2026 Per section 2 CFR 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the non-federal entity for direct program or project costs. Interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS). Expenditures must be incurred prior to the date of the reimbursement request. Per section 2 CFR 200.303, non-Federal entities must establish, document 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. Condition Found The System entity did not minimize the time elapsing between the transfer of funds and disbursement and did not remit interest earned on advances to the designated federal agency. The System requested reimbursement of federal grant funds of $1,042,278 over 350 days in advance of incurring the related expenditures for the St. Francis Medical Center Community Project Funding Congressionally Directed Spending – Construction award (ALN 93.493) and did not perform the required interest calculation or remit interest timely, representing a departure from the Uniform Guidance cash management requirements. We tested 100% of the expenditures and related cash draw activity for this award during the audit period; therefore, no sampling was used and no extrapolation was necessary. Possible Cause and Asserted Effect The System's internal controls did not ensure the federal funds requested for the program were either already expended or encumbered to be expended timely and did not implement the process steps and control to periodically identify and calculate the resulting accumulated interest earned on federal cash balances drawn in advance related to this program. Failing to minimize the time between the transfer and disbursement of funds, as well as failing to remit interest earned on advances, constitutes noncompliance with the Uniform Guidance.Questioned Cost Interest earned of $44,750 Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit No. Recommendation We recommend that the System strengthen its internal controls over cash management controls to ensure that all federal fund drawdowns are based on incurred expenditures and documented immediate cash needs, and that a process is implemented to periodically calculate and remit any interest earned on advance balances as required by the Uniform Guidance. View of Responsible Officials Management concurs with this finding. The System is implementing a management review control through periodic inquiry and review of advance fundings to ensure drawdowns are supported by incurred expenditures or are for immediate cash needs and any interest calculations to ensure timely compliance with the Uniform Guidance. Corrective Action Plan In the event that the System receives federal cash advances prior to the cash expenditures, the System will perform an additional financial review of any advanced payments compared to the related expenditures. Should accounting identify advances not yet spent, they will inquire with the grant administrator responsible for the grant to review their advance fundings, any potential resulting interest calculations. Anticipated Completion Date June 30, 2026 Name of Contact Person for Corrective Action Amanda Hymel, Corporate Controller
Finding No: 2025-003– Internal control deficiencies over accounting and identification of federal funds received from the Federal Emergency Management Agency (FEMA) that should be included on SEFA Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification 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, year the Federal award was issued, and name of the Federal agency or pass-through entity. 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. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure 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 and the terms and conditions of the Federal award. Condition During our procedures concerning the Administration’s funds received from FEMA we noticed that the reimbursement funds received from FEMA were not recognized as income during the year ended June 30, 2025. Cause The Administration recognized the reimbursement as an accrual and not as income during the year ended June 30, 2025. They have recognized only the amount that they disbursed during the year at their discretion. This accounting is correct when the funds received are capital advances. Effect This can result in amounts not to be included in the Schedule of Expenditures and Federal Awards in the correct period and understate SEFA. Also, the Administration could be subject to penalties or sanctions from the Federal Grantor. Context The Administration identified $6,543 as federal expenditures from prior years capital advances of FEMA awards but did not identify as expended the amount of $11,063 from advances. In addition, the Administration received reimbursements of $1,413,451 in the fiscal year, however management did not identify this amount as federal expenditures until the audit procedures was performed. Identification of repeat finding None. Questioned costs None, as adjustments were made during the audit to correct the misstatement. Recommendation We recommend validating, with the staff in charge of Engineering, the type of funds received from FEMA, if they are reimbursements or capital advances. When the funds received are reimbursements they should be recognized as income in the year received. If the funds are capital advances they should be recognized as unearned revenue and as income in the year in which they are disbursed. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan.
Finding Number - 2025-005 Rebates Agency Department of Health & Human Services Federal Program Medicaid Cluster ALN 93.778 Compliance Requirement Allowable Costs / Activities Cash Management Reporting Type of Finding Internal Control over Compliance / Compliance Category Significant Deficiency Criteria Pursuant to Section 1927 of the Social Security Act (42 U.S.C. § 1396r-8) and implementing regulations at 42 C.F.R. Part 447, Subpart I, states must: ✓ Report quarterly drug utilization data to manufacturers within 60 days after the end of each quarter; and ✓ Ensure that manufacturers remit rebate payments within 30 days after receipt of utilization data; and ✓ Properly identify, record, and credit rebate collections to the Medicaid program in a timely manner. Department of Health of the Commonwealth of Puerto Rico Schedule of Findings and Questioned Costs – (Continued) For the Fiscal Year Ended June 30, 2025 - 47 - Section III- Findings and Questioned Costs Relating to Federal Awards– (continued) Finding Number - 2025-005 Rebates – (continued) Criteria – (continued) In addition, 2 C.F.R. § 200.302 (Financial Management) requires non-federal entities to maintain effective financial management systems that provide accurate, current, and complete disclosure of financial results and ensure proper accounting for program income and federal funds. Further, 2 C.F.R. § 200.305 (Payment) requires that federal funds be minimized between drawdown and disbursement and that program income and recoveries be properly accounted for and applied. Condition During our audit, we identified that the Medicaid Cluster Program (the Program) returned Medicaid drug rebates outside of the federally required timeframes established under the Medicaid Drug Rebate Program. Specifically, rebates received from pharmaceutical manufacturers were not identified, recorded, and returned to the Medicaid program in accordance with the regulatory deadlines prescribed by federal law and regulation. As a result, federal Medicaid funds were not reconciled and credited in a timely manner, and program expenditures were overstated for the applicable reporting periods. Quarter End period Due date Remmitance date Late Q1 FFY2024 3/31/2024 6/29/2024 9/20/2024 83 Q1 FFY2024 3/31/2024 6/29/2024 12/5/2024 159 Q1 FFY2024 3/31/2024 6/29/2024 4/25/2025 300 Q2 FFY2023 6/30/2023 9/28/2023 9/20/2024 358 Q2 FFY2023 6/30/2023 9/28/2023 12/5/2024 434 Q2 FFY2023 6/30/2023 9/28/2023 4/25/2025 575 Q2 FFY2024 6/30/2024 9/28/2024 12/5/2024 68 Q2 FFY2024 6/30/2024 9/28/2024 4/25/2025 209 Q3 FFY2023 9/30/2023 12/29/2023 9/20/2024 266 Q3 FFY2023 9/30/2023 12/29/2023 12/5/2024 342 Q3 FFY2023 9/30/2023 12/29/2023 4/25/2025 483 Q3 FFY2024 9/30/2024 12/29/2024 4/25/2025 117 Q4 FFY2023 12/31/2023 3/30/2024 9/20/2024 174 Q4 FFY2023 12/31/2023 3/30/2024 12/5/2024 250 Q4 FFY2023 12/31/2023 3/30/2024 4/25/2025 391 Cause The Program relies on information provided by the actuaries of Puerto Rico Health Insurance Administration (PRHIA) to identify and calculate Medicaid drug rebates. PRHIA is responsible for compiling and providing the necessary rebate data to the Program. Based on the information received from PRHIA, management processes the corresponding reimbursements once the data is received. However, the Program does not maintain independent monitoring procedures to verify the completeness and timeliness of the information provided by PRHIA, nor does it perform periodic reconciliations between rebate information received and program expenditures to ensure that all applicable rebates are properly identified and credited to the Medicaid program in accordance with federal requirements. Effect As a result of this condition: ✓ The Program was not in compliance with federal Medicaid Drug Rebate Program requirements and Uniform Guidance financial management standards; and ✓ There is an increased risk of questioned costs and federal disallowances. Questioned Costs Indeterminable Perspective Information Under the program, state Medicaid agencies are required to submit quarterly drug utilization data to participating manufacturers. Based on this data, manufacturers calculate and remit rebate payments to the state. These rebate revenues constitute program income and must be applied to reduce Medicaid expenditures in accordance with federal law and Uniform Guidance. Prior Year Audit Finding This is not a repeat finding. Recommendation We recommend that management establish formal monitoring and reconciliation procedures to ensure that all Medicaid drug rebate information received from PRHIA is complete and accurately recorded. This should include periodic reconciliations between rebate data provided by PRHIA, rebate receipts, and related Medicaid program expenditures. Also, management should implement a formal follow-up process with PRHIA to periodically confirm that all applicable rebate information has been provided and processed in a timely manner. We also recommend that management: ✓ Implement written policies and procedures governing the identification, recording, reconciliation, and return of Medicaid drug rebates; ✓ Establish periodic reconciliation controls to ensure rebate receipts are timely credited to the Medicaid program; ✓ Strengthen oversight and monitoring of rebate activity to ensure compliance with Section 1927 of the Social Security Act and 42 C.F.R. Part 447; and ✓ Provide training to financial and program staff regarding federal rebate compliance requirements. Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.
Finding Number - 2025-006 Late vendor credits Agency Department of Health & Human Services Federal Program Medicaid Cluster ALN 93.778 Compliance Requirement Cost Principles Type of Finding Internal Control over Compliance / Compliance Category Other Criteria In accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR §200.305(b)(1) requires that pass-through entities ensure payments to subrecipients are made in a timely manner, generally within a reasonable period after receipt of a valid request for payment. Federal guidance and established administrative practice interpret a reasonable period for purposes of cash management compliance to mean no later than 30 calendar days following receipt of a proper payment request, unless the pass-through entity reasonably determines the request to be improper. This requirement applies regardless of whether the federal award operates on a reimbursement basis and is intended to ensure compliance with federal cash management standards and minimize the time between disbursement of funds and federal reimbursement. Criteria – (continued) For Medicaid program (Assistance Listing 93.778), CMS regulations further require that expenditures claimed for Federal Financial Participation (FFP) be based on actual, incurred, and properly documented costs in accordance with 42 CFR §433.32 and applicable CMS financial management guidance. CMS oversight emphasizes timely payment and proper cash management practices to ensure that expenditures are valid and that federal funds are drawn only for allowable and properly incurred costs. Additionally, 2 CFR §200.332(a) requires pass-through entities to monitor subrecipients and ensure compliance with applicable federal requirements, including adherence to cash management provisions. Condition During testing of subrecipient disbursements, it was noted that six (6) payments included in the sample of 178 were made more than 30 calendar days after the pass-through entity received a valid request for payment from the subrecipient. The delays ranged from 46 to 150 days beyond the regulatory requirement. Item No. Check Date (Voucher id) Invoice Date Audited Amount 1 1/24/2025 00536685 12/4/2024 $ 1,458 2 5/23/2025 00553562 12/23/2024 $ (1,321,563) 3 5/23/2025 00553519 12/23/2024 $ 2,111 4 5/23/2025 00553562 4/1/2025 $ (220,261) 5 7/23/2024 00515301 6/7/2024 $ 5,876 6 7/23/2024 00515303 6/7/2024 $ 8,911 Also, we identified two (2) instances in which vendor credits related to previously issued invoices were not applied to the corresponding invoices until approximately one (1) to three (3) months after the original drawdown was requested. Item No. Invoice number Invoice date Credit amount Drawdown not including credit Date credit return Days 1 RF VITAL 25-003 12/27/2024 $ (1,321,563) 1/13/2025 6/3/2025 -141 2 RF VITAL 25-006 4/10/2025 $ (220,261) 4/28/2025 6/3/2025 -36 Cause The delays in payment were primarily attributable to internal cash management and administrative practices, including the practice of awaiting the receipt of federal funds or internal approvals prior to issuing payment to the subrecipient. These practices were not aligned with the timing requirements established under Uniform Guidance. Management indicated that the Program waits until sufficient positive fund balances are available before processing the return of outstanding credits. As a result, certain credit balances may remain pending until adequate funds are available to complete the reimbursement. This practice may delay the timely return of funds in accordance with applicable requirements. Effect Failure to remit payment to subrecipients within the required 30-day timeframe. Continued noncompliance may increase the risk of: a) Audit findings under the Uniform Guidance, b) Increased federal oversight, c) Potential questioned costs, and d) Strained financial operations for subrecipients due to delayed reimbursement. The delayed application of credits resulted in temporary overstatements of expenditures used to support Federal drawdowns. Although the credits were eventually applied, the timing difference may result in noncompliance with cash management requirements under 2 CFR §200.305, as Federal funds may have been drawn in excess of immediate cash needs. Questioned Costs None Perspective Information This finding was identified during the audit of the Medicaid program (Assistance Listing 93.778) for the fiscal year ended 2025. The payments tested related to expenditures incurred and invoiced by a state agency acting as a subrecipient under an interagency agreement. Although both the pass-through entity and the subrecipient are agencies within the same state government, federal regulations treat them as distinct entities for purposes of cash management compliance. Prior Year Audit Finding This is not a prior year finding Recommendation It is recommended that the pass-through entity strengthens internal controls over subrecipient payments to ensure that all valid requests for payment are processed and paid within the 30-calendar-day timeframe required by 2 CFR §200.305(b)(1). Management should also ensure that payment procedures are not contingent upon the timing of federal drawdowns and that any delays are adequately documented and communicated to the subrecipient. We recommend that management strengthen internal controls over the drawdown process by implementing a formal review procedure to verify that all outstanding vendor credits have been identified and applied prior to submitting a Federal draw request. Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.
Finding Number: 2025-013 State/Educational Agency(s): Arkansas Department of Commerce – Arkansas Economic Development Commission Pass-Through Entity: Not applicable AL Number(s) and Program Title(s): 21.029 – Coronavirus Capital Project Funds Federal Awarding Agency: U.S. Department of the Treasury Federal Award Number(s): CPFFN0186 Federal Award Year(s): 2022 Compliance Requirement(s) Affected: Cash Management Type of Finding: Noncompliance Repeat Finding: Not applicable Criteria: Pursuant to 31 CFR § 205.33, state recipients are required to minimize the time elapsing between drawdowns of award funds and outlays of award funds. Arkansas State Broadband Office (ASBO) procedures indicate the Agency should disburse funds within 15 days of drawdown from the U.S. Department of the Treasury. Condition and Context: ALA reviewed drawdowns from the U.S. Department of the Treasury to determine the funds were disbursed timely. Of 34 drawdowns, 19 exceeded the 15-day maximum processing time for disbursements. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: ASBO management did not ensure funds drawn down from the U.S. Department of the Treasury were paid to the subrecipient in accordance with Agency procedures. Effect: Failure to comply with federal regulations for minimizing time between the drawdown of funds from the U.S. Department of the Treasury and disbursement to the subrecipient may result in the denial of future requests for funds, suspension or termination of the federal award, or pursuit of other legal remedies. Recommendation: ALA staff recommend the Agency ensure drawdown of funds from the U.S. Department of the Treasury are disbursed to subrecipients within the 15-day maximum processing time in accordance with Agency procedures. Views of Responsible Officials and Planned Corrective Action: ASBO acknowledges the auditor’s observation regarding the timing of disbursements following drawdowns from the U.S. Department of the Treasury. ASBO procedures include a 15-day internal processing target intended to promote efficient payment processing. While 19 of 34 drawdowns exceeded this internal benchmark, the applicable federal standard under 31 CFR § 205.33 requires recipients to minimize the time between drawdown and disbursement. Additionally, under 2 CFR § 200.305(b)(3), when the reimbursement method is used, payment must be made within 30 calendar days after receipt of a proper payment request. ASBO recognizes the importance of maintaining strong cash management controls and ensuring timely payment to subrecipients. The State of Arkansas is enhancing tracking, reconciliation, and workflow controls within its financial management processes to better monitor drawdown-to-disbursement timing. These measures are intended to strengthen timeliness and prevent recurrence. Anticipated Completion Date: June 30, 2026 Contact Person: Glen Howie State Broadband Director Arkansas State Broadband Office 1 Commerce Way Little Rock, AR 72202 (501) 683-6000 broadband@arkansas.gov
Finding 2025-002 - U.S. Department of Education (USD), Title IV Student Financial Aid Programs (significant deficiency): Information on the federal program – Federal Pell Grant Program, FAL No. 84.063, June 30, 2025; Federal Work-Study Program, FAL No. 84.033, June 30, 2025; Federal Supplemental Opportunity Grant Program, FAL No. 84.007, June 30, 2025; Federal Direct Student Loan Program, FAL No. 84.268, June 30, 2025; Teachers Education Assistance for College (TEACH),FAL No. 84.379, June 30, 2025. Criteria – Under 2 CFR 200.305 and the U.S. Department of Education’s cash management requirements at 34 CFR 668.162, institutions must draw down Title IV funds only for expenditures that have already been incurred and must maintain supporting documentation on file at the time of each drawdown request to demonstrate: 1. The existence of actual, allowable expenditures equal to or exceeding the amount drawn; and 2. That such expenditures were incurred before requesting Federal funds. These regulations require contemporaneous records to support that drawdowns reflect immediate cash needs for allowable program costs. Condition – During our testing of cash drawdowns, we noted In four (4) of the eight (8) drawdowns tested, the College did not maintain adequate supporting documentation to substantiate that allowable expenditures had been incurred at the time of the drawdowns. Additionally, although drawdowns exceeded recorded expenditures at certain points during the year, the College did not have Federal cash on hand at year-end. Cause – The condition resulted from insufficient internal controls over the drawdown and documentation retention processes, including the absence of a timely reconciliation between recorded expenditures and drawdown requests. Effect – Requesting Federal funds without maintaining adequate documentation of actual expenditures increases the risk of noncompliance with Federal cash management requirements and may result in temporary use of Federal funds for unallowable purposes. As a result, questioned costs totaling $58,270 were identified. Questioned Costs – $58,270 Program Title FAL No. Questioned Costs Federal Work Study Program 84.033 $ 8,882 Federal Direct Loans 84.268 49,388 Total Questioned Costs $ 58,270 Auditor’s Perspective – While the College did not have Federal cash on hand at year-end, the lack of documentation and proper reconciliation at the time of drawdown represents a compliance deviation under Uniform Guidance. These conditions increase the risk that future drawdowns may not align with actual cash needs or allowable expenditures. Repeat Finding – No. Auditor's Recommendation – We recommend the College strengthen controls over the cash drawdown process by: • Ensuring that reimbursement requests are supported by complete and readily available documentation at the time of submission; and • Requiring contemporaneous reconciliations between expenditures and drawdown requests; • Implementing improved supervisory review procedures prior to requesting funds. View of Responsible Officials – The College now requires all drawdowns to include supporting documentation of the funds requested from G5, along with sign-offs on preparation and approval. Supporting documents are stored securely on the College's accounting drive for easy access. This procedure took effect as of July 31, 2025.
Finding 2025-003 - U.S. Department of Education (USD), TRIO Programs (Significant Deficiencies): Information on the federal program – Student Support Services, FAL No. 84.042A, June 30, 2025; Ronald McNair Program, FAL No. 84.217A, June 30, 2025. a) Cash Management/Drawdown Supporting Documentation and Recordkeeping Criteria – Under 2 CFR 200.305, non-Federal entities must request Federal funds only for allowable program costs that have been incurred, and must maintain contemporaneous supporting documentation demonstrating: 1. Actual, allowable expenditures existed at the time Federal funds were drawn; and 2. Records supporting the nature and timing of those expenditures were on file and readily available. These requirements ensure that drawdowns reflect immediate cash needs supported by verifiable program expenditures. Condition – During our testing of cash drawdowns, we noted in four (3) of the four (4) drawdowns tested, the College did not maintain adequate supporting documentation to substantiate that allowable expenditures had been incurred at the time of the drawdowns. Additionally, although drawdowns exceeded recorded expenditures at certain points during the year, the College did not have Federal cash on hand at year-end. Additionally, two (2) of these four (4) unsupported transactions lacked evidence of required approval, such as documented review or authorization prior to requesting Federal funds. Cause – The condition resulted from insufficient internal controls over the drawdown and documentation retention processes, including the absence of a timely reconciliation between recorded expenditures and drawdown requests. Effect – Requesting Federal funds without maintaining adequate documentation of actual expenditures increases the risk of noncompliance with Federal cash management requirements and may result in temporary use of Federal funds for unallowable purposes. As a result, questioned costs totaling $52,159 were identified. Questioned Costs – $52,159 Program Title FAL No. Questioned Costs Ronald McNair Program 84.217A $ 32,684 Student Support Services 84.042A 19,475 Total Questioned Costs $ 52,159 Auditor’s Perspective – Although no Federal cash was on hand at year-end and funds were ultimately applied to allowable TRIO costs, the absence of adequate support at the time of the drawdowns constitutes a compliance deviation. Without contemporaneous documentation, the accuracy and allowability of drawdown requests cannot be assured. Repeat Finding – No. Auditor's Recommendation – We recommend the College strengthen controls over the cash drawdown process by: • Ensuring that reimbursement requests are supported by complete and readily available documentation at the time of submission; and Requiring contemporaneous reconciliations between expenditures and drawdown requests; • Implementing improved supervisory review procedures prior to requesting funds. View of Responsible Officials – The College now mandates that G5 drawdown requests include approved documentation stored on the accounting drive, effective July 31, 2025. b) Time and Effort Reporting & Grant Salary Accuracy Criteria – (Compensation – Personnel Services Documentation Requirements): Under 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and such records must: • Be supported by a system of internal controls providing reasonable assurance that the charges are accurate, allowable, and properly allocated; • Reflect 100% of the employee’s compensated activities, both Federal and non-Federal; • Be incorporated into the official records of the non-Federal entity; and • Be completed and documented in a timely and consistent manner. For TRIO programs, personnel costs must be supported by complete and accurate documentation demonstrating the portion of time dedicated to allowable TRIO activities Condition – During our testing of time and effort reporting and salaries charged to the TRIO programs, we identified the following exceptions: 1. Incorrect Salary Charge – For one (1) of the nine (9) time and effort reports tested, the salary expense charged to the McNair grant did not agree with the employee’s documented distribution of time. As a result, $24,947 of personnel costs charged to the grant were not supported by the corresponding time and effort report. 2. Incomplete Time and Effort Reports – Two (2) of the nine (9) reports tested, (both were for the same employee noted in the error above), were incomplete and did not reflect the employee’s full allocation of time across both restricted (grant-funded) and unrestricted activities. These omissions resulted in incomplete documentation to support the distribution of payroll costs. The College corrected the documentation after our inquiry; however, the corrections were not in place at the time of testing. Cause – The condition resulted from inconsistent application of time and effort reporting procedures and insufficient review controls to verify the completeness and accuracy of time distribution records prior to charging payroll costs to TRIO programs. Effect – Charging salaries without accurate, complete, and timely time and effort documentation increases the risk of unallowable personnel costs being charged to the program. As a result, questioned costs totaling $24,947 were identified for unsupported salary charges. Additionally, incomplete reports undermine the reliability of payroll allocations used to support Federal expenditures. Questioned Costs – Ronald McNair Program, FAL No. 84.217A: $24,947. Auditor’s Perspective – Although the College corrected the incomplete reports after our inquiry, corrections made after the fact do not demonstrate compliance at the time costs were charged. Accurate and complete time and effort reporting is essential to ensuring that salary costs charged to TRIO programs are allowable and properly supported. Repeat Finding – No. Auditor’s Recommendation – We recommend the College strengthen internal controls over time and effort reporting for TRIO programs by: • Ensuring all reports reflect 100% of compensated activities for each employee; • Implementing a supervisory review process to confirm accuracy before payroll is allocated to the grant; • Providing refresher training to staff responsible for preparing and approving time and effort documentation; and • Maintaining documentation that is complete, accurate, and contemporaneous with the period of performance. Views of Responsible Officials – Time and Effort reports must be submitted monthly with supervisor sign-off before reaching the Office of Sponsor Programs, showing 100% time allocation. Any changes will require a Personnel Action Form and administrative signatures of approval.
Finding 2025-003 - U.S. Department of Education (ED), Title III Programs (material weakness) Information on the Federal Programs – Title III, FAL No. 84.031, June 30, 2025 Criteria – Federal regulations require recipients of federal awards to minimize the time elapsing between the transfer of funds from the U.S. Department of Education and the disbursement of those funds. Specifically, 2 CFR §200.305(b) requires non-federal entities to maintain effective cash management procedures to ensure that federal funds are drawn only to meet immediate cash needs for program expenditures. Condition – The institution maintained excess federal cash balances for Title III programs at year-end of $1,320,114. Federal funds were drawn down in advance of actual program expenditures and were not disbursed within a reasonable period, resulting in excess cash balances that exceeded immediate program needs. Cause – The excess cash balances resulted from inadequate cash management procedures, including: a) lack of timely reconciliation between federal drawdowns and actual expenditures; b) drawdown practices not aligned with immediate cash needs; c) insufficient monitoring and oversight of grant cash balances and d) failure to adjust drawdown amounts based on current spending patterns. Effect – As a result of these deficiencies: a) federal cash was not managed in accordance with 2 CFR §200.305; b) the College was exposed to potential disallowances and increased federal oversight; c) there is an increased risk of questioned costs and repayment of excess funds and d) continued noncompliance may jeopardize future federal funding. Auditor’s Perspective – From the auditor’s perspective, the magnitude of excess cash, particularly within the Title III program, combined with the repeat nature of the finding, indicates a material weakness in internal control over compliance. Effective cash management controls are fundamental to federal grant compliance, and failure to correct this issue increases the risk of misuse or mismanagement of federal funds. Questioned Costs – $1,320,114. However, the excess cash balances represent noncompliance with federal cash management requirements and may be subject to further review or repayment if not promptly resolved. Repeat Finding – Yes. This finding was reported in a prior audit and corrective actions were not sufficient to prevent recurrence. Auditor’s Recommendation – We recommend that management: a) Establish and implement formal cash management procedures to ensure federal funds are drawn only to meet immediate cash needs; b) perform regular and timely reconciliations between drawdowns and actual expenditures for each federal program; c) strengthen oversight and monitoring of grant cash balances at both the program and central finance levels; d) provide training to staff responsible for federal drawdowns on federal cash management requirements and e) periodically review spending trends and adjust drawdown practices accordingly. Management should also develop and implement a corrective action plan to address the repeat nature of this finding and ensure sustained compliance with federal regulations. View of Responsible Officials – The College is aware of the findings and has hired additional staff to ensure that past behavior changes through a better understanding of the process. In addition, the College will send additional individuals to Title III Training. The college will ensure that every expenditure has a clear audit trail and that reconciliation is performed monthly. Progress will be tracked on each activity.
Finding 2025-004 - U.S. Department of Education (ED), TRIO Programs (material weakness) Information on the Federal Programs –TRIO Upward Bound, FAL No. 84.047A, June 30, 2025 and TRIO Student Support Services, FAL No. 84.042A, June 30, 2025 Criteria – Federal regulations require recipients of federal awards to minimize the time elapsing between the transfer of funds from the U.S. Department of Education and the disbursement of those funds. Specifically, 2 CFR §200.305(b) requires non-federal entities to maintain effective cash management procedures to ensure that federal funds are drawn only to meet immediate cash needs for program expenditures. Condition – The institution maintained excess federal cash balances for multiple federal programs at year-end, as follows: TRIO Upward Bound: $95,989 TRIO Student Support Services: $211,218 Federal funds were drawn down in advance of actual program expenditures and were not disbursed within a reasonable period, resulting in excess cash balances that exceeded immediate program needs. Cause – The excess cash balances resulted from inadequate cash management procedures, including: a) lack of timely reconciliation between federal drawdowns and actual expenditures; b) drawdown practices not aligned with immediate cash needs; c) insufficient monitoring and oversight of grant cash balances and d) failure to adjust drawdown amounts based on current spending patterns. Effect – As a result of these deficiencies: a) federal cash was not managed in accordance with 2 CFR §200.305; b) the College was exposed to potential disallowances and increased federal oversight; c) there is an increased risk of questioned costs and repayment of excess funds and d) continued noncompliance may jeopardize future federal funding. Auditor’s Perspective – From the auditor’s perspective, the magnitude of excess cash, particularly within the TRIO program, combined with the repeat nature of the finding, indicates a material weakness in internal control over compliance. Effective cash management controls are fundamental to federal grant compliance, and failure to correct this issue increases the risk of misuse or mismanagement of federal funds. Questioned Costs – $307,207. However, the excess cash balances represent noncompliance with federal cash management requirements and may be subject to further review or repayment if not promptly resolved. Repeat Finding – Yes. This finding was reported in a prior audit and corrective actions were not sufficient to prevent recurrence. Auditor’s Recommendation – We recommend that management: a) Establish and implement formal cash management procedures to ensure federal funds are drawn only to meet immediate cash needs; b) perform regular and timely reconciliations between drawdowns and actual expenditures for each federal program; c) strengthen oversight and monitoring of grant cash balances at both the program and central finance levels; d) provide training to staff responsible for federal drawdowns on federal cash management requirements and e) periodically review spending trends and adjust drawdown practices accordingly. Management should also develop and implement a corrective action plan to address the repeat nature of this finding and ensure sustained compliance with federal regulations. View of Responsible Officials – The College is aware of the past breakdown in Internal controls under the previous Administration and is working closely with the directors to ensure that we do not have any repeat findings in this area. The main tasks that are being performed are hiring of additional staff, constant communication, and timely reconciliation.
Finding 2025-002 – Indirect Cost Reimbursement Noncompliance with Federal Requirement Program: ALN # 84.282M Charter Schools Program Criteria or Specific Requirements In accordance with: •2 CFR §200.403, costs charged to federal awards must be allowable and based on actual activity; •2 CFR §200.414, indirect costs must be calculated by applying the approved rate to actual direct costs incurred; and •2 CFR §200.305(b), under the reimbursement method, federal funds must be drawn only for costs incurred. Condition The Organization requested and received $130,000 of indirect cost reimbursement during the fiscal year ended June 30, 2025. However, only $44,575 was supported by actual allowable direct costs incurred during the eligible period April 1, 2025 to June 30, 2025. The excess amount of $85,425 relates to expenditures applicable to a subsequent period. During the audit, management recorded this amount as a grant advance (liability) and did not recognize it as revenue or expense in the current year. Cause Use of budgeted amounts and lack of review controls. Effect Reimbursement requests exceeded allowable costs incurred during the period, resulting in noncompliance. Questioned Costs None, the excess was adjusted to a liability account. Context This exception was noted in 1 of 1 sample selected of indirect cost claims during the period. Recommendation We recommend that the Organization design and implement controls to ensure reimbursements are reviewed and based on actual costs. Views of Responsible Officials and Corrective Action Plan iLearn Schools, Inc. notes that the excess reimbursement of $85,425 was identified, properly recorded as a grant advance liability, and not recognized as revenue or expense in the current year. Going forward, all reimbursement requests will be based on actual allowable direct costs incurred. Management will establish written procedures for indirect cost recovery, implement a formal review and reconciliation process prior to submission, and provide staff training on Uniform Guidance requirements. These corrective actions will be in place for the fiscal year ending June 30, 2026.
Cash Management Federal Program and Specific Federal Award Identification CFDA Title and Number 84.031 Higher Education Institution Aid Federal Award Year June 30, 2025 Federal Agencies U. S. Department of Education Pass-Through Entity Not applicable Criteria Pursuant to Uniform Guidance § 200.305, institutions must maintain documentation supporting cash drawdowns and ensure that federal funds are drawn only for immediate cash needs and are supported by underlying expenditures. Conditions and Contexts During my testing, I noted twenty-five (25) transactions out of twenty-five (25) tested in which the University did not provide documentation to support the related drawdown requests. Cause The University did not maintain or provide adequate documentation to support drawdown activity. Questioned Costs For the purposes of this condition, I have not questioned any costs. Effect Without supporting documentation, there is no assurance that drawdowns were made in accordance with federal requirements, increasing the risk of excess cash on hand or unsupported use of federal funds. Repeat Finding No. Recommendation The University should implement procedures to ensure that all drawdowns are properly supported by detailed expenditure records and that documentation is retained and available for audit. Management should also perform periodic reviews of drawdown activity for compliance. Management’s Response The University acknowledges the finding related to missing documentation supporting cash drawdowns for the Higher Education Institutional Aid program. We recognize that federal regulations require all drawdown requests to be supported by underlying expenditures and appropriate supporting records. Corrective Actions 1. Implementation of Required Documentation Procedures The University has established a formal process requiring that all drawdown requests be supported by detailed expenditure reports before funds are drawn. Supporting documentation must be uploaded and retained in a shared electronic repository. 2. Enhanced Review and Approval Controls: Drawdown requests must now undergo a two step review process by Grants Management and the Controller’s Office to ensure compliance with cash management requirements prior to submission. 3. Staff Training: Relevant staff is updating training on Uniform Guidance §200.305 requirements and on maintaining complete documentation to support each drawdown. 4. Ongoing Monitoring: Periodic internal reviews will be conducted to confirm that all future drawdowns are documented, properly supported, and compliant with federal cash management standards. The University believes these actions will strengthen internal controls over cash drawdowns and ensure compliance with federal regulations moving forward.
U.S. DEPARTMENT OF JUSTICE PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANT- AL NUMBER 16.710 AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Cash Management Criteria or specific requirement: Advance payments must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient, as specified in 2 CFR § 200.305(b)(1). The 2024 COPS Office School Violence Prevention Program (SVPP) Award Owner's Manual states the period allowed for advance payments is 10 days, and any interest earned on federal advance payments deposited in interest-bearing accounts that is in excess of $500 per year must be remitted annually to the Department of Health and Human Services Payment Management System. Condition: The District requested and received a federal drawdown of $400,352 from their COPS School Violence Prevention Program (Program) award on December 3, 2024. The Program allows for a 10-day period for federal advance payments. Following the allowable 10-day period, the District had $344,102 of excess federal award funds on hand. The remaining funds were spent from January 28, 2025 to February 11, 2025. Cause: Lack of internal controls over the timing of the drawdown and disbursement of award costs. Effect or potential effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement could result in program noncompliance and loss of program funds. In addition, excess drawdowns can lead to interest earned on federal advance payments, which must be returned in excess of $500 per year. Questioned costs: None Context: In November 2024, the District requested a drawdown of the entire COPS grant award in the amount of $400,352, with $56,250 being expended prior to the request. The drawdown was received by the District on December 3, 2024. The remaining $344,102 was disbursed by the District from January 28, 2025 through February 11, 2025. Identification as a repeat finding: No Recommendation: The District should implement procedures to ensure drawdowns are timed with the District's immediate cash requirements and consult with the Department of Justice COPS Office. Views of responsible officials: The District will implement procedures to ensure drawdowns are timed with the District's immediate cash requirements.
Criteria or Specific Requirement – Cash Management – Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs (2 CFR 200.305(b)). Condition – The University drew funds in advance that were not disbursed as soon as administratively possible. Cause – The internal controls did not ensure that disbursements were reconciled prior to drawing funds. Questioned Costs – ALN 84.047A – $18,355 calculated as the amount of cumulative draws in excess of cumulative expenditures not disbursed as soon as administratively possible. Context – Out of the population of 137 draws made during the year, a sample of 14 was selected for testing. Our sampling method was not, and was not intended to be, statistically valid. One draw was not fully expended as soon as administratively possible. Effect or Potential Effect – Funds were drawn in advance and not fully disbursed as soon as administratively possible. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – The University should update their controls 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 – Management acknowledges the finding related to cash management requirements and the timing of federal fund draws and disbursements. While the University maintains a robust, multi-layered review process, enhancements are necessary to ensure full alignment with federal requirements regarding the minimization of time between the receipt and disbursement of funds. The University currently utilizes several internal controls, including: • A two-person pre-draw validation process to ensure draws align with liquidated expenses • Programmatic oversight through detailed fiscal year draw reports and reconciliation to G5 activity • Periodic fiscal year and program year reviews to identify and correct discrepancies These controls enabled the University to identify and correct the instances noted in the audit. However, management recognizes that refinements are needed to further align the timing of draws with actual cash disbursement activity. To address this, the University will implement the following corrective actions: 1. Refinement of Draw Timing – Draw requests will be more closely aligned with immediate cash needs and anticipated disbursement activity. 2. Enhanced Pre-Draw Reconciliation – In addition to existing controls, a real-time reconciliation of outstanding obligations and pending disbursements will be required prior to each draw to ensure alignment with cash needs. 3. Standardized Draw Calendar Adjustments – The University will evaluate and adjust its draw schedule, where necessary, to better align with actual disbursement cycles, including payroll and purchase card activity. 4. Formalized Monitoring and Documentation – Documentation will be maintained to support the relationship between drawdowns and disbursements, and periodic internal reviews will be conducted to ensure ongoing compliance. 5. Training and Communication – Additional guidance will be provided to program and fiscal staff regarding federal cash management requirements and expectations for timing of draws. Management believes these enhancements, in combination with existing internal controls, will ensure compliance with federal cash management requirements and prevent recurrence of this issue.
U.S. DEPARTMENT OF EDUCATION MAGNET SCHOOLS ASSISTANCE - AL NUMBER 84.165A AUDIT PERIOD - YEAR ENDED JUNE 30, 2025 2025-001. Cash Management Criteria or specific requirement: 2 CFR § 200.305 requires that for non-Federal 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 non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. In addition, interest earned on federal funds up to $500 per year may be retained by the non-Federal entity for administrative expenses. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be returned annually to the Department of Health and Human Services Payment Management System. Condition: On March 21, 2025, the District made a drawdown of Magnet Schools Assistance Program (MSAP) funds totaling $804,310, which consisted of reimbursements of $62,794 and advance payment of $741,516. From March 21, 2025 through June 30, 2025, the District incurred expenditures of $321,608 while also drawing down additional funds of $87,216 and $99,155 on April 30, 2025, and May 30, 2025, respectively. This resulted in significant time elapsing between the drawdown of funds and the disbursement of the funds by the District. At June 30, 2025, the District had $606,279 of excess federal award funds on hand. Cause: Lack of internal controls in place surrounding the drawdown of funds. Effect or potential effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement can result in program non-compliance and loss of program funds. In addition, excess drawdowns can lead to interest earned on federal advance payments, which mut be returned in excess of $500 per year. Questioned costs: None Context: An examination of three of six cash drawdowns and supporting documentation revealed excess funds drawn, because the District did not adjust future draws or return excess funds. Identification as a repeat finding: No Recommendation: The District should implement internal control processes and monitoring for MSAP cash drawdowns and ensure drawdowns are timed with the District's immediate cash requirements. Views of responsible officials: The District has implemented an internal control process that requires the review and approval of detailed expenditure reports and G5 drawdown amounts prior to submission. The review process includes the Director of the Magnet Program, Finance Coordinator, Executive Director of School Leadership, and the Business Manager to ensure accuracy, compliance, and proper authorization before completion.
Finding No. 2025-079 Prior Year Finding: 2024-081 Federal Awarding Agency: U.S. National Science Foundation, U.S. Department of the Interior and U.S. Department of Agriculture (USDA) Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.237 From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals 15.423, 47.050, 47.074, 47.078 Research and Development Cluster (RDC) Federal Award Number: 2040541-2025, 2224776-2025, 2322806-2025, M24AC00008-2025, 20237044040222-2025 Applicable Compliance Requirement: Cash Management Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Context: During our testing we identified 11 out of 40 subrecipient payments related to four grants from the University of Alaska Fairbanks (UAF) under RDC, that did not process payment requests from the subrecipients timely. During our testing we identified two out of eight subrecipient payments related to one grant from UAF under the From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals Program, did not process payment requests from the subrecipients timely. Cause: UAF did not process payment requests from the subrecipients timely. Criteria: Uniform Grant Guidance (2 CFR section 200.305(b)(3)) requires that 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. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effect: Subrecipients on federal awards do not receive timely payment for federal contract work. Questioned Costs: None Recommendation: We recommend the University review and update policies and procedures to allow for more timely payment to subrecipients for work the University contracts them to perform. Views of Responsible Officials: Management agrees with this finding.
Program information: Child Nutrition Cluster, U.S. Department of Agriculture passed through the Michigan Department of Education, 10.553, 10.555, 10.559, 10.582 Criteria: Title 2 of the Code of Federal Regulations (CFR) Part 200.305 requires non‑Federal entities to request reimbursement for allowable expenditures in a timely manner and to maintain effective controls to ensure federal grant funds are properly claimed and received. Additionally, program regulations require participating school food authorities to submit monthly claims for reimbursement for meals served under the National School Lunch Program and School Breakfast Program in accordance with deadlines established by the Michigan Department of Education. Condition: The School did not submit meal reimbursement requests for the months of March 2025 and April 2025 through the Child Nutrition Cluster Federal Awards Program in a timely manner. As a result, allowable meal service expenditures incurred during those months were not requested for reimbursement from the USDA through the Michigan Department of Education, resulting in lost revenue of approximately $250,000 for March, and unavailable revenue being recorded for the April request for approximately $315,000. Questioned costs: None Cause and effect: Management did not have adequate internal controls in place to ensure monthly meal reimbursement claims were prepared, reviewed, and submitted in a timely manner. The lack of controls resulted from significant turnover in the districts business office. The School failed to claim federal reimbursement for allowable child nutrition expenditures for two reporting periods, resulting in the loss of available revenue. Recommendation: We recommend that management establish and implement formal internal controls to ensure all child nutrition cluster reimbursement requests are prepared and submitted timely. Controls should include documented monthly procedures, assignment of responsibility, supervisory review of claims prior to submission, and periodic monitoring to confirm that all eligible reimbursements have been requested. Views of responsible officials: Management agrees with the finding. Corrective action plan: See attached corrective action plan.
Criteria: Per 2 CFR Section 200.305(b)(9) and North Carolina Administrative Code, the portion of any sales tax refunds received that pertain to federal funds administered by the North Carolina Department of Public Instruction (NC DPI) must be refunded to the appropriate federal program that paid the sales tax. Condition: Sales tax refunds received were not refunded to the appropriate federal program that paid the sales tax. Cause: Internal controls were not adequately designed and implemented to ensure that sales tax refunds received were refunded to the appropriate federal program that paid the sales tax Effect: The Local Education Agency (LEA) may be required to reimburse the overpayment of federal funds to NC DPI. Questioned Costs: $189,016 - All sales tax refunds received which pertain to federal programs. Recommendation: Internal controls should be adequately designed and implemented to ensure that sales tax refunds are appropriately refunded to the program that paid the sales tax. Views of responsible officials: The Board agrees with this finding and has set forth a correcve acon pl an. Corrective Action: The Board will implement internal controls over sales tax refunds of federal programs to ensure any such amounts are appropriately applied to the program(s).
FINDING 2025-015 Federal Program Information: Research and Development Cluster (various ALN #’s) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): C. Cash Management - per 2 CFR Part 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. M. Subrecipient Monitoring – per 2 CFR Part 200.332(e)(1), a pass-through entity must 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 review financial and performance reports. Additionally, in accordance with 2 CFR 200.332(g), a pass-through entity must verify that a subrecipient is audited as required by Subpart F of Part 200. Condition: The University’s procedures failed to minimize the time elapsing between the transfer of federal funds to the subrecipient and the disbursement of such funds for program purposes by the subrecipient. The University was unable to provide documentation evidencing appropriate, annual review of its subrecipients’ Single Audit reports. Cause: Administrative oversight and insufficient internal controls. Effect or Potential Effect: The University was not in compliance with the requirements for pass-through entities. Questioned Costs: None. Context: • For 3 of 23 subrecipient payments tested, the University was unable to provide documentation evidencing appropriate review by the principal investigator. • For 6 of 23 subrecipients payments tested, payment was not made within the required timeframe. • For 7 of 7 subrecipients tested, the University was unable to evidence its verification of whether an audit had been performed. Identification as a Repeat Finding: This is a repeat of prior year finding 2024-013. Recommendation We recommend that the University enhance subrecipient monitoring controls by implementing documented invoice review protocols and enforcing annual audit verification procedures for all subrecipients. Management should define responsibilities for these reviews, document oversight activities performed, and implement monitoring controls to ensure compliance with federal subrecipient monitoring requirements. Views of Responsible Officials: In response to the auditor’s recommendation to enhance internal controls and ensure timely review of invoice protocols and subrecipient monitoring, Howard University is implementing the following: • The University is currently piloting a new Supplier Invoice Portal, launched jointly by the Sponsored Programs Office and the Office of Procurement, to improve invoicing efficiency and compliance. Under this new process, subrecipients will be required to submit invoices electronically in accordance with the terms and conditions of their subawards. The portal will support a streamlined review and approval process, with invoices routed through an automated workflow to ensure timely review and disbursement. • To support completion of the University’s annual audit verification requirements for subrecipients, oversight will occur at multiple stages throughout the subaward lifecycle. This includes reviewing audit reports at the proposal development stage, during which subrecipients are required to complete a Subrecipient Commitment Form (implemented September 2025) prior to proposal submission. • At the award stage, refreshed due diligence will be conducted, including a re-review of the subrecipient’s Single Audit and/or financial statements. Finally, the Post Award Compliance team will perform an annual review of subrecipients’ audit reports and complete audit follow up procedures as necessary.
FINDING 2025-018 Federal Program Information: USAID Foreign Assistance for Programs Overseas (ALN 98.001) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): C. Cash Management - 2 CFR §200.305(b)(1) indicates that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: The University was unable to fully reconcile advance payments received from the sponsor to certain expenses incurred during the year. Cause: Administrative oversight and insufficient internal control. Effect or Potential Effect: The University was not in compliance with cash management requirements. Questioned Costs: None. Context: For 4 of 25 expenditures tested, the University was unable to reconcile the expenditure to the related sponsor payments received. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the University enhance its procedures and internal controls over compliance to ensure that cash draws are properly reconciled to expenditures. Views of Responsible Officials: The University receives advance payments from the sponsor, with the amount determined by the sponsor and adjusted as financial reports are submitted by the University. In response to the auditor’s recommendation to strengthen internal controls, Howard University will implement procedures to document and reconcile all cash payments received from sponsors on a quarterly basis to actual expenses incurred. This reconciliation process will help ensure that sponsor payments are fully accounted for and appropriately matched to related expenditures, thereby enabling the University to clearly demonstrate which expenses have been reconciled to payments received.
Finding 2025-002 – Cash Management (Reimbursement Request Error) Federal Program: Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control Over Compliance and Noncompliance Criteria Per 2 CFR §200.305(b)(1) and the terms of the subaward, the pass-through entity required the non-Federal entity to use the reimbursement method. Under this method, payment may be requested only for actual, allowable, and properly supported expenditures. Additionally, per 2 CFR §§200.302 and 200.303, the non-Federal entity must maintain financial management systems and internal controls sufficient to ensure reimbursement requests are accurate and supported by appropriate documentation. Condition The Town of Wheatland requested reimbursement totaling $74,113.15 in excess of actual, allowable, and supported expenditures due to an error in compiling reimbursement request amounts. As a result, the request was not fully supported by underlying documentation at the time of submission. The error was later identified by the Town and corrected through a subsequent reimbursement adjustment. Cause The condition resulted from insufficient review procedures over reimbursement requests, including a lack of detailed reconciliation between requested amounts and supporting expense documentation prior to submission. Effect The Town temporarily requested federal funds in excess of allowable and supported expenditures, resulting in noncompliance with cash management requirements. Questioned Costs None. Repeat Finding No. Recommendation We recommend the Town strengthen internal controls over reimbursement requests by implementing a secondary review of reimbursement calculations prior to submission, establishing a formal reconciliation process between requested amounts and supporting documentation, and using a standardized checklist to verify the completeness and accuracy of reimbursement requests. Views of Responsible Officials Management agrees with the finding and has corrected the identified error. Additional review procedures and reconciliations will be implemented to ensure reimbursement requests are accurate and fully supported prior to submission.
Significant Deficiency, Nonmaterial Non-Compliance North Carolina Department of Public Safety Program name: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (CDBG) AL Number: 14.228 Grant Number: 21-C-4010(NR) Criteria: In accordance with 2 CFR 200.305, the Town is required to maintain an adequate system of internal controls to ensure compliance with cash management requirements. Management must minimize the time elapsing between the transfer of funds form the agency and the disbursement of those funds by the recipient. Condition: The Town did not have adequate internal controls in place to ensure cash management compliance requirements. Our testing identified that reimbursement request #4 was drawn down and received in August; however, the related disbursement to the vendor was not made until September. As a result, fund were not disbursed within the required three-day timeframe. Context: Of the 43 expenditures totaling $755,482, we tested 24 transactions (19 ISI valued at $666,643 and five additional valued at $33,628) We noted that one transaction, valued at $6,563, did not meet the cash management requirements. Effect: The lack of effective internal controls over cash management increases the risk that errors to irregularities may occur and go undetected and may result in non-compliance with the grant requirements. Cause: This condition occurred because the Town did not disburse funds to the vendor within three business days of receipt. Questioned Costs: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs exceed $25,000. Likely questioned costs do not exceed $25,000. Recommendation: Management should strengthen the internal controls over cash management of grant funds to ensure that the requirements are met. Views of Responsible Officials and Planned Corrective Action: The Town agrees with this finding. Please refer to the Corrective Action Plan section of this report. 106
U.S. Department of Health and Human Services Congressional Directives - 93.493 Award# CE152271 Criteria or Specific Requirement – Cash Management and Significant Deficiency Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the Congressional Directive grant, we noted the Hospital received the grant funds in October 2023. The funds were placed in a restricted cash account and were not expended until January 2025, when the MRI equipment was invoiced and subsequently paid for. As such, grant funds were drawn in advance of the incurrence of allowable costs. Cause – Management indicated that, at the time the grant funds were drawn, a former Chief Financial Officer was responsible for grant administration. Management believes the funds were drawn early to demonstrate receipt of grant funding in order for construction on the MRI suite to proceed. However, management was unable to locate written authorization, correspondence, or other documentation from HRSA approving an advance drawdown. Effect or Potential Effect – The Hospital did not comply with federal cash management requirements, as grant funds were drawn in advance of the incurrence of allowable costs and without documented federal approval. Questioned Costs – None noted. Context – The MRI equipment could not be purchased until remodeling of the imaging suite was completed, patient safety concerns were addressed, and inspection was completed. The Hospital did maintain the grant proceeds in restricted cash and did not use the funds for other purposes. No documentation was provided evidencing HRSA approval to draw funds prior to expenditure. Identification as a Repeat Finding, if applicable – Not applicable. Recommendation – Management should strengthen controls to ensure federal grant funds are drawn only as allowable costs are incurred and in accordance with grant agreement terms. Controls should require documented evidence of incurred costs prior to drawdown and retention of any federal approvals authorizing advance funding. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S Department of Health and Human Services Award No. 5 H80CS00681-23-07, June 1, 2024 – May 31, 2025 Award No. 6 H80CS00681-24-04, June 1, 2025 – May 31, 2026 Award No. 5 H8KCS49728-02-00, September 1, 2024 - August 3, 2025 Criteria or Specific Requirement – Cash Management – 2 CFR 200.305 Condition – The Organization’s internal controls over the cash drawdown process did not minimize the time elapsing between the transfer of funds to the Organization from the U.S. Treasury and the issuance of payments for program purposes by the Organization. Cause – The Organization did not comply with their federal cash drawdown policy or federal grant cash management requirements. Effect or potential effect– Grant funds were drawn down sooner than administratively necessary. Questioned Costs – None Context – The Organization did not follow their process of determining whether sufficient grant expenditures had been incurred and disbursed prior to drawing down grant funds. Grant funds were drawn down prior to disbursements of expenditures within the grant period for $707,934 for two out of eleven draws during the fiscal year ended June 30, 2025. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – The Organization should ensure procedures are followed to prevent cash draws from being drawn down prior to disbursement of allowable expenditures. Views of Responsible Officials and Planned Corrective Actions – Management Response - Management concurs with the auditor's finding. The Organization acknowledges the cash drawdown process was not operating effectively to minimize the time lapsing between the transfer of funds to the Organization from the U.S. Treasury and the issuance of payments for program purposes to the Organization. Corrective Action Taken - Designated Crossing Healthcare staff will submit cash draw down requests no more than 5 business days prior to the anticipated pay date for the pay period claimed. Management has developed a dedicated schedule listing Organization pay periods, pay dates, appropriate fund draw dates, and funding draw amounts. Completion Date - Completed 5/7/2026 Responsible Contact Person - Julie Brilley, CEO