2025-004: Cash management - excess cash - ALN 93.568 Condition: The Organization maintained excess cash balances throughout the fiscal year. Monthly balances ranged from approximately $39,000 to $296,000, with consistently elevated balances observed during multiple months. These balances indicate that federal funds were drawn down in advance of immediate cash needs. Criteria: In accordance with 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the federal awarding agency and the disbursement of those funds. Cash management practices should ensure that drawdowns are limited to amounts needed for immediate disbursement of program costs. Cause: The condition appears to be the result of inadequate alignment between cash drawdowns and actual disbursement needs, as well as a lack of ongoing monitoring of program cash balances to ensure compliance with federal cash management requirements. Questioned Costs: N/A Effect: Maintaining excess federal funds on hand increases the risk of noncompliance with federal regulations and may result in the Agency being subject to interest liability on advanced funds. Additionally, it reflects weakened internal controls over cash management and increases the risk of inefficient use of federal resources. Recommendation: We recommend that the Agency strengthen its cash management procedures to ensure compliance with federal requirements by aligning cash drawdowns more closely with immediate disbursement needs. This should include developing and utilizing short-term cash forecasts to support draw requests, performing regular monitoring and review of program cash balances, and maintaining documentation that clearly demonstrates the timing and necessity of each draw. Additionally, management should ensure that personnel responsible for cash management are adequately trained on federal cash management requirements to prevent excess cash from being held going forward. Views of Responsible Officials: Management agrees with this finding and their response is included in the corrective action plan.
2025-002 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Cash Management Repeat Finding: No Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.305 requires non-Federal entities using the advance payment method to minimize the time between the transfer of federal funds and their disbursement. Advance payments must be limited to the minimum amounts needed and aligned with the entity’s actual, immediate cash requirements. To use the advance payment method, entities must maintain written cash management procedures and financial management systems that provide effective control and accountability over federal funds. In addition, 2 CFR 200.302(b)(3) and (b)(6) require entities to maintain financial management systems and written procedures sufficient to permit the tracing of federal funds to underlying expenditures and to implement the cash management requirements of 2 CFR 200.305. 2 CFR 200.303 further requires entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including monitoring activities. For Title IV Student Financial Assistance programs, 34 CFR 668.162(b) requires institutions using the advance payment method to request funds only for amounts needed immediately for disbursements made or to be made to eligible students and to disburse those funds no later than three business days after receipt. Condition: The College did not have written procedures governing drawdowns, including draw calculations, timing, approvals, reconciliations, or the return of excess funds. Tested draws were not consistently supported by documentation evidencing the accuracy of the expenditures being reimbursed. In addition, the College did not perform or document reconciliations between underlying disbursement records and authorized draw requests and did not monitor cash balances to identify whether positive balances were carried forward from period to period. As a result, the College could not demonstrate that draw amounts consistently reflected only eligible expenditures incurred during the applicable period. Cause: Management had not established a formal, documented cash management control framework, and responsibilities for draw preparation, review, approval, reconciliation, and monitoring were not clearly defined. As a result, draw requests, supporting documentation, and reconciliations were prepared inconsistently or not retained, and controls were not in place to identify or prevent excess cash on hand. Effect: Because the College did not maintain written cash management procedures, retain consistent support for draw calculations, or perform and document reconciliations of draws to underlying student disbursements and cash balances, the College could not demonstrate that Title IV funds were drawn only for actual, immediate cash needs or that drawn funds were timely disbursed in accordance with advance payment requirements. This condition increases the risk that the College may draw excess cash or draw funds in advance of need, be unable to detect or prevent noncompliance due to inadequate internal controls, and be subject to the return of excess funds, administrative actions, or questioned costs if noncompliance could be quantified. Recommendation: The College should strengthen cash management controls over the SFA Cluster by implementing the following: 1. Adopting written cash management procedures addressing draw calculations, timing of draws, approvals and segregation of duties, required supporting documentation, reconciliation requirements, and the identification and return of excess cash. 2. Maintaining a standardized draw file for each draw that includes approval evidence, supporting disbursement detail, a reconciliation to student-level disbursements by award type, and documentation of cash balances before and after the draw. 3. Performing and retaining monthly reconciliations between student-level disbursement records and federal cash activity, including documented supervisory review. Auditor’s Note: The engagement team noted that the cash management control deficiencies described in this finding have a direct impact on the College’s ability to support other Title IV compliance requirements that rely on traceable federal cash activity, including Return of Title IV Funds (R2T4). Specifically, where the College does not retain draw or return support, does not perform reconciliations between underlying student transactions and authorized activity, and does not maintain a clear audit trail of federal cash balances, it may be unable to demonstrate that Title IV funds were returned to the Department when required and that such returns can be traced from student-level determinations through COD activity and ultimately to federal cash activity (e.g., G5). View of Responsible Officials: See Auditee’s Corrective Action Plan. Questioned Costs: $0, Unknown
Federal Agency: Major Program – U.S. Department of Health and Human Services. Other Program –U.S. Department of Justice Federal Program Name: Major Program – HIV Prevention Activities: Non-Governmental Organization Based. Other Program – Grants for Outreach and Services to Underserved Populations Assistance Listing Number: Major Program – 93.939. Other Program – 16.889 Federal Award Identification Number: Major Program – NU65PS923746. Other Program – 15JOVW-22-GG-00404-UNDE Award Period: Major Program – July 1, 2024 through June 30, 2025. Other Program – October 1, 2024 through September 30, 2025. Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Cash Management. Criteria or Specific Requirement: Per the Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement for program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: During the audit of federal program compliance, it was identified that the entity drew down federal funds in excess of the amounts incurred for allowable expenses. Specifically, cash management procedures did not ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned Costs: Major Program – $339,859. Other Program – $110,783. Context: We noted through our testing of drawdowns and related expenses that as of June 30, 2025 Mazzoni Center had drawn down $339,859 more funds than it had expended on the contract for Assistance Listing No. 93.939 HIV Prevention Activities. It was also identified that $110,783 of funds were drawn down in excess of funds expended for Assistance Listing No. 16.889 Grants for Outreach and Services to Underserved Populations which was not deemed to be a major program. The individual drawing down funds from the federal agencies did not draw down funds based on the expenses incurred each month. Cause: The entity lacked effective internal controls to reconcile actual drawdowns with expenditures incurred. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed the entity to potential interest liabilities and reputational risk. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat Finding: Yes Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expenses. This should include: • Pre-drawdown verification of expense documentation. • Monthly reconciliations of drawdown activity to actual expenditures. • Training for staff involved in federal fund management on Uniform Guidance requirements. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.
Condition During our testing of cash draws, we noted the Education Alliance requested and received federal funds for certain expenditures from subrecipients prior to the related costs being incurred. Specifically, funds were requested based on subrecipient annual agreements rather than actual expenditures incurred as of the date of the draw request. Criteria In accordance with requirements set forth by 2 CFR section 200.305(b), non-federal entities are required to minimize the time elapsed between the transfer of federal funds from the awarding agency and the disbursement of those funds for programmatic purposes. Cause The Education Alliance did not have adequate controls in place to ensure that cash drawdowns for subrecipient activity aligned with the timing of actual expenditures incurred by subrecipients. Effect Federal funds were drawn in advance of allowable programmatic expenditures, resulting in noncompliance with federal cash management requirements and the accumulation of significant refundable advances at year-end. Questioned Costs No questioned costs were identified. Recommendation We recommend the Education Alliance implement procedures to ensure that cash drawdowns related to subrecipient agreements are supported by expected disbursement needs, including monitoring subrecipient expenditure activity and reimbursement status, to minimize the time between receipt and disbursement of federal funds. Management Response Management will review its cash management procedures to ensure that federal drawdowns are supported by actual or immediate cash needs based on expenditures incurred. Management will also closely monitor subrecipient expenditure activity and reimbursement timing to ensure compliance with 2 CFR 200.305(b) and minimize the time between receipt and disbursement of federal funds.
Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Category U.S. Department of Treasury U.S. Department of Homeland Security 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. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 102 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Criteria – (continued) 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. In addition, the 2 CFR Compliance Supplement states the following under Special Test and Provisions – Project Accounting: For large projects, the recipient is required to make an accounting to Federal Emergency Management Agency (FEMA) of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). For Small Projects, FEMA does not adjust estimated costs to the actual incurred amount. The Subrecipient must certify that they completed the approved SOW, and the Recipient must certify that they made all payments in accordance with the FEMA-State/Territory/Tribe agreement. This is typically completed on a Small Project Completion Certification. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 103 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Condition During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Return of interest earned on FEMA-related funds totaling approximately $211,853 was not timely recorded in the general ledger and was subsequently recorded through a post-closing entry dated January 26, 2026. 2. Management initially misclassified approximately $6 million received under the Coronavirus State and Local Fiscal Recovery Funds as state funds rather than federal awards. As a result, the amount was originally excluded from the Schedule of Expenditures of Federal Awards (the Schedule). Cause The condition was caused by the Authority's lack of personnel on the federal funds management office which has been present during prior audit periods, the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), and the resignation of some personnel from their occupied position and left the Authority willingly as stated in finding 2025-004 are the main causes for the condition. Effect Inadequate accounting and controls over federal funds can cause incorrect revenue recognition as capital advances are recognized as revenue when used appropriately and not when received. In addition, this can cause amounts to be included on the Schedule incorrectly as some of the activities received as capital advances have not actually occurred. It also creates risk of allocating funds in the incorrect federal awards as some of these have similar uses and assistance listing numbers. Also, the Authority could be subject to penalties or sanctions from the Federal Grantor. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 104 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Context The Authority recognized as federal award revenue of $6 million approximately, as contributions from the Commonwealth of Puerto Rico and therefore were originally not included in the Schedule. Also, $211,853 on the bank accounts where FEMA funds were deposited had to be returned since the funds cannot be deposited in an interest-bearing account. Journal entry recognizing this return was subsequently recorded through a post-closing entry dated January 26, 2026. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2025-006 Questioned costs None as adjustments were made during the audit to correct the misstatement. Recommendation We recommend the Authority’s Federal Funds Management Office (FFMO) and finance department coordinate with the external consultant who handles federal funds received from FEMA to better identify and classify funds received. In addition, we recommend the Authority to address the FFMO personnel limitations by hiring additional personnel for the Authority, re-shifting task between current personnel or by relaying on outsourced third party providers. 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 provided on pages 108-114.
Finding No: 2025-007 – Lack of controls over minimizing the time elapsing between the transfer of funds from the pass-through entity and the disbursement of funds by the Authority . CFR Part 200 Subpart D Subsection 200.305 states the following: For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment. 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. Whenever possible, advance payment requests by the recipient or subrecipient must be consolidated to cover anticipated cash needs for all Federal awards received by the recipient from the awarding Federal agency or pass-through entity. During our audit procedures, we identified that most capital advances received during fiscal years 2025 and 2024 from FEMA were still unused on June 30, 2025, with no procedures to minimize the time elapsing between funds received and disbursed. In addition the Authority had to returned unused funds to the pass through entity since they remained unused for more than a year.
Finding 2025-003 – U.S. Department of Education (ED) – Federal Work-Study - Noncompliance With Cash Management (Material Weakness): Information on the federal program –Federal Work-Study, FAL No. 84.033, June 30, 2025. Criteria – The Uniform Guidance (§200.305(b)) requires non-Federal entities to minimize the time elapsing between the drawdown of federal funds and the disbursement of those funds for program purposes. For the Federal Work-Study Program, institutions are required to draw federal funds only as funds are needed to reimburse allowable student payroll costs and related employer share expenses and to promptly disburse or return excess federal funds. Condition – As of June 30, 2025, the College reported excess federal cash of $415,971 related to the Federal Work-Study Program. The excess cash represented cumulative federal funds drawn down through the federal payment system that were not disbursed for allowable Federal Work-Study payroll costs as of year-end. The excess cash balance included amounts related to prior award years that had not been fully liquidated through reimbursement of allowable student wage expenditures or returned to the U.S. Department of Education as of June 30, 2025. Cause – The excess cash condition resulted from insufficiently effective cash-management monitoring controls over the Federal Work-Study Program. While allowable payroll expenditures were incurred and supported, cumulative federal draw activity was not adjusted on a sufficiently timely basis to ensure ongoing compliance with 2 CFR §200.305(b). Effect - As a result, the College held federal funds for an extended period beyond immediate program needs, resulting in noncompliance with federal cash-management requirements. Holding excess federal cash increases the risk that federal funds are not administered in accordance with applicable regulations and oversight expectations. Questioned Costs – $415,971 Repeat Finding – Yes. Auditor’s Perspective – From the auditors’ perspective, the excess federal cash balance identified represents a material weakness in cash-management controls over the Federal Work-Study Program. Although the College incurred allowable and supported Federal Work-Study payroll expenditures, routine cash-management procedures did not sufficiently ensure that federal funds were drawn only as needed and promptly liquidated. Government Auditing Standards and the Uniform Guidance emphasize the importance of effective monitoring controls to prevent the accumulation of excess federal cash and to ensure compliance with cash-management requirements. Auditor’s Recommendations – The auditors recommend that the College implement and document routine cash-management reconciliation procedures for the Federal Work-Study Program. At a minimum, reconciliations should be performed regularly between federal drawdowns, allowable payroll expenditures, and amounts subject to liquidation or return. Management review and approval of these reconciliations should be documented to ensure ongoing compliance with 2 CFR §200.305(b). Views of Responsible Officials – The College requests drawdowns for the Federal Work- Study Program on a reimbursable basis, including review and approval procedures. Of the total amount identified, $26,466 related to FY 2025, with the balance relating to prior year(s) activity. The College will review its Federal Work-Study Program cost allocation procedures to ensure all eligible costs are properly identified and supported. The College has engaged two accounting firms to assist with staff training and bring all reconciliations current. In addition, standard month-end and year-end closing procedures will be implemented to address timely, accurate Federal Work-Study Program reconciliations and audit readiness going forward.
Finding 2025-004 – Various Federal Programs: Cash Management – Excess Federal Cash, Untimely Reconciliations (Material Weakness): Information on the federal program – Strengthening Historically Black Colleges and Universities (HBCUs), (Title III), FAL No. 84.031B, June 30, 2025; Historically Black Colleges and Universities (HBCU) (FUTURE ACT), FAL No. 84.031E, June 30, 2025; Minority Science and Engineering Improvement Program (MSEIP), FAL No. 84.120A, June 30, 2025; Science Consortium of Minority Schools, FAL No. 84.120A, June 30, 2025; Empowerment of Undergraduate STEM Majors through Scholarships and Strengthening STEM Identity, FAL No. 47.076, June 30, 2025; Tennessee Louis Stokes (TSLAMP), FAL No. 47.076, June 30, 2025. Criteria – 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards. 2 CFR §200.305(b) requires that payments be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity. 2 CFR §200.308 requires that expenditures remain within approved budget limits unless prior approvals are obtained. Condition – At June 30, 2025, the College maintained excess federal cash balances across multiple federal programs, indicating that cash drawdowns and/or payable balances were not aligned with immediate cash needs for allowable program expenditures. These balances represented federal funds drawn or recorded as payable to federal agencies that were not supported by actual and immediate allowable program expenditures at year-end. The following table summarizes excess federal cash balances identified by program as of June 30, 2025: "Minority Science and Engineering Improvement Program" 120,031 "Science Consortium of Minority Schools" 169,907 "NSF - Empowerment of Undergraduate STEM Majors" 94,801 "NSF - Tennessee Louis Stokes TSLAMP" 54,834 "Title 111" 455,679 "FUTURE" 188,215 "Total Identified Excess Cash" "$ 1,083,467" Condition – (Continued) The College did not adequately reconcile federal cash activity to underlying grant expenditures on a timely basis and did not ensure that drawdowns were limited to amounts necessary to meet immediate cash needs. In addition, the College lacked effective monitoring controls to identify and resolve excess cash positions across federal programs in a timely manner. Federal bank reconciliations were untimely and error-prone. Corrections occurred only after auditor inquiry. Federal accounts also earned excess interest. Cause – The College lacked sufficient policies, procedures, and supervisory review controls to ensure that federal cash drawdowns were based on actual expenditures, that federal cash and grant reconciliations were prepared timely and accurately. Additionally, monitoring controls over cash balances, interest tracking and remittance were not effectively designed or implemented across federal programs. Effect – The lack of effective controls over federal cash management resulted in excess cash being maintained beyond immediate program needs. These conditions increase the risk of noncompliance with federal requirements, including potential return of excess cash or disallowed costs, and increase the risk of material misstatement of federal expenditures and cash balances. Questioned Costs – $1,083,467 Repeat Finding – No Auditor’s Perspective – From a compliance perspective, maintaining excess federal cash balances indicates that the College’s internal control over compliance did not operate effectively during the audit period. The condition demonstrates that drawdowns were not consistently based on actual incurred costs and that monitoring over federal cash was not functioning as designed. Given the pervasiveness of these conditions across multiple programs, this represents a systemic control deficiency. In accordance with 2 CFR §200.303 and auditing standards, this condition constitutes a material weakness in internal control over compliance. Auditor’s Recommendation – We recommend that the College strengthen controls over federal cash management and budget monitoring by implementing procedures to ensure that drawdowns are based on actual allowable expenditures and limited to immediate cash needs. Management should establish and enforce timely grant and federal bank reconciliation processes, monitor interest earnings and federal cash balances, and implement supervisory review controls to ensure compliance with federal requirements across all programs. Views of Responsible Officials – The College requests drawdowns for Title III and FUTURE programs on a reimbursable basis, including review and approval procedures. Of the total amount identified for the Title III program, a $181,433 receivable related to FY2025. The balance related to prior year(s) activity. The College will review its Federal program cost allocation procedures to ensure all eligible costs are properly identified and supported. The College has engaged two accounting firms to assist with staff training and bring all reconciliations current. In addition, standard month-end and year-end closing procedures will be implemented to address timely, accurate Federal program reconciliations and audit readiness going forward. The College experienced significant staff turnover within the business office. In addition, the College is undergoing conversion to a new Enterprise Resource Planning (ERP) system which affected its ability to complete some functions within a timely manner.
AL 93.354 – Material Weakness - Cash Management Criteria: Per 2 CFR 200.305(b), non-Federal entities must minimize the time elapsing between the transfer of funds from the pass-through entity and disbursement for program purposes. Funds under this grant should only be requested to reimburse expenditures for services that have already been provided. Condition: During our testing, we noted the Kentucky Health Departments Association (KHDA) drew down federal funds in excess of actual expenditures under the grant during the year ended June 30, 2025. As of June 30, 2025, cumulative drawdowns exceeded cumulative allowable expenditures by approximately $98,989. Cause: KDHA did not have adequate internal control procedures in place to ensure drawdowns were limited to expenditures for services that had already been provided. Effect: KHDA was not in compliance with federal cash management requirements. KHDA must spend the excess reimbursements on allowable grant expenses prior to the end of the grant’s period of performance, or KHDA may be required to return those funds to the grantor. Recommendation: We recommend KHDA implement procedures to ensure drawdowns are limited to immediate cash needs and are supported by actual expenditures incurred prior to the date of the drawdown. Management should periodically reconcile cumulative drawdowns to expenditures. Management’s Response: Staff have been trained on the federal requirements, and the organization has updated internal policies to reflect the compliance requirements. A Finance Committee has been formed to oversee federal compliance issues.
AL 93.354 – Material Weakness - Cash Management Criteria: Per 2 CFR 200.305(b), non-Federal entities must minimize the time elapsing between the transfer of funds from the pass-through entity and disbursement for program purposes. Funds under this grant should only be drawn down to meet immediate cash needs. Condition: During our testing, we noted the Kentucky Health Departments Association (KHDA) drew down federal funds without minimizing the amount of time between when those funds were received, and when they were disbursed for program purposes. During the year ended June 30, 2025, we noted approximately $163,690 of drawdowns that were not disbursed within thirty days of when the transfer of funds was received from the pass-through entity, which is the period of time KHDA determined be administratively feasible. Cause: KDHA did not have adequate internal control procedures in place to ensure drawdowns were limited to immediate cash needs and that disbursements for program purposes limited the time elapsing from when funds were received from the pass-through entity. Effect: KHDA was not in compliance with federal cash management requirements. These practices may subject KHDA to financial sanctions, repayment of excess funds, or increased oversight by the pass-through entity. Recommendation: We recommend KHDA implement procedures to ensure drawdowns are limited to immediate cash needs and that all program disbursements are scheduled to minimize the time elapsing between the transfer of funds from the pass-through entity and disbursement for program purposes. Management’s Response: Staff have been trained on the federal requirements, and the organization has updated internal policies to reflect the compliance requirements. A Finance Committee has been formed to oversee federal compliance issues.
CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Cash Management Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Questioned Costs: None Criteria: Per 2 CFR Part 200, Section 200.305, Federal payment, "payment methods must minimize the time elapsing between the transfer of funds from the Federal agency...and the disbursement of funds by the recipient… 2 CFR Part 200, Section 200.302(b)(6) also requires written procedures to implement the requirements of Section 200.305. Per HHS Grant Policy Statement: “In accordance with Dept of Treasury regulations, you must draw federal cash only for your immediate needs. At the time of draw down, you will certify you will not hold cash beyond three working days… Do not request cash to cover unliquidated encumbrances, obligation, or accrued expenditures until payment is pending”. Condition: On June 30, 2024, the Organization drew the remaining H8F funds of $1,253,464, and recorded this amount as a credit to a balance sheet account, indicating these were unspent or unearned grant funds. Throughout the year ended May 31, 2025, as expenditures were made, the Organization recorded debits to this balance sheet account, crediting a grant revenue account. The Organization's internal controls over compliance failed to prevent, or detect and correct, this noncompliance. Cause: Organization personnel were not aware of the cash management compliance requirement with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026, and they were spreading it out to what they thought was the deadline. Effect or Potential Effect: By drawing federal award funds prior to expenditure, the Organization did not comply with the requirements of 2 CFR Part 200, Section 200.305, Federal payment and of the HHS Grants Policy Statement. Context: Draws for this Federal award were taken in July, 2024 for $1,270,464. We requested supporting detail of the $1,270,464 expenditures made during the year for this Federal award as reported in the Schedule of Expenditures of Federal Awards. We received a spreadsheet that contained a list of 26 descriptions and amounts, but no transactional detail such as check numbers, check dates, payee, invoice number, invoice date, etc. After determining the check numbers and check dates for 9 of the 26 items in the spreadsheet, we noted that disburesments for 8 of those 9 occurred more than 3 days after the date the draw, with 2 disbursements made more than 5 months after the date of the draw. Repeat Finding? No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures that ensure grant funds are drawn at the time of, or following, expenditures for allowable costs by the Organization. These policies and procedures should include that, for each draw from a Federal award, 1) detailed documentation of the expenditures for which the grant funds are being drawn is prepared prior requesting the draw, including transactional details such as vendor, invoice number, invoice amount, check number, check date, payee, and check amount; 2) that the documentation supporting the draw is reviewed and approved by a member of management (other than the person who prepares the documentation) prior to requesting the draw, and 3) that the documentation supported each draw is maintained as part of the Organization's accounting records. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-005.
2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.
Finding Number: 2025-001 Award Identification: Assistance listing program title and number: NSF Technology, Innovation, and Partnerships – 47.084 Federal award identification number: 2303493 Award Date: May 9, 2023 Name of the federal agency: National Science Foundation Repeat Finding: No Questioned Costs: There are no questioned costs related to this finding Type of Finding: Significant Deficiency in Internal Control over Cash Management Criteria: Section 2 CFR 200.305 establishes the requirements over the management of federal payments. Under this regulation, the grantee must minimize the time lapse between the draw down of federal funds and the disbursement of those funds as well as demonstrate written procedures and a system of financial management that meets control and accountability requirements. Condition: While testing of internal controls over cash management it was noted that the Center did not follow the procedures in place for the draw down of federal funds. Cause: The Center was guided by the NSF program manager to draw down the funds as they became available in accordance with the grant agreement as opposed to following procedures in accordance with Section 2 CFR 200.305. Effect: The Center did not incur the costs in-line with the draw down of federal funds. Recommendation: We recommend the Center follow cash management procedures in accordance with Section 2 CFR 200.305. These procedures should ensure that funds are drawn on a reimbursement basis, supported by actual expenditures incurred or very soon to be incurred and paid. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Material Weakness Finding: 2025-002 Cash Management – Federal Grants Federal Programs: Department of Health and Human Services Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Assistance Listing No. 93.912 Criteria: Cash Management, 2 CFR 200.305(b)(1) Condition: The Organization did not reconcile federal grant expenditures in a timely manner, resulting in a lack of draws of federal funds for which qualifying expenditures had been made prior to the end of the Organization’s financial statement year end. This resulted in unrecorded revenue and receivables of approximately $224,564 at March 31, 2025. Without proper reconciliations and timely draws of federal grant funds, the Organization could be impacted by lost federal funding. Cause: The Organization did not reconcile federal grant expenditures or make federal grant draws in a timely manner. Effect: The Organization failed to properly recognize federal grant revenue and receivables of $224,564. Questioned Costs: None Context/Sampling: Not applicable. Repeat Finding from Prior Year: No Recommendation: The Organization should ensure that qualifying expenditures are reconciled, recorded in the Organization’s financial statements, and drawn from the Payment Management System in a timely manner. Views of Responsible Officials: The Organization understands the importance of timely reconciliations of federal grant expenditures and timely draws of federal grant funds. The Organization will review its processes and procedures to ensure that federal grants are reconciled in a timely manner. Contact Person: Brian Morton, CFO Anticipated Date of Completion: November 30, 2025
Material Weakness Finding: 2025-002 Cash Management – Federal Grants Federal Programs: Department of Health and Human Services Health Center Program Cluster Assistance Listing No. - 93.224 and 93.527 Department of Health and Human Services Grants for Capital Development in Health Centers Assistance Listing No.- 93.526 Criteria: Cash Management, 2 CFR 200.305(b)(1) Condition: The Organization made three draws of federal funds for which qualifying expenditures were not made prior to the end of the Organization’s financial statement year end. This resulted in excess federal cash on hand at March 31, 2025. The Organization is required to incur qualifying expenditures prior to drawing funds from the U.S. Treasury. Cause: The Organization made drawdowns of federal grant funds for which qualifying expenditures were not incurred. Effect: The Organization held excess federal cash due to lack of qualifying expenditures. Questioned Costs: $430,732. Context/Sampling: Out of 39 drawdowns during the fiscal year, three of the drawdowns were received for expenditures that had yet to be incurred and paid. The finding appears to be a systemic issue. Repeat Finding from Prior Year: No Recommendation: The Organization should ensure that qualifying expenditures are incurred prior to making the related draws of funds from the U.S. Treasury. Views of Responsible Officials: The Organization understands the requirements to incur qualifying expenditures prior to drawing funds from the U.S. Treasury. Procedures will be established to ensure that excess federal cash is not held by the Organization. Contact Person: Dr. Aretha Powers, CEO Anticipated Date of Completion: November 30, 2025
2025-002 Cash Management Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00540-23, H8GCS48292, H8LCS51370 Criteria Title 2 CFR 200.305 requires that organizations “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.” [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Condition The Organization was not able to provide documentation for certain cash draws made from the Payment Management System (PMS) to show that expenditures were incurred or expected to be incurred within a minimal amount of time. This finding appears to be a systemic issue. Cause The Organization did not always maintain documentation of the qualifying expenditures used to support amounts drawn from the payment management system. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs $0. Although the auditee did not retain documentation of the expenditures supporting certain draws, our testing indicated that the total program expenditures for the period were sufficient to cover all draws of federal funds under the program in the period. Context For two of six draws tested, the Organization was not able to provide documentation to show that expenses were incurred prior to or within a reasonable time after the draws. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation, along with the supporting invoices and payroll reports supporting the expenditures. In addition, we recommend that the listing of expenditures be reviewed by appropriate personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2025-004 Cash Management (repeat of finding 2024-008) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” Condition The Organization did not maintain supporting documentation for cash draws made from the Payment Management System (PMS). This finding appears to be a systemic problem. Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs None noted. Context Out of seven draws tested, the Organization was not able to provide any supporting documentation or expenditure detail to support two draws. Due to this, we were unable to verify the time elapsing between the funds transfer from the PMS system and the disbursement of funds. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures to be paid or reimbursed. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2025-004 Cash Management (repeat of finding 2024-008) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” Condition The Organization did not maintain supporting documentation for cash draws made from the Payment Management System (PMS). This finding appears to be a systemic problem. Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs None noted. Context Out of seven draws tested, the Organization was not able to provide any supporting documentation or expenditure detail to support two draws. Due to this, we were unable to verify the time elapsing between the funds transfer from the PMS system and the disbursement of funds. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures to be paid or reimbursed. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.
2024-005 - Lack of Written Federal Policies and Procedures Required by Uniform Guidance Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Condition/Finding: The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. Criteria: Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318–320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Cause: The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect: The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Recommendation: We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.
2024-005 - Lack of Written Federal Policies and Procedures Required by Uniform Guidance Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Condition/Finding: The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. Criteria: Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318–320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Cause: The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect: The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Recommendation: We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
Internal control deficiency and noncompliance over cash management related to advance payments. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) Payments for recipients and subrecipients other than States. 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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) (1) 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. Condition: During our testing over cash management, we observed management used the advance method for cash management; however, the entity did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Cause: Management did not have internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Advance payments were not supported by internal controls and management did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. This can potentially result in interest earned on Federal funds. Questioned costs: $981,704 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the expenditures incurred between July and December 2024 which were after the advance method payment was completed in June 2024. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over cash management, we observed management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were $981,704 expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. We were unable to quantify the interest earned on Federal funds. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement internal controls over advance method payments to ensure the entity minimizes the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity or switch to the reimbursement method. Management should review the advance method payment identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: The Company acknowledges non-compliance with 2 CFR § 200.305 that the entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury or the pass-through entity and the disbursement of funds by the recipient or subrecipient. However, the questioned costs that were transferred in advance were ultimately deemed reasonable because they were disbursed during the grant period for allowable costs as part of the federal contract awarded. The Company will ensure a proper understanding of the compliance requirements for all federal contracts prior to requesting funds and will ensure funds transferred are compliant with the requirement that the Company minimize the time elapsed from the time of transfer and the disbursement of funds in accordance with the grant terms.
Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.
Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.
2024-002 Noncompliance with Cash Management (Public Housing Capital Fund CFDA 14.872) Criteria: Federal Code of Regulations, 2 CFR § 200.305 requires the Authority to maintain both written procedures that minimize the time elapsing between the transfer of funds from HUD and disbursement of those funds for eligible costs and financial management systems that meet the standards for fund control and accountability. Advance payments to the Authority must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the Authority in its Capital Fund Program. Furthermore, in accordance with 2 CFR § 905.310, the Authority shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. The Capital Fund Program rules provide guidelines of 3 business days from drawdown to expenditure. Condition: During the year, the Authority had 24 transactions in its Capital Fund Program for grants ranging from CFP 2019-2022. All transactions made during the year did not adhere to the requirements to minimize the time federal funds were drawn down to expenditures of 3 business days. Questioned Costs: None. Effect: The Authority did not properly follow the requirements of 2 CFR § 200.305 and 905.310. Cause: The Authority did not have an adequate understanding of the Capital Fund Program requirements as related to Cash Management. Recommendation: The Authority’s staff should familiarize themselves with Capital Fund Program rules and guidelines in relation to Cash Management. Management Response: Management was unaware of the Cash Management rules and guidelines of the Authority’s Capital Fund Program. We will ensure all future eligible Capital Fund draws are made within 3 business days of expenditures.
Assistance Listing Number, Federal Agency, and Program Name - 11.611, United States Department of Commerce, National Institute of Standards and Technology Federal Award Identification Number and Year - 70NANB20H067 Pass through Entity - Not applicable - Direct funded Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - Yes, 2023-002/2023-003 Criteria - The Federal Funding Accountability and Transparency Act (FFATA), as amended by 6202 of Public Law 110-252, requires a prime grant awardee to report its subgrants using the FFATA Subaward Reporting System (FSRS) tool. The prime recipient will have until the end of the month plus one additional month after an award or subaward is obligated to fulfill the reporting requirement. In addition, written procedures to implement cash management requirements should be in place and updated in accordance with 2 CFR Part 200.305. Condition The Organization did not have the appropriate controls in place over FFATA reporting and did not file the required reports. Further, while the Organization had written procedures over cash management, they were outdated and did not reflect the current staffing model. This finding is repeated from the December 31, 2023 audit. Questioned Costs - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The following table summarizes the transactions examined and the noncompliance identified for FFATA: Additionally, the cash management policy was not updated when there was restructuring in the finance department during the prior fiscal year. Cause and Effect - A process was not in place for the Organization to determine the required reports to be submitted under the grant. The outdated cash management policy was not reflective of the actual process. Recommendation - The Organization must implement processes and controls to identify and comply with funding agency reporting requirements. Additionally, the cash management policy should be updated to reflect the new process. Views of Responsible Officials and Corrective Action Plan - Reporting was completed in SAM.gov in May 2025 for subrecipient subaward amount based on the award period running from calendar periods of July to June.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.305 requires that for reimbursement based grants, the entity should incur the costs for which reimbursement was requested prior to the date of the reimbursement request. Condition During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Questioned Costs $3,819 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the exception identified in our testing was used to calculate questioned costs. Context Of the 9 draws selected for testing, there was one draw that included one invoice submitted for reimbursement twice on the same draw as it was incorrectly entered into the system. Cause and Effect A check was voided and expense was never paid as the invoice was incorrectly coded to the incorrect vendor, but was still included as a check on the reimbursement request. Recommendation We recommend that the internal controls be put in place to ensure that there are no duplicate expenses being submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.305 requires that for reimbursement based grants, the entity should incur the costs for which reimbursement was requested prior to the date of the reimbursement request. Condition During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Questioned Costs $3,819 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the exception identified in our testing was used to calculate questioned costs. Context Of the 9 draws selected for testing, there was one draw that included one invoice submitted for reimbursement twice on the same draw as it was incorrectly entered into the system. Cause and Effect A check was voided and expense was never paid as the invoice was incorrectly coded to the incorrect vendor, but was still included as a check on the reimbursement request. Recommendation We recommend that the internal controls be put in place to ensure that there are no duplicate expenses being submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward.
1. Provide staff training on proper cash management and documentation standards under 2 CFR § 200.305.
Federal Program – American Rescue Plan Technical Assistance Investment Program – Assistance Listing No. 10.234 – Award No. 2023-70504-40441 – Program Year 2024– U.S. Department of Agriculture Criteria or specific requirement – Cash Management, 2 CFR 200.305 Condition – The organization is required to minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient or the subrecipients in accordance with 2 CFR 200.305. If the organization cannot meet the requirements for advance payment, they must use the reimbursement method. The organization, as a pass-through entity, is also responsible for implementing procedures to ensure the time elapsing between the transfer of Federal funds to the subrecipient and the disbursement of such funds for program purposes by the subrecipient is minimized in accordance with 2 CFR section 200.305(b)(1). Cause – The organization did not have appropriate controls in place to ensure compliance with federal requirements to minimize the time elapsing between receiving and disbursing the federal funds. The organization also did not have appropriate controls in place to ensure the time elapsing between the transfer of federal funds to the subrecipient and the disbursement of funds by the subrecipient for program purposes was minimized. Effect – The organization drew funds, but did not disburse them in a timely manner. Additionally, they passed funds to subrecipients and did not ensure the subrecipients spent those funds timely. Questioned costs – Assistance Listing No. 10.234, FAIN No. 20237050440441: $2,855,333. The amount calculated represents the total federal funding the organization received in advance that had not been expensed for program purposes by the end of the reporting period. Assistance Listing No. 10.234: $741,517. The amount calculated represents the total amount of federal funds passed through to subrecipients for the reporting period. Context – There were no cash draws for the reporting period as the majority of the funding awarded was received in advance in the prior year. Out of a population of 8 subrecipients, 2 subrecipients were selected for testing. Of these subrecipients, both received funding in advance; however, both did not disburse funds under the program purposes within a timely manner. Our sample was not, and was not intended to be, statistically valid. Identification as a repeat finding, if applicable – N/A Recommendation – The organization should put controls in place to ensure that funds are requested and spent timely or move to the reimbursement basis. The organization should put controls in place to ensure that funds passed through to subrecipients are disbursed by the subrecipient for the program within a timely manner. Views of Responsible Officials and Planned Corrective Actions – Management agrees with the finding. Management plans to revise internal procedures to include verification of expenditures for eligible and allowable expenses before initiating a draw request, develop a drawdown checklist and require supporting documentation for incurred costs, retain supporting documentation for all drawdowns, require Executive Director approval prior to all federal drawdowns, and conduct training on federal reimbursement protocols for program and finance staff.
2024 -003 – CASH MANAGEMENT Significant Deficiency / Other Matter U.S. Department of Housing and Urban Development ALN #: 14.872 – Public Housing Capital Fund CRITERIA For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. (2 CFR 200.305 (b)) Once funds are disbursed, i.e. transferred from LOCCS to the PHA’s bank account, the PHA must pay the applicable bill(s) within 3 business days after the deposit of the funds into the PHA’s bank account. (HUD Capital Fund Guidebook; Section 7.9) CONDITION We selected a sample of 4 drawdowns of capital funds from ELOCCs during the year. We identified 1 instance in which the Authority did not process payment to the vendor within 3 business days of receiving the funds. CAUSE The Authority does not have sufficient procedures in place to coordinate the timing of drawdowns with disbursement schedules. EFFECT Federal funds were held in excess of immediate cash requirements, which is not in compliance with Uniform Guidance cash management requirements. QUESTIONED COSTS None Identified. CONTEXT The Authority had 8 drawdowns of capital funds during the year. We selected a sample of 4 drawdowns during the year. This was not a statistically valid sample. REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend that the Authority utilize the reimbursement method and process payment to the vendor before requisitioning funds from ELOCCs. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
Assistance Listing Number: 93.193 Name of Federal Program: COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: The Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: No Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.