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.
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.
2024-002 Noncompliance with Cash Management (Public Housing Capital Fund ALN 14.872) Criteria: Federal Code of Regulations, 2 CFR § 200.305 requires the Authority to maintain both written procedures that minimize the time elapsing between the transfer of funds from HUD and disbursement of those funds for eligible costs and financial management systems that meet the standards for fund control and accountability. Advance payments to the Authority must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the Authority in its Capital Fund Program. Furthermore, in accordance with 2 CFR § 905.310, the Authority shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. The Capital Fund Program rules provide guidelines of 3 business days from drawdown to expenditure. Condition: During the year, the Authority had 12 transactions in its Capital Fund Program for grants ranging from CFP 2020-2022 that 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.
2024-002 – HUD CAPITAL FUND PROGRAM (CFDA #14.872) DRAWDOWNS Federal Program Name: Capital Fund Program Assistance Listing Number: 14.872 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Cash Management Criteria: Per HUD Capital Fund Program guidance and 2 CFR 200.305(b) (Cash Management), PHAs must minimize the time between the drawdown of federal funds and disbursement to vendors. HUD guidance further states: “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. PHAs cannot expend nonfederal funds first to pay the applicable bills and then use Capital Funds to reimburse themselves.” Condition: During our testing of Capital Fund drawdowns, we identified three drawdown transactions where the PHA did not comply with the 3-day rule. In each case, vendor payments were made prior to funds being received. Cause: Oversight Effect: The PHA is not in compliance with HUD’s cash management rules for Capital Fund drawdowns. Repeat Finding: No Recommendation: We recommend the PHA establish procedures requiring that Capital Fund related vendor invoices not be paid until drawdowns have occurred.
Criteria: In accordance with the Uniform Guidance (2 CFR §200.305), when entities are funded on a reimbursement basis, they must disburse funds for program purposes prior to requesting reimbursement. The grant for IBBG allowed a 3 day grace period where the Organization could request funds in advance if they spend them within 3 days. Condition: During our testing of cash management, we noted that the Organization requested and received reimbursement of federal funds prior to expending the related program costs. In a certain instance the entity also requested funds in advance and did not spend them within the 3 day window. Cause: The Organization did not have adequate procedures in place to ensure reimbursement requests were timed in accordance with federal cash management requirements. Effect: Requesting federal funds in advance of need results in noncompliance with cash management requirements and creates a risk of the Organization holding federal funds for unallowable purposes, or earning interest that would need to be remitted to the Federal government. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its cash management procedures to ensure that reimbursement requests are made only after expenditures have been incurred, and that advance requests, if any, are timed so that funds are disbursed within the required three-day window. Organization Response: Management agrees with this finding.
Criteria or Specific Requirement: Per 2 CFR §200.302, nonfederal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable federal statutes, regulations, and the terms and conditions of the award. • Cash Management requirements under 2 CFR §200.305 require that drawdowns be based on allowable costs incurred, supported by documentation, and reviewed for accuracy prior to submission. • Matching requirements under 2 CFR §200.306 require that cost sharing or matching contributions be verifiable from the entity’s records and documented in accordance with the cost principles. Entities must retain written documentation of the review and approval process before submission of reimbursement requests to ensure accuracy and compliance. Condition: The Organization maintained a written cash management policy; however, the policy did not specify that documentation of review and approval of reimbursement requests must be retained. As a result, the Organization was unable to provide written evidence of review and approval prior to submission of certain reimbursement requests. In addition, the Organization did not have a formal written policy addressing the review, approval, and documentation of matching contributions to ensure they are allowable, verifiable, and in compliance with federal requirements. While management indicated that a review process occurs, the lack of documented approval reduces the audit trail and does not provide adequate evidence that costs included in the requests were reviewed for accuracy, allowability, and compliance with both cash management and matching requirements. Cause: The lack of specificity in the cash management policy regarding retention of documented approvals, combined with the absence of a written matching policy, resulted in a lack of written documentation of the review and approval process that could be verified. Effect or Potential Effect: Without documented approval for reimbursement requests or a formal policy over matching, there is an increased risk that unallowable or unsupported costs could be included in reimbursement requests or that matching contributions could be inaccurately reported, potentially resulting in noncompliance with federal requirements. Questioned Costs: Not applicable as there were no questioned costs related to noncompliance. Recommendation: We recommend the Organization strengthen its internal controls over cash management and matching by implementing the following: 1. Update the cash management policy to require documented review and approval of reimbursement requests, with such documentation retained as part of the grant record. 2. Develop and implement a formal written matching policy that includes procedures for review, approval, and documentation of matching contributions to ensure compliance with 2 CFR §200.306. Repeat finding from prior year: No – this is the Organization’s first single audit. Views of Responsible Officials: Management agrees with the finding. See attached corrective action plan.
Finding 2024-003 – Subrecipient Cash ManagementIdentification of the federal program:Federal Grantor: Department of Health and Human Services (HHS)Assistance Listing No.: 12.420, Military Medical Research and DevelopmentGrant Award: W81XWH2010210Federal Grantor: Department of Health and Human Services (HHS)Assistance Listing No.: 93.395, Cancer Treatment ResearchGrant Award: R01CA248574Federal Grantor: Department of Health and Human Services (HHS)Assistance Listing No.: 93.847, Diabetes, Digestive, and Kidney Diseases Extramural ResearchGrant Award: R01DK133328Criteria or specific requirement (including statutory, regulatory or other citation):Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”2 CFR 200.305 (c) states, “…the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper.”Condition:Management did not have sufficiently designed internal controls to ensure all payments made to subrecipients were made within the required time frames.Cause:Management did not ensure that all subrecipient cash payments were made within the required time frame.Effect or potential effect:Subrecipients are not paid within the time frame established in the Uniform Guidance.Questioned costs:None.Context:We tested a sample of 10 subrecipient payments, and identified 4 payments that were not paid within 30 days of receipt. Total expenditures for the Research and Development Cluster were $13,427,764 at December 31, 2024. Total subrecipient expenditures for the year ended December 31, 2024, were $2,133,172.Identification as a repeat finding, if applicable:This finding is not a repeat finding from the prior year.Recommendation:Management should ensure subrecipient payments are made within the required time frames included in the Uniform Guidance.Views of responsible officials:Management concurs with the finding and will increase the priority around the 30-day processing deadline mandated by the Uniform Guidance 2 FR 200.305 (b)(3), including review of current processes, policies, and procedures to minimize the time between invoice receipt and the transfer of federal funds to the subrecipient.
Finding 2024-003 Material Weakness in Controls over Compliance and Material Noncompliance – Cash Management Federal Program: 93.137 Community Programs to Improve Minority Health Year: 2024 Federal Agency: Department of Health and Human Services Criteria – In accordance with 2 CFR 200.305 when non-federal entities are funded under the reimbursement method, expenditures should be incurred prior to the date of the reimbursement request. Condition/Perspective – There were four drawdowns made in relation to the fiscal year 2024 expenses for the grant. For two out of the four drawdowns, management erroneously drew down in excess of the expenses incurred. Cause – When requesting for drawdowns management erroneously used the cumulative expenses in the underlying spreadsheet rather than the periodic expenses which led to draw downs to be in excess of the expenses. Questioned Cost - $732,156 was over drawn. Effect – Drawing down in excess of the expenses incurred may result in the granting agency withholding future funding for this grant. Recommendation – Implement a more precise control to ensure that the underlying expense details that are used to make the drawdowns made are accurately calculated. View of Responsible Officials - See Corrective Action Plan
Finding 2024-001 – Cash Management – Pass-Through Entities Identification of the federal program: U.S. Department of Health and Human Services U.S. Department of Defense Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 12.420 – Military Medical Research and Development 93.242 – Mental Health Research Grants 93.279 – Drug Abuse and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.838 – Lung Diseases Research 93.855 – Allergy and Infectious Diseases Research 93.866 – Aging Research Federal Award Numbers Award Period W81XWH1910496-02 5/1/2020-10/31/2025 R01MH116844-05 2/1/2022-1/31/2024 R01MH130193-02 3/1/2023-2/29/2024 R01MH130193-03 3/1/2024-2/28/2025 R01DA052845-04 7/1/2023-6/30/2024 U42OD010442-22 2/1/2023-1/31/2024 P51OD011133-25 5/1/2023-4/30/2024 P51OD011133-26 5/1/2024-4/30/2025 R01HL145411-05 1/1/2023-12/31/2025 R01AI048071-21 12/1/2022-11/30/2023 R01AI048071-22 12/1/2023-1/31/2025 R01AI138587-05 5/1/2022-4/30/2025 R01AI172539-02 8/1/2023-7/31/2024 1503702001-03 8/1/2024-7/31/2025 R21AI170148-02 8/1/2023-7/31/2025 R01AI134245-07 5/1/2023-4/30/2025 P30AI168439-02 3/1/2023-2/29/2024 P30AI168439-03 3/1/2024-2/28/2025 R61AI169026-02 5/1/2023-4/30/2024 R61AI169026-03 5/1/2024-4/30/2026 R56AI174877-01 4/1/2023-3/31/2025 Federal Award Numbers Award Period R01AI176309-01 4/1/2023-3/31/2024 R01AI176309-02 4/1/2024-3/31/2025 R01AI158963-03 4/1/2024-3/31/2025 R01AI179465 6/21/2024-4/30/2025 U34AG068482-03 6/1/2022-5/31/2025 R01AG065546-04 6/1/2023-5/31/2024 R01AG065546-05 6/1/2024-5/31/2025 Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.305(b)(1) requires “The non-Federal entity 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 non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR 200.305(b)(3) requires “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper.” Condition Texas Biomedical Research Institute (Texas Biomed) did not provide evidence of effectively designed internal controls to ensure subrecipients are paid by Texas Biomed within 30 days of requests for reimbursement received by Texas Biomed. In 18 instances, Texas Biomed paid subrecipients after 30 days of receipt of the request for reimbursement from the subrecipient, resulting in noncompliance with 2 CFR 200.305(b)(3). Cause Texas Biomed’s internal controls around payments to subrecipients were not precisely designed to ensure the issuance of payments to subrecipients occurs within 30 days of requests for reimbursement by the subrecipient. Effect or potential effect Texas Biomed did not comply with the cash management requirements of the Uniform Guidance to pay subrecipients within 30 days of their requests for reimbursement. Questioned costs None. Context EY issued a significant deficiency for Texas Biomed related to internal controls over cash management for subrecipients in the prior year. Based upon the implementation date for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a significant deficiency consistent with the prior year finding. For 18 of 40 subrecipient payments to 13 unique subrecipients, Texas Biomed made payments to subrecipients at dates ranging from 31 to 109 days (average of 64 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement for the following award numbers: • R01MH116844-05 • R01AG065546-04 (3 late payments) • P30AI168439-02 • R56AI174877-01 (2 late payments) • R01AI176309-02 (2 late payments) • R01AI048071-22 • R01HL145411-05 • R01DA052845-04 • R01AI134245-07 • P51OD011133-26 • R01MH130193-03 • R01AI172539-02 (2 late payments) • P51OD011133-25 The total for the 18 subrecipient payments paid after 30 days was $127,273 and the total subrecipient payments in our sample of 40 was $323,770. Texas Biomed’s subrecipient expenditures totaled $2.6 million during the period, which represented 5.7% of Texas Biomed’s total research and development expenditures of $45.3 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001 and 2023-001. Recommendation We recommend Texas Biomed design and implement internal controls with the required precision to ensure subrecipients are paid within 30 days of the receipt of requests for reimbursement from the subrecipient. Views of responsible officials Management agrees with the finding and implemented corrective action in September 2024 to implement controls to ensure payments to subrecipients are made timely.
2024-001 – Material Weakness in Internal Control over Cash Management Identification of federal programs: United States Department of the Interior (DOI): #15.608 Fish and Aquatic Conservation - Aquatic Invasive Species: F21AC02420, F23AC01420, and F23AP01474 #15.685 National Fish Passage: F23AC02320 Criteria: Part 3 Compliance Supplement Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: The Organization received advanced payments of grant funding and did not minimize the time elapsing between the transfer of funds and disbursement by the Organization. Advanced funding outstanding as of December 31, 2024 was as follows: #15.608: -F21AC02420 = $161,728 -F23AC01420 = $137,398 -F23AP01474 = $93,662 #15.685: -F23AC02320 = $54,037 Additionally, on the F23AC02320 annual financial report, the funding is improperly reported as liquidated cash disbursements and not cash on hand. Though it had been obligated, it had not yet been disbursed. Cause: The Organization’s written policies and procedures do not address all of the cash management requirements of Uniform Guidance. Previously, the Organization’s grants were operated on a reimbursement basis. At the end of the fiscal year under audit, due to the significant size and nature of the grants, and due to general economic uncertainty and internal risk assessments performed, the Organization determined that it was in their best interest to draw down grant funds in advance so that funding would be available for significant purchases during upcoming construction stages of the grants. Effect or potential effect: The Organization is not in compliance with the cash management requirements of the Uniform Guidance. Questioned Costs: None. Context: -#15.608: Three out of five grants had significant advanced funds outstanding at the end of the year, that were not subsequently disbursed soon after year end. -#15.685: One out of one grant had significant advanced funds outstanding at the end of the year, that were not subsequently disbursed soon after year end. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Organization reviews and revises their policies and procedures to ensure that they align with the cash management requirements of Uniform Guidance. We also recommend that as part of the Organization’s internal control structure over compliance with cash management requirements, to establish planning and monitoring procedures or checklists to ensure that timing is minimized between receipt from the U.S. Treasury or pass-through entity, and disbursement to the vendor. Additionally, we recommend that the Organization implements policy and procedures to ensure that earned interest is appropriately monitored and handled in accordance with the requirements of Uniform Guidance. Views of Responsible Officials: See Corrective Action Plan.
Criteria: Uniform Guidance requires payments to be based on reimbursement requests in accordance with 2 CFR 200.305. Condition: The Organization did not comply with the Uniform Guidance requirement to manage cash and requested payments in advance from the United States Department of Agriculture. Questioned Costs: $0 Cause: Inadequate oversight controls in the grant billing process resulted in duplicate Department of Agriculture reimbursement requests and funds received prior to issuing the related payments. Effect: The Organization was not in compliance with Uniform Guidance 2 CFR 200.305. Recommendation: We recommend the Organization monitors its budget and cash flows regularly. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and in the summer of 2024, the Organization contracted with a third party accounting company to provide services.
Finding number 2024-002, material weakness in internal controls over compliance – cash management Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: 2 CFR 200.303 states that the non-Federal entity is responsible for maintaining effective internal controls over cash management to comply with the terms and conditions of the Federal award. Under CFR 200.305(b), the timing of cash draws for cost reimbursement awards should be as close as administratively feasible to the actual disbursements of the expenditures. Condition: During the year ended December 31, 2024, the Organization’s federal draw down requests were not properly reconciled to actual cash needs. This also resulted in an instance where $121,533 was required to be returned to the awarding agency in June 2024. Cause: Inadequate procedures to monitor cash needs based on actual expenditures. Effect: The Organization temporarily held federal funds without immediate need and is not requesting funds based on actual expenditures incurred. Questioned Costs: None Recommendation: Management should improve the monitoring of actual expenditures to better align cash needs and draw down requests with actual expenditures incurred. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.
Criteria: Under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance, 2 CFR §200.305), non-federal entities must minimize the time between the receipt of federal funds and the disbursement of those funds for program purposes. Reimbursements must be used promptly to pay allowable costs incurred. Condition:Duringtheauditperiod,theCentersubmittedreimbursementrequestsfundsforallowableprogramexpenses andreceivedreimbursementinthesubsequentyear,butdidnotremitpaymenttovendorsinatimelymanner.3of the14 vendor invoices remained unpaid for extended periods despite the Center having received reimbursement for those costs. Cause: The delays in vendor payments were primarily due to weaknesses in internal cash management controls, including lack of reconciliation between reimbursement receipts and outstanding payables, and insufficient oversight of accounts payable processing. Effect: The Center was not in compliance with 2 CFR §200.305. Failure to promptly pay vendors after receiving reimbursement can also result in reputational risk, strained vendor relationships, and potential disallowance of costs by grantor agencies. Questioned Costs: None Recommendation: Management should establish procedures to ensure timely disbursement of funds upon receipt of reimbursements to vendors. Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
2024-001 Cash Management – WIC Reimbursement to Member Counties Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.557 WIC Special Supplemental Nutrition Program for Women, Infants, and Children Award Number and Year: 202792; 2024 Pass-Through Agency: Minnesota Department of Health Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.305(b) 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. Condition: One of four subrecipient payments tested for compliance with federal cash management requirements was not paid timely to minimize the time elapsing between receipt of federal funds and disbursement to subrecipients. Questioned Costs: None. Context: Payment was made 126 days after receipt of the reimbursement request. The total amount reimbursed by the Minnesota Department of Health and paid to subrecipients is $1,087,575, consisting of 12 reimbursements. The sample of four reimbursements totaled $393,605. The payment made 126 days after receipt was for $89,935. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Partnership4Health is not in compliance with cash management requirements. Cause: Partnership4Health did not have backup procedures in place during an employee transition. Recommendation: We recommend Partnership4Health establish procedures to ensure cash management requirements are met. View of Responsible Official: Concur
Reference Number: 2024-005 Prior Year Finding: No Federal Agency: U.S Department of Justice Federal Program: Congressionally Recommended Awards Assistance Listing Number: 16.753 Award Number: 15PBJA-23-GG-00920-BRND Compliance Requirement: Cash Management Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Condition The County received reimbursement for the total grant award amount prior to incurring expenditures. Criteria or specific requirement Compliance: Per 2 CFR section 200.305(b) For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions the Federal award. These internal controls should comply 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). Context The County received $2.5 million on July 1, 2024, for the grant, as of that date the general ledger reported no expenditures. The County incurred expenditures of $274,235 in October, $62,247 in November, and $2,160,518 in December. Cause The County’s controls were not operating effectively to ensure reimbursement request were performed in accordance with federal requirements. Effect The County had to return funding of $1,367,790 in November, which was subsequently drawn in December when expenditures were incurred. Questioned Costs None noted. Recommendation We recommend that the County develop internal controls and procedures to ensure drawdowns are performed in a manner to minimize the time between drawing and disbursing federal funds Views of responsible officials and planned corrective actions Fiscal Clerk has been trained on proper drawdown of grant funds and accurate recording of expenditures.
Finding # 2024-003 Type: Immaterial noncompliance Federal Agency: U.S. Department of Commerce, National Oceanic and Atmospheric Administration Assistance Listing: 11.441 Criteria/Requirement: In accordance with 2 CFR 200.305, organizations that receive more than $250,000 of federal funding per year should maintain those funds in an interest-bearing account. Interest earned in excess of $500 should be remitted back to the federal government. Cause: Funds are not maintained in an interest-bearing account. Effect: There are potential lost earnings and the Organization is not following federal guidelines. Recommendation: The Organization should change their primary operating account to an interest-bearing account. Management Response: Funds on hand will be moved to an interest-bearing account.
Federal agency: U.S. Department of Health and Human Services Federal Award Project Title: Better Family Life’s Relationship, Education, Advancement, and Development for Youth for Life Project Assistance Listing Number: 93.086 Assistance Listing Program Title: Healthy Marriage Promotion and Responsible Fatherhood Grants Award Period: September 30, 2023 – September 29, 2024 Award Period: September 30, 2024 – September 29, 2025 Federal agency: U.S. Department of Health and Human Services Federal Award Project Title: Better Family Life’s Teen Pregnancy Prevention Education Assistance Listing Number: 93.297 Assistance Listing Program Title: Adolescent Health Programs Award Period: July 1, 2023 – June 30, 2024 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Criteria: Related to cash management, when entities are funded on a reimbursement basis, program costs must be incurred before the drawdown is requested according to CFR section 200.305. Nonprofits should document the basis, or calculation, used for each drawdown request to show that the amount requested matches the expenses incurred for the period. Additionally, CFR section 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control over the Federal awards that provides reasonable assurance that the Federal expenditures are in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Drawdown requests should be reviewed and approved by appropriate personnel prior to submission by reviewing supporting documents to ensure amounts have been incurred.Condition: During audit testing of compliance and internal control over compliance, it was discovered funds were drawn down several times based on estimated bi-monthly expenses. Additionally, drawdown requests were not properly reviewed and approved by appropriate personnel. Cause: Due to staff turnover and timing constraints, the Organization utilized reasonable estimates rather than exact amounts for drawdown requests. Additionally, review and approval procedures related to drawdown requests were not being consistently performed. Effect: The estimated drawdown of funds could be different than actual expenditures incurred for the period, leading to costs being reimbursed prior to costs being incurred. As of December 31, 2024, all funds drawn were for expenses incurred prior to December 31, 2024. Additionally, the inconsistent application of internal controls could result in reimbursement of costs that were not incurred prior to drawdown. Questioned costs: No questioned costs were identified. Context: During audit testing of the Organization’s compliance and internal controls over compliance related to cash management, it was discovered the Organization at times utilized reasonable estimates rather than exact amounts for drawdown requests. Additionally, there was no review and approval of drawdown requests by appropriate personnel after February 2024, due to staff turnover. The audit team did not identify any questioned costs and concluded that the control failure was not indicative of fraud or illegal activities. Due to the compliance finding and lack of control, the audit team concluded the finding to be a significant deficiency in compliance and internal control over compliance. Recommendation: We recommend the Organization implement procedures to monitor drawdowns of funds so that funds are only requested when approved and documented reimbursable expenses have been incurred. Additionally, we recommend that management establish and enforce documented review and approval procedures of all drawdown requests. View of responsible officials: There is no disagreement with the audit finding.
Finding 2024-004 Lack of Internal Control over Cash Management Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 Award Numbers: SLFRP4178/4850 Award Year: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management, as contained in 2 CFR 200.305, states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that grant funds drawn down were used for grant expenditures in the applicable program. We compared the unearned revenue balances of the grant funds with the available cash balances at year end. The Village’s cash balances for all governmental funds amounted to $6,230,065 at December 31, 2024. The unearned revenues were $6,512,960 which resulted in a shortfall of $282,895. The CSLFRF program had an unearned revenue balance of $5,352,004 as of December 31, 2024. Cause: Lack of internal control over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Cash advances were used to fund other unrelated programs of the Village. Questioned Costs: $282,895, which is the shortfall between cash and cash equivalents and the unearned revenue balances. Repeat Finding: This is a repeat of Finding 2023-006, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs to ensure that unearned revenue balances do not exceed total cash and cash equivalents. Management’s Response: Management concurs with this finding. See corrective action plan.
Reference Number: 2024-005 Prior Year Finding: No Federal Agency: U.S Department of Justice Federal Program: Congressionally Recommended Awards Assistance Listing Number: 16.753 Award Number: 15PBJA-23-GG-00920-BRND Compliance Requirement: Cash Management Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Condition The County received reimbursement for the total grant award amount prior to incurring expenditures. Criteria or specific requirement Compliance: Per 2 CFR section 200.305(b) For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions the Federal award. These internal controls should comply 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). Context The County received $2.5 million on July 1, 2024, for the grant, as of that date the general ledger reported no expenditures. The County incurred expenditures of $274,235 in October, $62,247 in November, and $2,160,518 in December. Cause The County’s controls were not operating effectively to ensure reimbursement request were performed in accordance with federal requirements. Effect The County had to return funding of $1,367,790 in November, which was subsequently drawn in December when expenditures were incurred. Questioned Costs None noted. Recommendation We recommend that the County develop internal controls and procedures to ensure drawdowns are performed in a manner to minimize the time between drawing and disbursing federal funds Views of responsible officials and planned corrective actions Fiscal Clerk has been trained on proper drawdown of grant funds and accurate recording of expenditures.
Finding No. 2024-001 – Cash Management | Identification of the Program: | Program Name: Research and Development Cluster: Basic Scientific Research, Department of Defense Awarding Office, 12.431; NSF Technology, Innovation and Partnerships, National Science Foundation, 47.084 | Criteria or Specific Requirements (Including Statutory, Regulatory, or Other Citations): 2 CFR 200.303 requires that a non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” According to page 3-C-5 of the 2024 OMB Compliance Supplement, expenses must be incurred before submitting a reimbursement request (2 CFR § 200.305(b)(3)). | Condition: During our testing of 2024 reimbursement requests (totaling $536,272), we noted that there was no evidence of review and approval of the requests to indicate whether the reviewer determined that expenditures submitted for reimbursement had been incurred prior to the request for reimbursement. Management has indicated this review does, in fact, take place, however, there is no evidence (i.e., sign off) on the request to indicate that the review had occurred. | Section III— Federal Award Findings and Questioned Costs (continued) | Cause: Internal controls over the review and approval of the reimbursement requests were not effective. | Effect or Potential Effect: This could result in reimbursement for expenditures that have not been incurred and paid prior to reimbursement being requested. | Questioned Costs: None. | Context: As the sample size is small, we selected 10 cash disbursements for testing. There was no evidence of approval for all 10 reimbursement requests. | Identification as a Repeat Finding: N/A – This is a first year Uniform Guidance audit. | Recommendation: Management should strengthen its internal controls over cash management related to reimbursement requests by having the reviewer sign off on the reimbursement request to support that the review had occurred. | View of Responsible Officials: Management concurs with the findings and has developed a corrective action plan to address this finding.
Finding 2024-001: Lack of Internal Control over Financial Reporting Information on the Federal Program: Assistance Listing Number 11.405 - Cooperative Institute for Marine and Atmospheric Research. Award Number NA22NMF4050043 (MA 1797). Compliance Requirement: Reporting. Type of Finding: Material Noncompliance. Criteria: Uniform Guidance, 2 CFR § 200.305 Report Submission requires that a non-federal entity submit its Single Audit report, data collection form (SF-SAC), and reporting package to the Federal Audit Clearinghouse within the earlier of 30 days after the receipt of the auditor's report or nine months after the end of the audit period. Condition: The auditee's fiscal year-end is December 31, 2024. Per 2 CFR § 200.512, the reporting package was due on September 30, 2025. The auditee did not submit the completed Single Audit package to the Federal Audit Clearinghouse until after the required due date. Context: A review of the auditee's internal records and the FAC website confirmed that the Single Audit reporting package was not submitted by the required deadline. The delay was primarily caused by the lack of timely reconciliation of the auditee's financial records, which postponed the auditor's ability to complete their fieldwork. Cause: Management had not established and maintained effective internal controls over reporting to ensure timely submission of audited financial statements to the Federal Audit Clearinghouse. Effect or Potential Effect: The late submission put the auditee in noncompliance with federal regulations. This hinders the oversight agency from getting timely information about the auditee’s financial and compliance status. A lack of internal controls over required compliance requirements could affect the Organization receiving future federal funding. Questioned Costs: None Repeat Finding: Repeat finding of 2024-001 Recommendation: We recommend that management timely submit annual audit report to the Federal Audit Clearinghouse. To do this, management should develop and implement a clear timeline with internal milestones for completing audit preparation and review. Management should also establish internal control procedures that assign specific responsibilities to staff to ensure that all federal reporting deadlines are met. Views of Responsible Official: Management of the Organization concurs with the audit finding and will immediately implement the auditors’ recommendations. Internal control procedures will be put into place to establish milestones and overseen by the Executive director.
Compliance Requirement Cash Management and Reporting Type of Finding Material Weakness in Internal Control over Compliance Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs None Criteria - Federal rules require grant recipients to request reimbursement from the federal government soon after paying expenses, rather than holding costs for long periods. They also require financial reports to be accurate, up to date, and complete. To meet these standards, timely reporting must be supported by timely reimbursement requests so that the reports truly reflect the District’s financial activity. Condition - Although the District submitted the required SF-425 Federal Financial Reports on a timely basis, it did not submit requests for reimbursement timely. Repeatedly, reimbursements were requested nine to twelve months after expenditures were incurred, creating cash flow inefficiencies and increasing risk of misreporting. The total value of these requests were $661,577 Cause - The District failed to establish and implement adequate procedures to ensure reimbursement requests were submitted in coordination with actual cash outflows. This control weakness reflects insufficient oversight of cash management practices and resulted in noncompliance with federal requirements for timely reimbursement.Effect - Delayed reimbursement requests reduce cash management efficiency and create potential inconsistencies between reporting and drawdown activity. Recommendation - The District must establish and enforce policies mandating that reimbursement requests be submitted promptly after vendor payments are made. The District must reconcile reimbursement activity with SF-425 reporting to ensure that expenditures are accurately, timely, and consistently reflected in financial reports submitted to FEMA, in compliance with 2 CFR 200.305 and 2 CFR 200.328
Condition and Context: The County does not have a complete set of written cash management policies and procedures as required by the Uniform Guidance. The lack of written procedures did not result in any material noncompliance, fraud or abuse with respect to the major program. Criteria: The Uniform Guidance requires Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, to follow the cash management standards set out at 2 CFR section 200.305. The County must have a complete set of written cash management policies, which conform to applicable Federal statutes and the cash management requirements identified in 2 CFR part 200. Cause: The County was unaware of the written cash management policy requirements required by the Uniform Guidance. Effect: An important component of internal controls is the existence of operating policies and procedures and that they are clearly understood and communicated. Without clear written policies and procedures, there is a higher risk of noncompliance with program requirements. Recommendation: Management should determine the scope of written policies needed for compliance with all federal programs and develop policies and procedures to comply with the Uniform Guidance. Grantee Response: Management agrees with the finding and recommendation. The County’s existing policies are currently under review by management and staff to determine what updates/changes are necessary in order to meet the Uniform Guidance requirements. Once any updates/changes are drafted, the policy will be presented to the Governing Body for review and approval.
Finding 2025-001: Cash Management (Material Weakness) Federal Program: Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease (Ryan White Part C). [93.918] Federal Agency: U.S. Department of Health and Human Services (HHS) Criteria: Effective internal controls require an entity to have a financial management system that provides accurate, current, and complete disclosure of the financial results of a federally assisted project (2 CFR § 200.302). Drawdown requests must be based on actual incurred expenditures and be properly reviewed for accuracy before submission to minimize the time between draw and disbursement (2 CFR § 200.305). Additionally, the entity must maintain records that adequately identify the source and application of funds for all federally assisted activities (2 CFR § 200.333). Condition: During our audit of the financial management system and cash management practices for the Ryan White Federal Program, we identified the following deficiencies: Transposed Drawdown Amount: A drawdown request submitted to the PMS system for the Ryan White Program had the requested amount transposed with the amount of another federal program. This resulted in an over-request of a material amount on the Ryan White Program. Duplicate Invoice Reimbursement: An invoice was requested and received for reimbursement on a prior drawdown and was subsequently included again in a draw after year-end, resulting in a duplicate reimbursement. Incomplete Expenditure Tracking: The entity did not have a complete system for tracking all expenditures eligible for reimbursement. The drawdown process was limited to cash disbursement and payroll transactions and excluded expenditures incurred and recorded by journal entries. This resulted in the entity having unreimbursed expenditures that could have offset the over-requests noted above. Questioned Costs: $252,567 The questioned costs consist of the material amount over-requested in the transposed drawdown and the duplicate reimbursement of the previously paid invoice. A detailed breakdown is as follows: Over-requested amount due to transposed data: $150,516 Duplicate reimbursement for invoice submitted twice: $102,051 Cause: The organization's internal controls over the cash management and drawdown request process were inadequate. Specifically, there was a lack of a formal review and approval process to verify the accuracy and completeness of drawdown requests before they were submitted. Effect: The deficiencies in internal control led to material noncompliance with federal regulations related to financial management and cash management. This resulted in the entity holding federal funds in excess of immediate needs, which is a violation of the terms and conditions of the federal award. The inadequate financial management system also prevented the entity from accurately tracking and requesting all eligible expenditures, which could have helped offset the over-draws. Context: This is a systemic finding. Repeat Finding: No. This is the first time this specific finding has been identified. Recommendation: The entity should implement robust internal controls to ensure all drawdown requests are reviewed and approved by a second person with authority. A reconciliation of expenditures to the general ledger should be performed before each drawdown to ensure all eligible costs are included and that no duplicate requests are made. The entity’s cash management policies and procedures should be updated to address these deficiencies and ensure compliance with federal requirements. Management Response: The organization acknowledges and we are committed to remediation. To correct the deficiency, we are implementing a plan focused on establishing a review and approval process for all drawdown requests and revising our policies to ensure that all eligible incurred expenditures are properly captured and reconciled, thereby assuring strict compliance with federal cash management regulations and preventing federal funds from exceeding our immediate needs.
Condition and Context: The County does not have a complete set of written cash management policies and procedures required by the Uniform Guidance. The lack of written procedures did not result in any material noncompliance, fraud or abuse with respect to the major program. Criteria: The Uniform Guidance requires Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the cash management standards set out at 2 CFR section 200.305. They must have a complete set of written cash management policies, which conform to applicable Federal statutes and the cash management requirements identified in 2 CFR part 200. Cause: The County was unaware of the written cash management policy requirements required by the Uniform Guidance. Effect: An important component of internal controls is the existence of operating policies and procedures and that they are clearly understood and communicated. Without clear written policies and procedures, there is a higher risk of noncompliance with program requirements. Recommendation: Management should determine the scope of written policies needed for compliance with all federal programs and develop policies and procedures to comply with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. The County’s existing policies are currently under review by management and staff to determine what updates/changes are necessary in order to meet the Uniform Guidance requirements. Once any updates/changes are drafted, the policy will be presented to the Governing Body for review and approval.
Criteria or specific requirement: 2 CFR section 200.305(b)(1) requires that an entity implement procedures to ensure that the time elapsing between the transfer of federal funds to the subrecipient and the disbursement of such funds for program purposes by the subrecipient be minimized. 2 CFR section 200.305 (b)(3) states the pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the request is believed to be improper. Condition: 5 out of 18 total billings sampled were not paid timely. Questioned costs: None. Context: During our testing of subrecipient payments, 5 out of the 18 billings sampled were not paid within 30 calendar days to the subrecipient after the billing was submitted for payment. Cause: Policies and procedures were not in place to ensure timely payments of subrecipient billings. Effect: Subrecipients received payments a significant amount of time after expenditures have been incurred. Repeat Finding: Yes. Recommendation: We recommend that the Organization implement policies and procedures to ensure subrecipients are paid within 30 days of when the billing is received. If the request is believed to be improper, support for the delay in payment should be maintained. Views of responsible officials: There is no disagreement with the audit finding.
Section III – Major Federal Awards Programs – Findings and Questioned Costs (Cont.) Finding 2024-010: Cash Management - Inadequate Policies for Drawdowns, Program Income, and Reconciliations (Material Weakness) Federal Program : Grants for Transportation of Veterans in Highly Rural Areas Assistance Listing Number : 64.035 Criteria: 2 CFR 200.305 requires documented procedures for cash management, including drawdowns, program income usage, and reconciliation processes. Condition: The Center does not have comprehensive written policies governing drawdowns, program income application, and required reconciliations. Cause: Noncompliance with Federal cash management and program income requirements may result in questioned costs or delayed reimbursements. Effect: Late submission constitutes noncompliance with federal regulations and may delay future federal funding or result in additional oversight. Recommendation: Management should develop and adopt formal written policies detailing drawdown procedures, program income usage, and reconciliation requirements. Repeat Finding: This is not a repeat finding.
Criteria – Uniform Guidance (2 CFR §200.305) requires that non-federal entities establish and maintain written procedures to minimize the time elapsing between the transfer of federal funds from the U.S. Treasury and the disbursement of those funds for allowable program expenditures. In addition, entities must maintain adequate documentation to support all drawdowns and ensure that amounts requested are based on actual, allowable costs incurred. Condition and Description – During our audit, we identified deficiencies in the Organization’s compliance with federal cash management requirements and internal controls over reporting of federal expenditures. Specifically, documentation supporting certain drawdowns of federal funds was not consistently maintained. However, the total drawdowns did not exceed eligible expenses. In addition, we noted timing differences between when expenses were recognized in the financial statements and when related drawdowns were requested and reported to the federal government. These conditions create the risk that federal funds may not be drawn down in alignment with actual expenditures, resulting in temporary over- or under-drawdowns, increasing the likelihood of noncompliance with Uniform Guidance requirements and misstatements of federal program expenditures. Questioned Costs – Unknown. Cause/Effect – Drawdowns were not consistently reconciled to underlying expenses, and supporting documentation was incomplete. Timing differences between expenditures and drawdowns were not addressed, creating the risk of temporary over- or under-drawdowns and noncompliance with federal cash management requirements.
Finding 2024-002: Cash Management Requirements U.S Department of Health and Human Services – Pass-through Office of Refugee Resettlement – Unaccompanied Children ALN 93.676 Cash Management Statement of Condition: During the audit of KidsPeace it was observed that the organization did not minimize the time elapsing between the transfer of funds from the Federal agency to the disbursement of these funds. Funds were drawn down in advance of actual disbursement needs resulting in excess cash balances. Questioned Costs: None. Criteria: According to 2CFR 200.305(b), non- Federal entities must minimize the time elapsing between the transfer of funds from the federal agency and the disbursement of funds by the non- Federal entity. Advance payments must be limited to the minimum amounts needed and timed in accordance with the actual immediate cash requirements of the entity in carrying out the purpose of the program. Cause: The organization lacked adequate procedures to ensure that funds were drawn down only as needed for immediate disbursement. Additionally, there was insufficient oversight of cash management practices. Effect of the Condition: The cash on hand by year end was approximately $1.37 million which is in excess of the immediate needs of the program Repeat Finding: This is a repeat finding for 2023-001. Recommendation: We recommend that the Organization implements further procedures to ensure the drawdown amounts reflect actual expenditures incurred. Views of Responsible Officials: Management agrees with the findings. See corrective action plan.