Assistance Listing, Federal Agency, and Program Name - 11.611, United States Department of Commerce (DOC), National Institute of Standards and Technology (NIST) Federal Award Identification Number and Year - 70NANB20H067 Finding Type - Significant deficiency Repeat Finding - No Criteria - Internal controls should be put in place to ensure grant duties are appropriately segregated between preparation and review processes. In addition, written procdures to implement cash management requirements should in place and updated in accordance with 2 CFR Part 200.305. Condition - The Organization did not have appropriate segregation of duties surrounding the preparation and review of the monthly NIST schedules which accumulate the information necessary to calculate allowable costs and matching for drawdown requests. Further, while the Organization had written procedures over cash management, they were outdated and did not reflect the current staffing model. Questioned Costs - Not applicable Context - One individual was responsible for the preparation of the monthly schedule described above and submission of the drawdown request. The cash management policy was not updated when there was restructuring in the finance department during fiscal year. Cause and Effect - Turnover within the finance department contibuted to the lack of segregation of duties and delay in updating the cash management policy. A lack of segregation of duties allows for the potential for errors and/or noncompliance to occur without detection. The outdated cash management policy was not reflective of the actual process. Recommendation - An individual independent of the preparation process should review and approve the information used to calculate allowable costs and matching prior to submitting the drawdown requests for cash management. Additionally, the cash management policy should be updated to reflect the new process. Views of Responsible Officials and Planned Corrective Actions - Subsequent to year end, the reorganized finance team put new controls and procedures in place. Moving forward the Accounting Supervisor will calculate the NIST MEP monthly program income which is used to determine the monthly award drawdown of cash from the available grant award funds. This is reviewed by the Controller and this report is used to create SF 425.
Federal Program: Assistance Listing #93.590 - Community-based Child Abuse Prevention Grant Program Assistance Listing #93.912 - Rural Communities Opioid Response Program Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Illuminate Colorado has established a policy to time Federal drawdown requests to ensure that Federal cash on hand is sufficient to be disbursed to third party vendors within 10 days of receipt. 2 out of 49 program disbursements to external vendors were made 79 to 90 days after receipt of funds for Community-based Child Abuse Prevention Grant program. 32 out of 46 program disbursements to external vendors were made 14 to 186 days after receipt of funds for Rural Communities Opioid Response program. Questioned Costs: None. Cause and Effect: Illuminate Colorado experienced cashflow issues during 2023 resulting in usage of program receipts for other programs. In addition, vendors utilized for direct Federal assistance programs were not identified and prioritized for federal drawdown receipts. As a result, Illuminate Colorado did not minimize the time elapsing between the drawdown and transfer of funds from the US Treasury and disbursement by the non-federal entity for direct program or project costs. Recommendation: Since Illuminate Colorado is a direct recipient of federal program funds, we recommend Illuminate Colorado identify and pay external vendors participating in this program within 10 days of receipt of program funds in accordance with its financial policies and procedures. In addition, non-program cash flow should be increased to allow enough working capital to disburse program funds to external vendors utilized for this program. Management’s Response: Illuminate Colorado has improved invoicing procedures to ensure timely submission of invoices across the board to minimize time elapsed between submission of invoices to funders and reimbursement of those invoices. In addition, Illuminate Colorado has been seeking increased working capital via a larger line of credit or other sources to address cash flow issues. Finally, Illuminate Colorado is in process of developing a Standard Operating Procedure to ensure consistent identification of vendors utilized for direct Federal assistance programs in order to prioritize payment of those vendors with federal drawdown receipts.
Federal Program: Assistance Listing #93.590 - Community-based Child Abuse Prevention Grant Program Assistance Listing #93.912 - Rural Communities Opioid Response Program Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Illuminate Colorado has established a policy to time Federal drawdown requests to ensure that Federal cash on hand is sufficient to be disbursed to third party vendors within 10 days of receipt. 2 out of 49 program disbursements to external vendors were made 79 to 90 days after receipt of funds for Community-based Child Abuse Prevention Grant program. 32 out of 46 program disbursements to external vendors were made 14 to 186 days after receipt of funds for Rural Communities Opioid Response program. Questioned Costs: None. Cause and Effect: Illuminate Colorado experienced cashflow issues during 2023 resulting in usage of program receipts for other programs. In addition, vendors utilized for direct Federal assistance programs were not identified and prioritized for federal drawdown receipts. As a result, Illuminate Colorado did not minimize the time elapsing between the drawdown and transfer of funds from the US Treasury and disbursement by the non-federal entity for direct program or project costs. Recommendation: Since Illuminate Colorado is a direct recipient of federal program funds, we recommend Illuminate Colorado identify and pay external vendors participating in this program within 10 days of receipt of program funds in accordance with its financial policies and procedures. In addition, non-program cash flow should be increased to allow enough working capital to disburse program funds to external vendors utilized for this program. Management’s Response: Illuminate Colorado has improved invoicing procedures to ensure timely submission of invoices across the board to minimize time elapsed between submission of invoices to funders and reimbursement of those invoices. In addition, Illuminate Colorado has been seeking increased working capital via a larger line of credit or other sources to address cash flow issues. Finally, Illuminate Colorado is in process of developing a Standard Operating Procedure to ensure consistent identification of vendors utilized for direct Federal assistance programs in order to prioritize payment of those vendors with federal drawdown receipts.
Finding 2023-001; Lack of Written Policies and Procedures Condition: The Organization does not have written policies and procedures in place for the administration and management of federal awards, as required by the Uniform Guidance (2 CFR Part 200). Specifically, the organization lacks documented procedures for financial management, internal controls, allowable costs, procurement, and other key operational areas. Criteria: According to 2 CFR § 200.302(b)(7), non-federal entities must have written procedures to implement the requirements of § 200.305 (Payment) and must maintain 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. Additionally, 2 CFR § 200.303 requires non-federal entities to establish and maintain effective internal controls, including written policies and procedures, to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The absence of written policies and procedures appears to be due to a lack of awareness of the specific requirements under the Uniform Guidance, coupled with insufficient resources allocated to the development of these necessary internal controls. Effect: Without written policies and procedures, the Organization is at risk of non-compliance with federal regulations, which could lead to unallowable costs being charged to federal awards, inefficient or improper use of federal funds, and potential disallowance of costs during audits. This deficiency could also reduce the Organization's ability to ensure consistency and accountability in the management of federal funds. Recommendation: The Organization should develop and implement comprehensive written policies and procedures in accordance with the requirements of the Uniform Guidance. These should include, but not be limited to, the following areas: 1. Financial management, including procedures for payments and cash management. 2. Internal controls to ensure compliance with federal requirements. 3. Determination of allowable costs in accordance with federal regulations and the terms and conditions of the award. 4. Time and effort reporting and compensation. The Organization should also ensure that staff are adequately trained in these policies and procedures to enhance compliance and operational efficiency. Views of Responsible Officials of Auditee: In response to the finding, management will take action to develop and implement the necessary written policies and procedures by June 30, 2025. Comprehensive training will be provided to all relevant staff to ensure compliance with federal requirements.
Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non-Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non-Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass-through entity. Condition: The Organization has a policy which includes the Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the twenty-one (21) drawdown requests that we tested, there was no evidence of review and approval for drawdown. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non-Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non-Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass-through entity. Condition: The Organization has a policy which includes the Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the twenty-one (21) drawdown requests that we tested, there was no evidence of review and approval for drawdown. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non-Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non-Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass-through entity. Condition: The Organization has a policy which includes the Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the twenty-one (21) drawdown requests that we tested, there was no evidence of review and approval for drawdown. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Finding No. 2023–001 - CASH MANAGEMENT Name of Federal Agency U.S. Department of Education Pass-through the Puerto Rico Department of Education Federal Programs Charter Schools Assistance Listing Numbers 84.282 Category Significant Deficiency Compliance / Internal control Compliance Requirements Cash Management Criteria According to the 2 CFR 200.305(b) For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. According to the 2 CFR 200.305(b) (2)The recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. Condition During our audit procedures, we found the following instances on which the Institution did not disbursed funds in an expedite matter: Fund Sample Selected Instances Average of Days Late 84.282 11 Two (2) 10 to 15 days Cause The delay in disbursements responds to several situations: remote work, lack of banking or information from suppliers, multiplicity of tasks under the responsibility of the CFO, which affected the dates of sending the payments. Effect As a result of this condition, the U.S. Department of Education and /or Puerto Rico Department of Education may issue warnings and/or impose penalties to the Institution.-34- Questioned Cost None Recommendation The management of the Institution should reinforce its cash management procedures and internal controls to ensure the disbursement of funds in the required time frame. Views of Responsible Officials of the Auditee The management of the Institution agrees with this finding. Responsible Person Yusein Duarakov Business Administration
Finding 2023-003: Cash Management Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance (Modified Opinion) Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.305, Federal Payments states “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper.” 2 CFR section 200.305(b)(3) requires that expenditures be incurred prior to the date of the reimbursement request. Condition/Context During the current audit period, CDF is not in accordance with federal regulations regarding the cash management requirements. Exceptions were noted in five of five tested reimbursement requests: For all five requests, we were not provided with the evidence to support the reimbursement requests were internally reviewed and approved prior to submission. For all five requests, we were not provided with adequate documentation to determine that expenditures were incurred prior to the date of the reimbursement request. We were only provided with system-generated expenditures reports, instead of actual invoices, payroll registers, and payment support. Cause Based on our discussions with management, this finding occurred due to staff turnover. As a result, consistent documentation was not maintained to trace the reimbursement submissions to pass-through entities. Effect The failure to maintain adequate documentation to verify the reimbursement request submissions to pass-through entities could result in duplicate submissions of reimbursement requests and delayed reimbursements. Questioned Costs Unable to determine. Identification of Repeat Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that CDF implement procedures to ensure all reimbursement requests are properly reviewed and approved and submission documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 18-20.
Finding 2023-003: Cash Management Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance (Modified Opinion) Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.305, Federal Payments states “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper.” 2 CFR section 200.305(b)(3) requires that expenditures be incurred prior to the date of the reimbursement request. Condition/Context During the current audit period, CDF is not in accordance with federal regulations regarding the cash management requirements. Exceptions were noted in five of five tested reimbursement requests: For all five requests, we were not provided with the evidence to support the reimbursement requests were internally reviewed and approved prior to submission. For all five requests, we were not provided with adequate documentation to determine that expenditures were incurred prior to the date of the reimbursement request. We were only provided with system-generated expenditures reports, instead of actual invoices, payroll registers, and payment support. Cause Based on our discussions with management, this finding occurred due to staff turnover. As a result, consistent documentation was not maintained to trace the reimbursement submissions to pass-through entities. Effect The failure to maintain adequate documentation to verify the reimbursement request submissions to pass-through entities could result in duplicate submissions of reimbursement requests and delayed reimbursements. Questioned Costs Unable to determine. Identification of Repeat Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that CDF implement procedures to ensure all reimbursement requests are properly reviewed and approved and submission documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 18-20.
Finding 2023-003: Cash Management Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance (Modified Opinion) Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.305, Federal Payments states “when the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper.” 2 CFR section 200.305(b)(3) requires that expenditures be incurred prior to the date of the reimbursement request. Condition/Context During the current audit period, CDF is not in accordance with federal regulations regarding the cash management requirements. Exceptions were noted in five of five tested reimbursement requests: For all five requests, we were not provided with the evidence to support the reimbursement requests were internally reviewed and approved prior to submission. For all five requests, we were not provided with adequate documentation to determine that expenditures were incurred prior to the date of the reimbursement request. We were only provided with system-generated expenditures reports, instead of actual invoices, payroll registers, and payment support. Cause Based on our discussions with management, this finding occurred due to staff turnover. As a result, consistent documentation was not maintained to trace the reimbursement submissions to pass-through entities. Effect The failure to maintain adequate documentation to verify the reimbursement request submissions to pass-through entities could result in duplicate submissions of reimbursement requests and delayed reimbursements. Questioned Costs Unable to determine. Identification of Repeat Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that CDF implement procedures to ensure all reimbursement requests are properly reviewed and approved and submission documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 18-20.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.305 (b1) states “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 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.” Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than monthly.” Condition We noted several instances throughout the audit where management had drawn advances on federal awards which exceeded actual federal award expenditures in the same period. Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was submitted as requesting reimbursement, when several were actually requesting advances. Cause of Condition The Organization’s internal controls are not properly designed to be in line with Federal guidelines, particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and approve each SF-270. Repeat Finding No. Effect of Condition The Organization was not in compliance with cash management compliance requirements as stated in 2 CFR 200.305. Recommendation We recommend management implement processes and procedures to adhere to Federal guidelines and only draw funds immediately needed. We also recommend management implement processes and procedures to review each SF-270 form and verify whether the request is an advancement or reimbursement request. We recommend management document the expenditures associated with each reimbursement request, when applicable.
U.S. Department of Health and Human Services 2023-003 Cash Management/Reporting Program(s) Name of Federal Program (Assistance Listing Number) Urban Indian Health Services (93.193) Special Diabetes Program for Indians - Diabetes Prevention and Treatment Projects (93.237) Criteria - Recipients of federal awards must minimize the time elapsing between the receipt of funds from the U.S. Treasury and disbursement by the Organization set out at 2 CFR section 200.305(b). Context and Condition - We compared four quarterly Federal Cash Transaction Reports and three monthly reimbursement requests to total disbursements reported by these two programs in the Organization’s job-costing system. In both reports we found that the amounts requested did not match the amounts in the job-costing system. Cause - Due to increased funding the Organization received to address the impact of COVID-19, disbursements were not always correctly assigned to a program when incurred. Requests for federal funds were made based on those incomplete reports that were changed subsequently and no longer represent the amounts requested. The original reports were not maintained to support the requests made. Effect - A federal program could disburse funds prior to the disbursement by the Organization. We identified that both programs had requested funds in excess of disbursements. Questioned Costs - No costs were questioned. Repeat finding - Yes Statistically valid - Yes Recommendation - We recommend the Organization 1) maintains timely and accurate recording of disbursements in its job-costing system and 2) regularly request grant funds based on amounts expended as report in the Organization’s job-costing system. Views of responsible officials - The Organization is implementing a grant tracking system in addition to its job-costing system to better comply with these requirements. Together, these systems will be used to request only the amount attributable to the program for reimbursement.
U.S. Department of Health and Human Services 2023-003 Cash Management/Reporting Program(s) Name of Federal Program (Assistance Listing Number) Urban Indian Health Services (93.193) Special Diabetes Program for Indians - Diabetes Prevention and Treatment Projects (93.237) Criteria - Recipients of federal awards must minimize the time elapsing between the receipt of funds from the U.S. Treasury and disbursement by the Organization set out at 2 CFR section 200.305(b). Context and Condition - We compared four quarterly Federal Cash Transaction Reports and three monthly reimbursement requests to total disbursements reported by these two programs in the Organization’s job-costing system. In both reports we found that the amounts requested did not match the amounts in the job-costing system. Cause - Due to increased funding the Organization received to address the impact of COVID-19, disbursements were not always correctly assigned to a program when incurred. Requests for federal funds were made based on those incomplete reports that were changed subsequently and no longer represent the amounts requested. The original reports were not maintained to support the requests made. Effect - A federal program could disburse funds prior to the disbursement by the Organization. We identified that both programs had requested funds in excess of disbursements. Questioned Costs - No costs were questioned. Repeat finding - Yes Statistically valid - Yes Recommendation - We recommend the Organization 1) maintains timely and accurate recording of disbursements in its job-costing system and 2) regularly request grant funds based on amounts expended as report in the Organization’s job-costing system. Views of responsible officials - The Organization is implementing a grant tracking system in addition to its job-costing system to better comply with these requirements. Together, these systems will be used to request only the amount attributable to the program for reimbursement.
1. Provide staff training on proper cash management and documentation standards under 2 CFR § 200.305.
1. Provide staff training on proper cash management and documentation standards under 2 CFR § 200.305.
1. Provide staff training on proper cash management and documentation standards under 2 CFR § 200.305.
1. Provide staff training on proper cash management and documentation standards under 2 CFR § 200.305.
Material Weakness in Cash Management Controls Federal Agency and Pass-through Entity: U.S. Environmental Protection Agency – Georgia Environmental Finance Authority Program Title/Cluster: Clean Water State Revolving Fund Cluster (CWSRF) Criteria: In accordance with 2 CFR §200.305(b), when advance payments are made, the non-federal entity must maintain written procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury (or pass-through entity) and disbursement. Effective internal control over compliance with the cash management requirement includes documented procedures to ensure federal funds are drawn down only when needed and promptly disbursed. Per 2 CFR §200.303, the non-federal entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing of compliance with cash management requirements for the CWSRF program, we inquired about the City’s procedures to minimize the time elapsed between draw requests, deposit of funds, and disbursement to contractors. We noted that the City did not have formal or documented internal controls in place specifically related to this process. No control activities were identified to monitor or ensure timely disbursement following drawdowns. Effect: The absence of identifiable internal controls over cash management increases the risk of noncompliance with federal requirements, including the potential for drawing federal funds in advance of immediate cash needs. While our audit testing did not identify any instances of noncompliance (contractor payments were made within a reasonable timeframe) this control deficiency represents a material weakness in internal control over compliance. Questioned Costs: None reported. Recommendation: We recommend that the City develop and implement formal, documented procedures and internal controls to ensure that federal funds are drawn only when needed and disbursed in a timely manner in accordance with federal cash management requirements. This should include documented monitoring of the timing of drawdowns and corresponding disbursements. Status: New finding in the current year.
2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
Significant Deficiency in Internal Control over Federal Programs Lack of Fiscal Policies and Procedures in Accordance with the Uniform Guidance Assistance Listing Number: 93.328 Name of Federal Program or Cluster: Epidemiology and Laboratory Capacity for Infectious Diseases Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: State of Wisconsin Department of Health Services The Code of Federal Regulations (CFR) Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR§200.302(b)(6-7) Financial Management: - Written procedures are required to implement the requirements of §200.305. - Written procedures are required for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award.WHCA’s written policies and procedures lack some of the requirements required by the Code of Federal Regulations. There is an increased risk that the Association could potentially charge unallowable costs to federal awards or be noncompliant with other areas of the Code of Federal Regulations. We recommend the Association create formal written fiscal policies and procedures that conform to the uniform guidance. No Staff at the WHCA are dedicated to adhering to the regulations. The Executive Director, Vice President of Workforce Development, and the Director of Administration & Association completed a certification course on Federal allowable costs. In managing the federal awards, staff references this knowledge to guide the spending of the award.
Significant Deficiency in Internal Control over Federal Programs Lack of Fiscal Policies and Procedures in Accordance with the Uniform Guidance Assistance Listing Number: 93.328 Name of Federal Program or Cluster: Epidemiology and Laboratory Capacity for Infectious Diseases Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: State of Wisconsin Department of Health Services The Code of Federal Regulations (CFR) Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR§200.302(b)(6-7) Financial Management: - Written procedures are required to implement the requirements of §200.305. - Written procedures are required for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award.WHCA’s written policies and procedures lack some of the requirements required by the Code of Federal Regulations. There is an increased risk that the Association could potentially charge unallowable costs to federal awards or be noncompliant with other areas of the Code of Federal Regulations. We recommend the Association create formal written fiscal policies and procedures that conform to the uniform guidance. No Staff at the WHCA are dedicated to adhering to the regulations. The Executive Director, Vice President of Workforce Development, and the Director of Administration & Association completed a certification course on Federal allowable costs. In managing the federal awards, staff references this knowledge to guide the spending of the award.
Finding No. 2023-001 U.S. Department of the Treasury, Community Development Financial Institutions Fund Federal Assistance Listing Number #21.011 Capital Magnet Fund - Compliance Requirement: J – Program Income Criteria In accordance with 2 CFR, Part 200.305(9), interest earned on advance payments in excess of $500 per year must be remitted annually to the Department of Health and Human Services, Payment Management System. Condition During our testing, we noted that the Organization did not remit interest earned on advance payments. Cause Interest earned on advance payments was calculated, however the Organization did not have adequate procedures and controls in place to ensure the interest was remitted. Effect or Potential Effect Failure to remit interest earned on advance payments could result in misuse of funds. Questioned Costs: Not applicable. Context For two program income samples out of a total two tested, management did not remit a total of $148,180 related to 2023 interest earned on advance payments. Repeat Finding: No Recommendation Management should establish controls to ensure the annual remittance of interest earned on advance payments in excess of $500. Views of Responsible Officials In 2024, all required interest refunds were remitted. Additionally, management established a policy to remit annual calculated interest refunds by March 31st of the subsequent year.
Ineffective Controls Over the Cash Management Requirement Federal Agency: Department of Health and Human Service Federal Program: Health Center Program Assistance Listing Number: 93:224/93.527 Type of Finding: Significant Deficiency Condition Community Health Concern, Inc. (“CHC”) did not minimize the times between drawdowns and disbursements of Federal funds in accordance with Federal regulations. There were three cash drawdowns made by management that were at least two months (60 days) in advance of actual expenditures or immediate requirement need for payment. Possible Asserted Criteria: In accordance with 2 CFR 200.305 (b), for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. 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. Possible Asserted Cause: Management made two (2) early drawdowns to have funds available fearing a government shutdown. An additional early drawdown was made to meet a project deadline. Potential Asserted Effect of Condition: The Federal government may: • Require the funds to be paid back immediately. • Require the use of a more stringent cash drawdown method for the program. • Potential interest liability may be required. Questioned Costs: $967,117. Recommendation: We recommend that CHC improve its procedures to ensure that Federal cash is requested based on immediate cash needs and within the correct period. Additionally, management should consult with its Project Officer for helpful guidance and/or actions to take during cases of looming uncertainties such as government shutdowns, missing project deadlines, etc. Management’s Views: Management’s response is included inthe “Management’s Views and Corrective Action Plan” included at the end of this report after “Section IV – Status of Financial Statements Findings of Prior Audits.”
Statement of Condition/Criteria 2 CFR Section 3603.1 gives regulatory effect to the Office of National Drug Control Policy for 2 CFR Section 200.305(b) which states, in part: Non-Federal entities other than states must minimize the time elapsing between the transfer of funds from the United States Treasury or pass-through entity and disbursement by the non-Federal entity whether the payment is made by electronic funds transfer or issuance or redemption of checks, warrants, or payment by other means. Section 7.25.2 of the High Intensity Drug Trafficking Area (HIDTA) Program Policy and Guidance states if an advance of funds is requested, details specifying the need for the advance must accompany the request. Documentation of how the advance was spent must be submitted within 21 days of use of funds and prior to another advance or reimbursement request. During our testing, we noted in 7 out of 34 receipts the advance was not spent within 21 days after the advance was deposited into HIDTA’s account. The timeliness of the submissions was not in compliance with the above-mentioned requirements. Cause/Effect Failure to properly document how advances are spent per the HIDTA Program Policy and Guidance may result in a reduction of future funding. Recommendation We recommend the City review this matter with the HIDTA Financial Manager to establish procedures in order to submit support for expenses within the 21-day requirement. HIDTA may consider requesting advances of smaller dollar amounts, or requesting reimbursement rather than advances of funds. Client’s Response See Corrective Action Plan on the next page of this document.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
Identification of the federal program U.S. Department of Health and Human Services Research and Development Cluster All Assistance Listing Numbers with amounts provided to subrecipients: 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 R01MH116844-05 2/1/2022-1/31/2024 1R01MH130193-01 4/5/2022-2/28/2023 5R01MH130193-02 3/1/2023-2/29/2024 5R01DA052845-03 7/1/2022-6/30/2023 5R01DA052845-04 7/1/2023-6/30/2024 5P51OD011133-24 5/1/2022-4/30/2023 5P51OD011133-25 5/1/2023-4/30/2024 7R01HL145411-05 1/1/2023-12/31/2024 2R01AI048071-21 12/1/2022-11/30/2023 5R01AI133749-05 7/1/2021-6/30/2023 5R01AI138587-05 5/1/2022-4/30/2024 5R01AI136831-04 8/1/2022-7/31/2024 5R21AI150445-02 2/1/2021-1/31/2024 7R01AI134245-05 9/1/2021-4/30/2022 5R01AI134245-06 2/1/2022-4/30/2023 5R01AI134245-07 5/1/2023-4/30/2025 1P30AI168439-01 3/10/2022-2/28/2023 5P30AI168439-02 3/1/2023-2/29/2024 1R61AI169026-01 5/10/2022-4/30/2023 5R61AI169026-02 5/1/2023-4/30/2024 1R56AI174877-01 4/1/2023-3/31/2025 1R01AI176309-01 4/1/2023-3/31/2024 5U34AG068482-03 6/1/2022-5/31/2024 5R01AG065546-03 6/1/2022-5/31/2023 5R01AG065546-04 6/1/2023-5/31/2024 1R56AG073316-01 9/1/2021-8/31/2023 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).” Criteria or specific requirement (including statutory, regulatory, or other citation) (continued) 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 Biomed 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 5 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). Section III – Federal Award Findings and Questioned Costs (continued) Finding 2023-001 – Cash Management – Pass-Through Entities (continued) 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 For 5 of 30 subrecipient payments, Texas Biomed made payments to subrecipients at dates ranging from 40 to 132 days (40, 41, 71, 110 and 132 days) after receipt of the requests for reimbursement. These payments were not made in accordance with the 30-day requirement (2R01AI048071-21, P51OD011133-24, 5U34AG068482-03, 1P30AI168439-01 and 1R61AI169026-01). Texas Biomed’s subrecipient expenditures totaled $2.8 million during the period, which represented 6.3% of Texas Biomed’s total research and development expenditures of $44.6 million. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2022-001. 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 and approved by the principal investigator prior to paying the subrecipient. Views of responsible officials Management agrees with the finding and will implement corrective action to implement controls to ensure payments to subrecipients are made timely.
2023-002: U.S. Department of Environment Protection – Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures – Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: The Authority has not had any significant federal grant funding in many years. The current federal project is the first time that the Authority has been subject to the requirements of the Uniform Guidance. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however, the Authority was not aware that the Uniform Guidance requires these policies and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understands the potential effects of the condition described above and is currently consulting with their attorney to draft written policies and procedures as they relate to federal programs that are required by the Uniform Guidance.
Assistance Listing Number, Federal Agency, and Program Name 11.463, U.S. Department of Commerce, Habitat Conservation, Implementing Priority Fish Habitat Restoration Projects of GLFC Lake Committees and Great Lakes Commission Lake Erie Metropark NOAA Federal Award Identification Number and Year NA18NMF4630293 and NA22NMF4630144 Pass through Entity Great Lakes Commission and Great Lakes Fishieries Commission Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Non federal entities must establish written procedures to implement the requirements of 2 CFR 200.305 for cash management. Condition Controls in place were not adequate to ensure the Authority had written procedures around cash management. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context During cash management testing, we noted no formal written procedures were in place. Cause and Effect The Authority did not have written procedures around cash management established. As a result, formal cash management procedures are not established, which could result in a possible noncompliance. Recommendation We recommend the Authority put established written procedures in place that follow requirements in 2 CFR 200.305. Views of Responsible Officials and Corrective Action Plan The Authority will establish written procedures in place that follow requirements in 2 CFR 200.305.
Assistance Listing Number, Federal Agency, and Program Name 11.463, U.S. Department of Commerce, Habitat Conservation, Implementing Priority Fish Habitat Restoration Projects of GLFC Lake Committees and Great Lakes Commission Lake Erie Metropark NOAA Federal Award Identification Number and Year NA18NMF4630293 and NA22NMF4630144 Pass through Entity Great Lakes Commission and Great Lakes Fishieries Commission Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Non federal entities must establish written procedures to implement the requirements of 2 CFR 200.305 for cash management. Condition Controls in place were not adequate to ensure the Authority had written procedures around cash management. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context During cash management testing, we noted no formal written procedures were in place. Cause and Effect The Authority did not have written procedures around cash management established. As a result, formal cash management procedures are not established, which could result in a possible noncompliance. Recommendation We recommend the Authority put established written procedures in place that follow requirements in 2 CFR 200.305. Views of Responsible Officials and Corrective Action Plan The Authority will establish written procedures in place that follow requirements in 2 CFR 200.305.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the seventeen (17) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the seventeen (17) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Condition: In May 2023, the Corporation received a $1,425,000 advance of federal funds. The grant agreement and federal regulations require the funds to be held in a separate interest-bearing account until expended. In December 2023, the Corporation made an endowment draw receipt of which was delayed by the investment manager. As a result, the total unrestricted cash was less than the unspent grant funds. This was cured on January 2, 2024, when the endowment draw of approximately $300,000 was received. Criteria: Uniform Guidance, 2 CFR § 200.305(b) - Cash Management, requires a recipient that receives an advance of federal funds to maintain the funds in a separate interest-bearing account. Furthermore, recipients must limit the use of the advanced federal funds to only those purposes outlined in the award agreement, and the funds must not be used for general operations or other non-compliant purposes. Cause: The Corporation’s endowment draw was delayed by the investment manager resulting in a period of time where grant funds were used for non-grant expenditures. Effect: The delay in receipt of the requested endowment draw resulted in the Corporation’s total unrestricted cash balance falling below unspent grant funds for a period of time from mid-December 2023 through January 2, 2024. This indicates that grants funds were temporarily used for general operations. Questioned Costs: As of December 31, 2023, $119,984 was utilized to fund general operations. Those grant funds were reimbursed on January 2, 2024. Recommendation: We recommend the Corporation rely upon other funding sources for operations if this situation occurs in the future.
Criteria In accordance with 2 CFR 200.305(b), entities receiving federal funds are responsible for ensuring payment methods minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity. Condition and Context The Organization engaged the services of an information technology firm for the initial development work (Phase 1) to create a tool to assist in outreach to employers in Ohio that are in the broadband sector. This initial development work was completed in September 2023 at a cost of $100,000. The Organization requested reimbursement of this expense in November 2023 as part of the award’s final close-out procedures. Given that the Organization was negotiating terms with this vendor for Phase 2 of this effort, the Organization did not issue a payment to the vendor for the $100,000 that had been received. Rather, the Organization determined it would be appropriate to withhold payment to the vendor until the Phase 2 negotiations were completed or terminated. Cause The ongoing work related to this project was to be completed under a different federal contract. Thus, the Organization determined that it would be in the best interest of the overall project to hold payment for the completed Phase 1 work until a comprehensive agreement for Phase 2 could be reached. The vendor was amenable to this arrangement. The contract negotiations have taken longer than anticipated. As a result, payment has been delayed. Effect The Organization’s treatment of this $100,000 reimbursement was not in compliance with the requirements of the cash management provisions of 2 CFR 200.305(b). Repeat Finding No. Recommendation We recommend that the Organization review its processes to ensure all reimbursements of federal funds are remitted in a timely manner to vendors. Views of Responsible Officials and Planned Corrective Actions See attached corrective action plan. Questioned Costs None.
Finding 2023-001; Lack of Written Policies and Procedures Condition: The Organization does not have written policies and procedures in place for the administration and management of federal awards, as required by the Uniform Guidance (2 CFR Part 200). Specifically, the organization lacks documented procedures for financial management, internal controls, allowable costs, procurement, and other key operational areas. Criteria: According to 2 CFR § 200.302(b)(7), non-federal entities must have written procedures to implement the requirements of § 200.305 (Payment) and must maintain 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. Additionally, 2 CFR § 200.303 requires non-federal entities to establish and maintain effective internal controls, including written policies and procedures, to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The absence of written policies and procedures appears to be due to a lack of awareness of the specific requirements under the Uniform Guidance, coupled with insufficient resources allocated to the development of these necessary internal controls. Effect: Without written policies and procedures, the Organization is at risk of non-compliance with federal regulations, which could lead to unallowable costs being charged to federal awards, inefficient or improper use of federal funds, and potential disallowance of costs during audits. This deficiency could also reduce the Organization's ability to ensure consistency and accountability in the management of federal funds. Recommendation: The Organization should develop and implement comprehensive written policies and procedures in accordance with the requirements of the Uniform Guidance. These should include, but not be limited to, the following areas: 1. Financial management, including procedures for payments and cash management. 2. Internal controls to ensure compliance with federal requirements. 3. Determination of allowable costs in accordance with federal regulations and the terms and conditions of the award. 4. Procurement standards and conflict of interest policies. 5. Time and effort reporting and compensation. The Organization should also ensure that staff are adequately trained in these policies and procedures to enhance compliance and operational efficiency. Views of Responsible Officials of Auditee: In response to the finding, management and will take action to develop and implement the necessary written policies and procedures by December 31, 2024. Comprehensive training will be provided to all relevant staff to ensure compliance with federal requirements.
Hazard Mitigation Grant Program (HMGP) – Assistance Listing No. 97.039; Grant No. 2057-4506-HMGP; Grant Period Year Ended December 31, 2023 – Cash Management Condition: Perkiomen Township has no written policy regarding cash management of funds received under Federal grants that are subject to the Cash Management compliance requirement. Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Cause: Management was not aware of specific compliance requirements to minimize the time elapsing between the transfer of funds from Pennsylvania Emergency Management Agency (PEMA) and the disbursement by the Township for project costs. Effect: Although Perkiomen Township has no written policy regarding cash management of funds received under Federal grants that are subject to the Cash Management compliance requirement, of the funds received on November 13, 2023, totaling $1,154,359.30, the Township had disbursed most of these funds, totaling $1,118,102.77, by December 31, 2023. Context: The results of audit procedures revealed that funds totaling $1,154,359.30 were received on November 13, 2023, and that the Township had disbursed most of these funds, totaling $1,118,102.77, by December 31, 2023. Recommendation: Perkiomen Township should adopt a written policy regarding cash management of funds received under Federal grants that is designed to minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the Township.
FINDING 2023-002 Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): C. Cash Management – When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR 200.305(b)(3). M. Subrecipient Monitoring - Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved (2 CFR 200.332(d). Condition: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022, resulting in untimely payment of pass-through funds to the correct local club and insufficient subrecipient monitoring over subawards. Cause: Administrative oversight with respect to subrecipient monitoring and cash management. Effect or Potential Effect: The Organization did not ensure the incorrect local club used the subaward for authorized purposes. The Organization did not make timely payment of pass-through funds within 30 days to the correct club. Questioned Costs: Below reportable threshold. Context: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022. This club did not incur expenditures in the period of reimbursement, indicating insufficient subrecipient monitoring over subawards. As the Organization did not disburse the funds to the correct club until February 2024, they did not make appropriate payment within 30 calendar days after receipt of the billing as required at 2 CFR 300.305(b)(3). Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to monitoring over subrecipient activities and reimbursement payments. Views of Responsible Officials and Planned Corrective Actions: The Organization will enhance its procedures and internal controls with respect to monitoring subrecipient activities, and reimbursement payments, by working with the State of Montana grantor to ensure local clubs are using subawards for authorized purposes.
Assistance Listing Number, Federal Agency, and Program Name – 59.059, U.S. Small Business Administration, Congressional Grants Federal Award Identification Number and Year SBAHQ23I0070, 2023 Pass through Entity – Not applicable Finding Type Material weakness and material noncompliance with laws and regulation Repeat Finding – No Criteria – Per CFR 200.302, the Organization must maintain written procedures to implement the requirements of CFR 200.305. Under these Federal payment requirements, the Organization must maintain advance payments of Federal awards in interest-bearing accounts. Any interest earned on Federal advance payments above $500 must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition – The Organization does not have written procedures to implement the requirements of CFR 200.305. The advance payment of the Federal award was not maintained in an interest-bearing account and no interest was remitted back to the Federal government. Questioned Costs Not applicable Identification of How Questioned Costs Were Computed Not applicable. Context – There was only one advance payment of Federal awards received during 2023 which amounted to $921,000. Cause and Effect – Policies and procedures and related internal controls did not ensure compliance with Federal payment requirements under Uniform Guidance. Recommendation - We recommend establishing and maintaining written procedures to ensure 1) advance payments of Federal Awards are maintained in interest-bearing accounts; 2) interest earned is monitored; 3) interest earned above $500 is remitted at least annually. Views of Responsible Officials and Corrective Action Plan – The Organization acknowledges receipt of the finding. The following corrective actions have been taken: Management is in the process of updating written procedures for Federal award compliance. Management will calculate and remit interest for 2023 to the Department of Health and Human Services Payment Management System (PMS).
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: The Department of Health and Human Services/Centers for Disease Control and Prevention Assistance Listing Number: 93.323 Federal Award Identification Number and Year: NU50CK000515 - 2021 Pass-Through Agency: State of Washington Department of Health Pass-Through Number: CBO28488-0 Award Period: July 1, 2023 through July 31, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance – Cash Management – Subrecipient Payments • Other Matters 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: 2 out of 8 total billings sampled were not paid timely. Questioned costs: None. Context: During our testing of subrecipient payments, 2 out of the 8 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. 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.
Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the 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. 3. Conflict of Interest 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024