Finding 2023-001 Lack of Internal Controls over Cash Management Federal Agency: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Numbers: 21.027 Award Number: SLFRP3171/4774 Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $3,569,292 at September 30, 2023. The unearned revenues were $3,789,475 which resulted in a shortfall of $220,183. The unearned revenue for the CSLFRF Fund was $2,941,712. Cause: Lack of internal controls over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village. Questioned Costs: $220,183, which is the shortfall between cash and investment balances and the unearned revenue balances. Repeat Finding: This is a repeat of finding 2022-001, and since this is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments. Management’s Response: Management concurs with this finding. See corrective action plan.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR section 200.305(9), interest earned in excess of $500 per year on federal cash draws must be annually remitted to the Department of Health and Human Services, Payment Management System. For ALN 19.517, the interest earned in excess of $500 of $279 was not remitted to the Department of Health and Human Services, Payment Management System for fiscal year ended September 30, 2023.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Under the requirements of 2 CFR 200.305 (b)(3), When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or passthrough entity reasonably believes the request to be improper. For ALN 19.517, all selections tested of payments to subrecipients, MTI did not remit payment with federal funds timely, with time between receipt of subrecipient invoice and MTI payment ranging from 3 to 6 months. Total federal funds passed through to subrecipients is $525,953 of which $169,733 was tested.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: § 200.302 Financial management § 200.305 Payment § 200.319 Competition § 200.320 Methods of procurement to be followed § 200.430 Compensation—personal services § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.
2023 002 Assistance Listing, Federal Agency, and Program Name ALN 10.557, U.S. Department of Agriculture, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Federal Award Identification Number and Year E20233413 00 (2023) and E20232456 00 (2023) Pass through Entity Michigan Department of Health and Human Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR section 200.305(b)(9), interest earned amounts up to $500 per year may be retained by the non Federal entity for administrative expense. Any additional interest earned on Federal advanced payments deposited in interest bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS)t. Condition The County did not track WIC interest income earned throughout the fiscal year, resulting in the County not refunding the Department of Health and Human Services the excess of $500 earned during the year. Questioned Costs $806 Identification of How Questioned Costs Were Computed The County determined that there was $1,306 of interest earned, less $500 that can be retained for administrative expense, results in $806 that should have been remitted back to the Department of Health and Human Services. Context From October 1, 2022 through September 30, 2023, the County received advanced payments for the WIC program, which were held in an interest bearing account and those funds earned interest in excess of $500. Cause and Effect The County did not have a control in place to track the interest earned on WIC advanced payments to note if they exceeded $500 throughout the year. This resulted in the County not properly remitting the excess interest amount earned back to the Department of Health and Human Services at the end of the fiscal year. Recommendation We recommend that an internal control be put in place to monitor interest earned monthly or quarterly, to ensure that if it exceeds $500 on WIC advance payments, that it is properly remitted back to the Department of Health and Human Resources annually. Views of Responsible Officials and Planned Corrective Actions The financial analyst assigned to the grant will review interest income earned throughout the fiscal year and ensure any amount exceeding $500 is returned to the Department of Health and Human Services.
2023 002 Assistance Listing, Federal Agency, and Program Name ALN 10.557, U.S. Department of Agriculture, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Federal Award Identification Number and Year E20233413 00 (2023) and E20232456 00 (2023) Pass through Entity Michigan Department of Health and Human Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR section 200.305(b)(9), interest earned amounts up to $500 per year may be retained by the non Federal entity for administrative expense. Any additional interest earned on Federal advanced payments deposited in interest bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS)t. Condition The County did not track WIC interest income earned throughout the fiscal year, resulting in the County not refunding the Department of Health and Human Services the excess of $500 earned during the year. Questioned Costs $806 Identification of How Questioned Costs Were Computed The County determined that there was $1,306 of interest earned, less $500 that can be retained for administrative expense, results in $806 that should have been remitted back to the Department of Health and Human Services. Context From October 1, 2022 through September 30, 2023, the County received advanced payments for the WIC program, which were held in an interest bearing account and those funds earned interest in excess of $500. Cause and Effect The County did not have a control in place to track the interest earned on WIC advanced payments to note if they exceeded $500 throughout the year. This resulted in the County not properly remitting the excess interest amount earned back to the Department of Health and Human Services at the end of the fiscal year. Recommendation We recommend that an internal control be put in place to monitor interest earned monthly or quarterly, to ensure that if it exceeds $500 on WIC advance payments, that it is properly remitted back to the Department of Health and Human Resources annually. Views of Responsible Officials and Planned Corrective Actions The financial analyst assigned to the grant will review interest income earned throughout the fiscal year and ensure any amount exceeding $500 is returned to the Department of Health and Human Services.
2023 002 Assistance Listing, Federal Agency, and Program Name ALN 10.557, U.S. Department of Agriculture, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Federal Award Identification Number and Year E20233413 00 (2023) and E20232456 00 (2023) Pass through Entity Michigan Department of Health and Human Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR section 200.305(b)(9), interest earned amounts up to $500 per year may be retained by the non Federal entity for administrative expense. Any additional interest earned on Federal advanced payments deposited in interest bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS)t. Condition The County did not track WIC interest income earned throughout the fiscal year, resulting in the County not refunding the Department of Health and Human Services the excess of $500 earned during the year. Questioned Costs $806 Identification of How Questioned Costs Were Computed The County determined that there was $1,306 of interest earned, less $500 that can be retained for administrative expense, results in $806 that should have been remitted back to the Department of Health and Human Services. Context From October 1, 2022 through September 30, 2023, the County received advanced payments for the WIC program, which were held in an interest bearing account and those funds earned interest in excess of $500. Cause and Effect The County did not have a control in place to track the interest earned on WIC advanced payments to note if they exceeded $500 throughout the year. This resulted in the County not properly remitting the excess interest amount earned back to the Department of Health and Human Services at the end of the fiscal year. Recommendation We recommend that an internal control be put in place to monitor interest earned monthly or quarterly, to ensure that if it exceeds $500 on WIC advance payments, that it is properly remitted back to the Department of Health and Human Resources annually. Views of Responsible Officials and Planned Corrective Actions The financial analyst assigned to the grant will review interest income earned throughout the fiscal year and ensure any amount exceeding $500 is returned to the Department of Health and Human Services.
Finding 2023-003 – Cash Collateralization Criteria: Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Coalition’s cash, it was noted that as of September 30, 2023, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $10,608,222 were uninsured at September 30, 2023. Unearned revenue was reported at approximately $5,389,532 which includes advance payments of Federal funds. Questioned Costs: None Cause: The Coalition has not entered into a cash collateralization agreement with their financial institution. Effect: The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Coalition enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2023-003 – Cash Collateralization Criteria: Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Coalition’s cash, it was noted that as of September 30, 2023, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $10,608,222 were uninsured at September 30, 2023. Unearned revenue was reported at approximately $5,389,532 which includes advance payments of Federal funds. Questioned Costs: None Cause: The Coalition has not entered into a cash collateralization agreement with their financial institution. Effect: The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Coalition enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
Finding: 2023-002-Nonmaterial Noncompliance – Timing between the transfer of funds and disbursement of costs Federal Program: 93.XXX U.S. Department of Health and Human Services Condition: The Institute was not able to provide us detailed support showing that time elapsing between the receipt of funds from the federal agency or pass-through entity and disbursement of funds for direct program or project costs and the proportionate share of allowable indirect costs was minimized. Criteria: In accordance with the Compliance Supplement, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, 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)). Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR Section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR Section 200.305(b)(1)). Cause: The Institute received funds in accordance with fixed price payment schedules and did not maintain documentation of the time elapsing between the receipt and disbursement of such funds. Effect: The Institute may have earned interest on federal funds during the time elapsed between receipt and disbursement of federal funds. Questioned Costs: None noted. Repeat Finding: No. Recommendation: We recommend the Institute establish an internal control in which an individual review the time elapsing between receipt and disbursement of federal funds. Corrective Action Plan: The Institute implemented the recommendations in the fourth quarter of fiscal year 2024.
2023-001 CASH MANAGEMENT U.S. Department of Environmental Protection ALN 66.456 – National Estuary Program Federal Award ID Number: 4T-02D39922 2023 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. As required by 2 CFR 200.305(b), grant recipients may only draw funds for the minimum amounts needed for actual and immediate cash requirements to pay employees, contractors, subrecipients or to satisfy other obligations for allowable costs under the grant agreement. Disbursements within five (5) business days of the drawdown are deemed to comply with this requirement. Condition: On December 19, 2022 the grantee drew down their entire award of $909,800, but only $300,000 was for reimbursable expenses. The remaining $609,800 was an advance which is not permitted under the award terms or Uniform Guidance. The erroneous advance was identified by the grantor and returned by the Council on December 29, 2022. Cause: Council management misunderstood the award terms and the allowability of advances. Effect: Draws of funds in excess of amounts needed for actual and immediate cash requirements can result in the return of funds. Questioned Costs: None. Perspective: During our testing, we did not note any other instances in which funds were drawn on an advance basis, in excess of costs already incurred by the Council. The Council misunderstood guidance from the grantor, which led to the draw down of funds in advance of current needs. Recommendation: Management should obtain clarification in writing from the grantor on guidance outside of the established procedures to prevent future misunderstandings.
DEPARTMENT OF HEALTH AND HUMAN SERVICES 2023-002 Immunization Cooperative Agreements, ALN #93.268 Criteria: According to 2 CFR Section 200.305(b)(3), all reimbursement requests should be based on supporting documentation that shows the cost was incurred before the request for payment and that the payment to vendor was made. Condition: 4 of the 7 cash drawdown reports tested contained expense reimbursements requested for which there was missing supporting documentation for some of the expenses requested for reimbursements. Total questioned costs were $115,617. Cause: The extra expenses that were missing in the test were because IAFP used staff instead of consultants and the Organization did not update our policies and procedures to include time sheets to show how staff was allocated to the grant to support the charges. Effect: The effect is that the Organization requested funds but did not have back up to support that the actual expenses were incurred and was therefore not in compliance with the cash management requirements under Uniform Grant Guidance in relation reimbursement requests. Auditor recommendation: We recommend that the accounting department verify that the expense has been incurred and paid to the vendor before requesting reimbursement from the grantor and ensure that the backup documentation is filed where it can be located. We recommend hiring or training staff in relation to cash management and documentation of allowable cost. Management response: Management will follow the advice and undergo training in cash management and documentation of allowable costs.
Condition: Although the City drewdown and received approximately $2.5M in grant funds, it had expended only approximately $1.49M for the fiscal year ended September 30, 2023. Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b), 45 CFR Part 75.305(b)). According to the Office of Management and Budget 2023 Compliance Supplement, what constitutes minimized elapsed time for funds transfer depends on the method of payment the auditee uses. The U.S. Department of Health and Human Services (HHS) processes its financial transaction through its Program Support Center, which uses the Payment Management System (PMS). Payments requested through the HHS PMS are generally available to the auditee the next business day. Under the advance payment method, payment may be made to the auditee prior to the auditee's disbursement of program funds, so long as the auditee "...maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity..." Cause: The City requested and received grant funds prior to having a need for such funds. Effect: The City did not comply with cash management requirements as set forth by the Office of Management and Budget (OMB), 2 CFR section 200.305(b), and 45 CFR Part 75.305(b). As a result, at the end of the fiscal year, the City had in more than $1M in HHS funds in its financial institution account. Questioned costs: N/A Recommendation: We recommend that the City develop and implement procedures to ensure that federal funds are only either requested as reimbursement for allowable program disbursement. In those instances where a federal program allow advance payments, procedures should be implemented to ensure that those payments are for immediate cash needs City's Response: The City will not draw down any grant funds prior to incurring the expenditure.
2023-005: Written Policies and Procedures Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal control and noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319(d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Authority did not have written procedures for cash management and allowable cost. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: Although the Authority is aware that they were required to have written policies and procedures for the items noted above, they were using the grant agreement guidelines that provide grantees with guidance for ensuring the existing accounting and personnel policies and procedures include the necessary controls. These guidelines address the compliance areas required by the Uniform Guidance. Recommendation: We recommend the Authority adopt written policies and procedures over cash management and allowable costs required under the Uniform Guidance. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.
AL Numbers: 93.568 Name of Federal Program or Cluster: Low-Income Home Energy Assistance Program (LIHEAP) and COVID-19 LIHEAP Award Number: 23PANDLIEA, 23PANDLIEE, 23 PANDLIEI Award Year: 2023 Criteria – In accordance with the Tribe’s grant award requirements and the Uniform Guidance 2 CFR 200.305, the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements for project costs. Condition and context – The LIHEAP program had a significant amount of unearned revenue (i.e., unspent advanced grant funds) as of September 30, 2023, which was not expended within a reasonable amount of time. Cause – Lack of sufficient oversight on cash management requirements may have led to this finding. Questioned costs – There are no questioned costs to report related to this finding as the advanced funds were unexpended. Effect – Failure to adhere to these requirements can potentially cause the suspension of grant funds. Repeat finding – This is a repeat finding and was reported in the prior year as finding 2022-010. Recommendation – LIHEAP program should implement a supervisory review process over the cash management and drawdown process to ensure compliance with the requirements. Views of responsible officials and planned corrective actions – The Program will work with the finance department to better match advanced drawdowns to the actual disbursement for the period. This will be done by comparing the funds on hand (bank balance) to program costs. If sufficient funds are on hand a drawdown request will not be made.
AL Numbers: 93.568 Name of Federal Program or Cluster: Low-Income Home Energy Assistance Program (LIHEAP) and COVID-19 LIHEAP Award Number: 23PANDLIEA, 23PANDLIEE, 23 PANDLIEI Award Year: 2023 Criteria – In accordance with the Tribe’s grant award requirements and the Uniform Guidance 2 CFR 200.305, the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements for project costs. Condition and context – The LIHEAP program had a significant amount of unearned revenue (i.e., unspent advanced grant funds) as of September 30, 2023, which was not expended within a reasonable amount of time. Cause – Lack of sufficient oversight on cash management requirements may have led to this finding. Questioned costs – There are no questioned costs to report related to this finding as the advanced funds were unexpended. Effect – Failure to adhere to these requirements can potentially cause the suspension of grant funds. Repeat finding – This is a repeat finding and was reported in the prior year as finding 2022-010. Recommendation – LIHEAP program should implement a supervisory review process over the cash management and drawdown process to ensure compliance with the requirements. Views of responsible officials and planned corrective actions – The Program will work with the finance department to better match advanced drawdowns to the actual disbursement for the period. This will be done by comparing the funds on hand (bank balance) to program costs. If sufficient funds are on hand a drawdown request will not be made.
Cash Management Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 93.264; and 93.364 Pass-Through Agency: N/A Award Number: Nurse Faculty Loan Program (NFLP), 2 E01HP28792-04-00; and Nursing Student Loans (NSL), 1 E4CHP46343-01-00 Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency and Noncompliance Questioned Costs: $19,593 Repeat Finding: No Institutions must maintain advance payments of federal awards in interest-bearing accounts (Title 2, Code of Federal Regulations (CFR), Section 200.305(b)(8)). Interest earned amounts up to $500 per year may be retained by the non-federal entity for administrative expense. Any additional interest earned on federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment (Title 2, CFR, Section 200.305(b)(9)). The University of Texas at Arlington (University) did not remit interest to the Department of Health and Human Services’ PMS as required. Specifically, the University: • Maintained advance payments of Nurse Faculty Loan Program (NFLP) funds in an interest-bearing account, which earned $17,803 in interest in fiscal year 2023. • Maintained advance payments of Nursing Student Loan (NSL) funds in an interest-bearing account, which earned $2,290 in interest in fiscal year 2023. The University asserted it was not aware of the requirement to remit interest for NFLP and NLS, and believed the earnings on interest could be retained as a source of additional funds for lending to students. After the $500 allowance for administrative expenses, the University would be required to remit interest totaling $17,553 associated with ALN 93.264, Nurse Faculty Loan Program, award number 2 E01HP28792-04-00 and $2,040 associated with ALN 93.364, Nursing Student Loans, award number 1 E4CHP46343-01-00, which are considered questioned costs. Recommendation: The University should ensure that interest in excess of $500 per year earned on federal cash draws is remitted annually to the Department of Health and Human Services. Views of Responsible Officials: The University has been adhering to the guidance found in the Nursing Faculty and Student Loan award documentation as well as the guidance found in the HRSA EHB Guidance Document regarding interest earned on the advanced payments. The guidance found in these documents states that interest earned in these loan funds should be maintained in an interest-bearing account and deposited in the loan fund. It further states that the interest earned can be retained as an important source of additional funds for lending to students. However, as a result of the finding from this audit, the University acknowledges that interest in excess of $500 must be remitted annually to the Department of Health and Human Services. Corrective Action Plan: The University will remit annually any interest earned in excess of $500 to the Department of Health and Human Services. Implementation Date: 2/2024 Responsible Person: Andrea Wright, Executive Director of Accounting Service
Cash Management Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 93.264; and 93.364 Pass-Through Agency: N/A Award Number: Nurse Faculty Loan Program (NFLP), 2 E01HP28792-04-00; and Nursing Student Loans (NSL), 1 E4CHP46343-01-00 Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency and Noncompliance Questioned Costs: $19,593 Repeat Finding: No Institutions must maintain advance payments of federal awards in interest-bearing accounts (Title 2, Code of Federal Regulations (CFR), Section 200.305(b)(8)). Interest earned amounts up to $500 per year may be retained by the non-federal entity for administrative expense. Any additional interest earned on federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment (Title 2, CFR, Section 200.305(b)(9)). The University of Texas at Arlington (University) did not remit interest to the Department of Health and Human Services’ PMS as required. Specifically, the University: • Maintained advance payments of Nurse Faculty Loan Program (NFLP) funds in an interest-bearing account, which earned $17,803 in interest in fiscal year 2023. • Maintained advance payments of Nursing Student Loan (NSL) funds in an interest-bearing account, which earned $2,290 in interest in fiscal year 2023. The University asserted it was not aware of the requirement to remit interest for NFLP and NLS, and believed the earnings on interest could be retained as a source of additional funds for lending to students. After the $500 allowance for administrative expenses, the University would be required to remit interest totaling $17,553 associated with ALN 93.264, Nurse Faculty Loan Program, award number 2 E01HP28792-04-00 and $2,040 associated with ALN 93.364, Nursing Student Loans, award number 1 E4CHP46343-01-00, which are considered questioned costs. Recommendation: The University should ensure that interest in excess of $500 per year earned on federal cash draws is remitted annually to the Department of Health and Human Services. Views of Responsible Officials: The University has been adhering to the guidance found in the Nursing Faculty and Student Loan award documentation as well as the guidance found in the HRSA EHB Guidance Document regarding interest earned on the advanced payments. The guidance found in these documents states that interest earned in these loan funds should be maintained in an interest-bearing account and deposited in the loan fund. It further states that the interest earned can be retained as an important source of additional funds for lending to students. However, as a result of the finding from this audit, the University acknowledges that interest in excess of $500 must be remitted annually to the Department of Health and Human Services. Corrective Action Plan: The University will remit annually any interest earned in excess of $500 to the Department of Health and Human Services. Implementation Date: 2/2024 Responsible Person: Andrea Wright, Executive Director of Accounting Service
Finding 2023-001: Cash Management – Disbursement U.S. Department of Education – Education Stabilization Fund COVID-19 Institutional Portion – ALN 84.425F 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: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Questioned Costs: None noted. Repeat Finding: This is a repeat finding. Management was only made aware of this finding after it was repeated. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the Institutional Portion subprogram. A mitigating factor is the uniqueness of the Institutional Portion subprogram. Effect: Institutional Portion funds used to defray expenses associated with coronavirus were not disbursed within the required 3 calendar days of the drawdown from ED’s G5 grants system. Recommendation: Before drawing down from ED’s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization’s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding. Since the program is not applicable to the organization after the issuance date of the financial statements, no corrective action is necessary.
Assistance Listing Number: 84.425F Program Name: COVID-19: HEERF – Institutional Portion Pass Through Identifying Number: N/A Award Year: 2022-2023 Federal Agency: U.S. Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a). Management should ensure that internal controls related to federal and state awards are appropriately designed and operating effectively in order to comply with 2 CFR 200.305. Condition: The College did not ensure that internal controls were appropriately designed and operating in regards to HEERF drawdowns which resulted in the incorrect classification of two different awards within G-5, an overdraw of funds in the amount of $1.9M and the incorrect recording of associated grant revenues. Cause: Turnover at the College had led to unqualified personnel at the management level. Effect: Journal entries for drawdown of HEERF funds were not approved within Colleague, drawdown requests were not reviewed and approved prior to submitting within G5 reporting system. Additionally, bank reconciliations were not reviewed by the CFO/VP of Finance and Business Operations in order to reconcile payments received from the DOE to grant accounts. It was determined that controls in place were not operating effectively during the fiscal year. Questioned costs: N/A Recommendation: Management must review the roles and responsibilities of accounting personnel and ensure they have the necessary background and training to properly execute required accounting functions and adhere to necessary internal control functions. Management should review the controls in place and assess that such controls are designed appropriately given the positions in roles within the accounting department. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the findings and, as discussed, the College is currently searching for a candidate to fulfill the CFO position with the appropriate level of training. The College does intend to interview accounting professionals from the community to determine if appropriate levels are present. Responsible Party: Dr. Justin Hoggard, Board President and Dixie Lytle, Director of Human Resources Expected Completion: December 31, 2024 Anticipated Completion: December 31, 2024
Cash Management U.S. Department of the Education Upward Bound Program – CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: 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 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: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes, budgets, and enhance the current way of working with federal timelines.
Cash Management Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 93.264; and 93.364 Pass-Through Agency: N/A Award Number: Nurse Faculty Loan Program (NFLP), 2 E01HP28792-04-00; and Nursing Student Loans (NSL), 1 E4CHP46343-01-00 Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency and Noncompliance Questioned Costs: $19,593 Repeat Finding: No Institutions must maintain advance payments of federal awards in interest-bearing accounts (Title 2, Code of Federal Regulations (CFR), Section 200.305(b)(8)). Interest earned amounts up to $500 per year may be retained by the non-federal entity for administrative expense. Any additional interest earned on federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment (Title 2, CFR, Section 200.305(b)(9)). The University of Texas at Arlington (University) did not remit interest to the Department of Health and Human Services’ PMS as required. Specifically, the University: • Maintained advance payments of Nurse Faculty Loan Program (NFLP) funds in an interest-bearing account, which earned $17,803 in interest in fiscal year 2023. • Maintained advance payments of Nursing Student Loan (NSL) funds in an interest-bearing account, which earned $2,290 in interest in fiscal year 2023. The University asserted it was not aware of the requirement to remit interest for NFLP and NLS, and believed the earnings on interest could be retained as a source of additional funds for lending to students. After the $500 allowance for administrative expenses, the University would be required to remit interest totaling $17,553 associated with ALN 93.264, Nurse Faculty Loan Program, award number 2 E01HP28792-04-00 and $2,040 associated with ALN 93.364, Nursing Student Loans, award number 1 E4CHP46343-01-00, which are considered questioned costs. Recommendation: The University should ensure that interest in excess of $500 per year earned on federal cash draws is remitted annually to the Department of Health and Human Services. Views of Responsible Officials: The University has been adhering to the guidance found in the Nursing Faculty and Student Loan award documentation as well as the guidance found in the HRSA EHB Guidance Document regarding interest earned on the advanced payments. The guidance found in these documents states that interest earned in these loan funds should be maintained in an interest-bearing account and deposited in the loan fund. It further states that the interest earned can be retained as an important source of additional funds for lending to students. However, as a result of the finding from this audit, the University acknowledges that interest in excess of $500 must be remitted annually to the Department of Health and Human Services. Corrective Action Plan: The University will remit annually any interest earned in excess of $500 to the Department of Health and Human Services. Implementation Date: 2/2024 Responsible Person: Andrea Wright, Executive Director of Accounting Service
Cash Management Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 93.264; and 93.364 Pass-Through Agency: N/A Award Number: Nurse Faculty Loan Program (NFLP), 2 E01HP28792-04-00; and Nursing Student Loans (NSL), 1 E4CHP46343-01-00 Award Period: July 1, 2022, to June 30, 2023 Statistically Valid Sample: No and not intended to be a statistically valid sample Type of Finding: Significant Deficiency and Noncompliance Questioned Costs: $19,593 Repeat Finding: No Institutions must maintain advance payments of federal awards in interest-bearing accounts (Title 2, Code of Federal Regulations (CFR), Section 200.305(b)(8)). Interest earned amounts up to $500 per year may be retained by the non-federal entity for administrative expense. Any additional interest earned on federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either the Automated Clearing House (ACH) network or a Fedwire Funds Service payment (Title 2, CFR, Section 200.305(b)(9)). The University of Texas at Arlington (University) did not remit interest to the Department of Health and Human Services’ PMS as required. Specifically, the University: • Maintained advance payments of Nurse Faculty Loan Program (NFLP) funds in an interest-bearing account, which earned $17,803 in interest in fiscal year 2023. • Maintained advance payments of Nursing Student Loan (NSL) funds in an interest-bearing account, which earned $2,290 in interest in fiscal year 2023. The University asserted it was not aware of the requirement to remit interest for NFLP and NLS, and believed the earnings on interest could be retained as a source of additional funds for lending to students. After the $500 allowance for administrative expenses, the University would be required to remit interest totaling $17,553 associated with ALN 93.264, Nurse Faculty Loan Program, award number 2 E01HP28792-04-00 and $2,040 associated with ALN 93.364, Nursing Student Loans, award number 1 E4CHP46343-01-00, which are considered questioned costs. Recommendation: The University should ensure that interest in excess of $500 per year earned on federal cash draws is remitted annually to the Department of Health and Human Services. Views of Responsible Officials: The University has been adhering to the guidance found in the Nursing Faculty and Student Loan award documentation as well as the guidance found in the HRSA EHB Guidance Document regarding interest earned on the advanced payments. The guidance found in these documents states that interest earned in these loan funds should be maintained in an interest-bearing account and deposited in the loan fund. It further states that the interest earned can be retained as an important source of additional funds for lending to students. However, as a result of the finding from this audit, the University acknowledges that interest in excess of $500 must be remitted annually to the Department of Health and Human Services. Corrective Action Plan: The University will remit annually any interest earned in excess of $500 to the Department of Health and Human Services. Implementation Date: 2/2024 Responsible Person: Andrea Wright, Executive Director of Accounting Service
Finding 2023-001: Cash Management – Disbursement U.S. Department of Education – Education Stabilization Fund COVID-19 Institutional Portion – ALN 84.425F 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: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Questioned Costs: None noted. Repeat Finding: This is a repeat finding. Management was only made aware of this finding after it was repeated. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the Institutional Portion subprogram. A mitigating factor is the uniqueness of the Institutional Portion subprogram. Effect: Institutional Portion funds used to defray expenses associated with coronavirus were not disbursed within the required 3 calendar days of the drawdown from ED’s G5 grants system. Recommendation: Before drawing down from ED’s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization’s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding. Since the program is not applicable to the organization after the issuance date of the financial statements, no corrective action is necessary.
Assistance Listing Number: 84.425F Program Name: COVID-19: HEERF – Institutional Portion Pass Through Identifying Number: N/A Award Year: 2022-2023 Federal Agency: U.S. Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a). Management should ensure that internal controls related to federal and state awards are appropriately designed and operating effectively in order to comply with 2 CFR 200.305. Condition: The College did not ensure that internal controls were appropriately designed and operating in regards to HEERF drawdowns which resulted in the incorrect classification of two different awards within G-5, an overdraw of funds in the amount of $1.9M and the incorrect recording of associated grant revenues. Cause: Turnover at the College had led to unqualified personnel at the management level. Effect: Journal entries for drawdown of HEERF funds were not approved within Colleague, drawdown requests were not reviewed and approved prior to submitting within G5 reporting system. Additionally, bank reconciliations were not reviewed by the CFO/VP of Finance and Business Operations in order to reconcile payments received from the DOE to grant accounts. It was determined that controls in place were not operating effectively during the fiscal year. Questioned costs: N/A Recommendation: Management must review the roles and responsibilities of accounting personnel and ensure they have the necessary background and training to properly execute required accounting functions and adhere to necessary internal control functions. Management should review the controls in place and assess that such controls are designed appropriately given the positions in roles within the accounting department. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the findings and, as discussed, the College is currently searching for a candidate to fulfill the CFO position with the appropriate level of training. The College does intend to interview accounting professionals from the community to determine if appropriate levels are present. Responsible Party: Dr. Justin Hoggard, Board President and Dixie Lytle, Director of Human Resources Expected Completion: December 31, 2024 Anticipated Completion: December 31, 2024
Cash Management U.S. Department of the Education Upward Bound Program – CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: 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 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: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes, budgets, and enhance the current way of working with federal timelines.
Finding 2023-002 – Cash Management – Subrecipient Payments Repeat Finding: No Federal Program Title – U.S. Department of Defense Cybersecurity Core Curriculum 12.905 Condition For one out of two subrecipient payments tested (50%), the College did not submit payment within 30 days after receipt of the billing from the subrecipient. Criteria Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. The College made payment to the subrecipient 105 days after receipt of the billing from the subrecipient. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Questioned Costs There were no questioned costs related to testing of subrecipient payments. Cause To ensure the College is fully monitoring both programmatic activities and financial compliance with Uniform Guidance cost principles of its subrecipients, the College’s internal control procedure requires signatures from the Principal Investigator (PI), Director of Resource Development, and the Manager of Grants Accounting and Compliance. Delays in the internal approval process caused the delay in payment of the sampled invoice. Prevalence Frequent. One out of two payments selected for testing. Effect Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. Recommendation We recommend the College review current processes, policies and procedures to ensure that payments to subrecipients minimize the time elapsing between transfer of federal funds from the pass-through entity to the subrecipient. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-002 – Cash Management – Subrecipient Payments Repeat Finding: No Federal Program Title – U.S. Department of Defense Cybersecurity Core Curriculum 12.905 Condition For one out of two subrecipient payments tested (50%), the College did not submit payment within 30 days after receipt of the billing from the subrecipient. Criteria Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. The College made payment to the subrecipient 105 days after receipt of the billing from the subrecipient. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Questioned Costs There were no questioned costs related to testing of subrecipient payments. Cause To ensure the College is fully monitoring both programmatic activities and financial compliance with Uniform Guidance cost principles of its subrecipients, the College’s internal control procedure requires signatures from the Principal Investigator (PI), Director of Resource Development, and the Manager of Grants Accounting and Compliance. Delays in the internal approval process caused the delay in payment of the sampled invoice. Prevalence Frequent. One out of two payments selected for testing. Effect Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. Recommendation We recommend the College review current processes, policies and procedures to ensure that payments to subrecipients minimize the time elapsing between transfer of federal funds from the pass-through entity to the subrecipient. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-002 – Cash Management – Subrecipient Payments Repeat Finding: No Federal Program Title – U.S. Department of Defense Cybersecurity Core Curriculum 12.905 Condition For one out of two subrecipient payments tested (50%), the College did not submit payment within 30 days after receipt of the billing from the subrecipient. Criteria Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. The College made payment to the subrecipient 105 days after receipt of the billing from the subrecipient. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Questioned Costs There were no questioned costs related to testing of subrecipient payments. Cause To ensure the College is fully monitoring both programmatic activities and financial compliance with Uniform Guidance cost principles of its subrecipients, the College’s internal control procedure requires signatures from the Principal Investigator (PI), Director of Resource Development, and the Manager of Grants Accounting and Compliance. Delays in the internal approval process caused the delay in payment of the sampled invoice. Prevalence Frequent. One out of two payments selected for testing. Effect Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. Recommendation We recommend the College review current processes, policies and procedures to ensure that payments to subrecipients minimize the time elapsing between transfer of federal funds from the pass-through entity to the subrecipient. Views of responsible officials We agree with this finding. See corrective action plan.