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.
Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Disease Federal Award No.: NU50CK000513 Area: Cash Management Questioned Costs: $236,426 Criteria: In accordance with 2 CFR section 200.305(b)(3), reimbursement is preferred when the requirements in paragraph (b) cannot be met, when the Federal agency sets a specific condition per section 200.208. When the reimbursement method is used, the Federal agency or pass-through entity must make payment within 30 calendar days after receipt of the payment request unless the Federal agency or pass-through entity reasonably believes the request to be improper. Condition: Of forty transactions tested, aggregating $236,426 of a total population of $3,758,311, the following were noted: For forty (or 100%) samples tested, drawdown reports were not provided to substantiate that expenditures were incurred prior to the date of the reimbursement request. Cause: The FSM National Government lacked monitoring controls over adequate documentation and systematic filing of relevant documents supporting program costs. Effect: The FSM National Government appears to be in noncompliance with applicable cash management requirements and questioned cost of $236,426 is reported. Recommendation: The FSM National Government should strengthen and enforce compliance with the applicable cash management requirements and establish and implement systematic filing of relevant documentation supporting program costs for easy retrieval. Views of Responsible Officials: Management disagrees with the finding. Refer to FSM NG’s Views of Responsible Officials for their detailed response. Auditor Response: The finding remains as we could not locate nor find the required documentation within the files provided.
Finding No.: 2023-013 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Compact of Free Association, As Amended Questioned Costs: $ Undeterminable Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Federal Award No.: NU50CK000558 Questioned Costs: $27,059 Area: Cash Management Criteria: Compact payments shall be made in accordance with Article IV of Fiscal Procedure Agreement (FPA). Further, Article VI stipulates that to the extent that the Government of the Republic of the Marshall Islands awards Sub-Grants to local governments or other entities, it shall establish reasonable procedures to ensure the timely receipt of the reports on cash balances and cash disbursements to enable the preparation of complete and accurate transactions reports. 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, 2 CFR 200.303(a) states that a recipient of a Federal award must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). Condition 1: RepMar does not have established cash management monitoring, which is essential for ensuring compliance with Article IV of the Fiscal Procedure Agreement. Furthermore, there is no detailed listing of expenditures supporting the drawdowns made during the year on file to ascertain whether these expenditures were incurred prior to the date of the reimbursement request, thereby hindering the preparation of complete and accurate transaction reports. Questioned costs, if any, that may result from inadequate records are not determinable. Condition 2: RepMar utilizes a cumulative deductive reimbursement method for payment, therefore, it is unable to provide or correlate when an invoice or drawdown is made. Condition 3: Internal control deficiency resulted in overdraws during the year: • $27,059 for ALN 93.323, which is not material to the program but exceeds the $25,000 threshold and thus questioned costs result. • $2,639,269 for ALN 15.875 in Fund 10309, SPG 70120100. With grantor approval, this overdraw was partially offset against grantor receivables, and the remaining $2,342,351 balance as of September 30, 2023 was reclassed to liabilities. Therefore, no questioned cost results. Cause: RepMar lacks adequate internal controls over compliance related to cash management, including the retention of documentation supporting cash drawdowns. Effect: RepMar is in noncompliance with applicable cash management requirements. Questioned cost of $27,059 results from Condition 3 ALN 93.323. Recommendation: RepMar should strengthen controls to ensure that complete and accurate transaction reports are retained to evidence compliance with applicable cash management requirements. Views of Responsible Officials: RepMar’s Corrective Action Plan does not indicate disagreement and provides planned corrective action.
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.
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.
Identification of the federal program: Assistance Listing Number 93.958, Block Grants for Community Mental Health Services, United States Department of Health and Human Services. 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)). Condition: In one of three months selected for testing, we noted that the amount requested for reimbursement was greater than the expenses incurred resulting in an advance of federal funds. The overdraw was corrected over the subsequent two-month period. Cause: Management indicated that this error occurred due to a change in the budgeted indirect costs allowed for in year two vs. year one, and that resulted in an oversight in the calculation. Effect or potential effect: In one of three months tested, the amount overdrawn approximated $58,000 and the error was corrected over the subsequent two-month period. Questioned costs: not applicable. Context: In one of three months selected for testing, Bellefaire did receive an advance of federal funds. Management was able to provide supporting documentation which appeared to indicate that the error was corrected in the subsequent two-month period. Given the interest rate environment and the amount of time the advance was maintained, any interest income earned would be considered trivial. Recommendation: We recommend that existing policies and procedures be reviewed to ensure that reimbursement of federal funds is made within the required timeframe to minimize the time elapsing between the receipt of funds from the U.S. Treasury and disbursement. Views of responsible officials: Management concurs with this finding. See page 43 for corrective action.
Program: Coronavirus State and Local Fiscal Recovery Funds ALN #93.323 Program Requirement: Cash Management Criteria: Per 2 CFR 200.305, “non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or pass-through entity and the disbursement by the non-Federal Entity”. The non-Federal entity has cash on hand from federal funds, interest begins to accrue from the date of receipt of the drawdown and will be required to be remitted back to the federal government once the total aggregate amount of interest earned on federal grant awards equals $500. Condition: In accordance with 2 CFR 200.305 the District deposited federal grant funds into an interest bearing account. Interest earned on the federal funds exceeded $500. Context: The District received an allocation of Covid funding in FY 2022 but the funds were not expended until FY 2023. Cause: The District utilized the grant to purchase a HVAC Auto Cleaning air system which is subject to procurement and bid test work. With higher interest rates and the timing of the grant funds received and expended; interest accrued on the federal funds in excess of $500. Effect: At June 30, 2023, he District has accrued the interest payable to remit to the Department of Health and Human Services Payment Management System. Questioned Costs: No Repeat Finding: No Recommendation: The District needs to implement additional monitoring to ensure compliance with 2 CFR 200.305 and advances on federal funds. Views of Responsible Officials: The District agrees with the recommendation.
Program: Magnet Schools Assistance (Assistance Listing No. 84.165) Compliance Requirement – Cash Management Finding Type: Material Noncompliance / Material Weakness in Internal Controls over Compliance Criteria: 2 CFR Part 200.305 requires that for non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. In addition, interest earned 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 through a Fedwire Funds Service payment. Condition: In March 2023, the District performed a drawdown of all available funding allocated to the Magnet Schools Assistance Program (MSAP). This drawdown included the entirety of the Year 1 program allocation, in addition to the entirety of the Year 2 program allocation for a total drawdown of $7,804,837. As of June 30, 2023, the District had expended $1,077,941 of these funds, leaving an excess drawdown of $6,726,896. Interest earned on these funds, to be returned to the federal government, totaled $20,791 as of June 30, 2023 and had not been recorded. Cause: The District failed to have an adequate documented system of internal controls in place surrounding the drawdown of funds for MSAP. Effect: The failure to properly monitor drawdowns and limit the time between drawdown and disbursement can result in program non-compliance and the loss of program funds altogether. In addition, excess drawdowns can lead to unnecessary federal interest being earned that would have to be returned. Auditor’s Recommendations: The District should implement internal control processes and monitoring to handle MSAP similar to other federal programs in the way it requests reimbursement and/or drawdown funds. Views of Responsible Official: The District will implement additional internal control procedures to require the MSAP Director complete a request for reimbursement based off general ledger expenditures similar to other federal programs at the District. In addition, the District will implement additional monitoring procedures to ensure requests for reimbursement are received and reflect general ledger transactions prior to performing any drawdown of federal funds.
2023-004: Cash Request Reimbursements Federal Asisstance Listing Number: 84.371 Compliance Area: Cash (c) Type of Finding: Significant Deficiency Questioned Costs: None Criteria: In accordance with 2 CFR subsection 200.305 the District should seek to minimize the time elapsing between expenditures and cash requests. The District should have written procedures addressing the timing of cash requests. Condition: We found that the District did not have written procedures addressing the timing of cash requests, furthermore we found the District was over twelve months behind in requesting grant funds. Identification as a repeat finding: No. Recommendation: The District should submit Federal cash drawdown requests on a monthly basis relating to the expenditures.
Cash Management for the Institutional Portion of the COVID-19 Education Stabilization Fund Type of Finding - Noncompliance with Cash Management compliance requirements and material weakness in internal control over compliance Program: COVID-19 Education Stabilization Fund Assistance Listing Number: Institutional Aid Portion 84.425F Federal Agency: U.S. Department of Education Criteria - 2 CFR section 200.305 requires recipients of Federal funds to minimize the time between drawing down funds from G5 and paying incurred obligations. The Certification and Agreement and/or the Supplemental Agreement published by the U.S. Department of Education pertaining to the Public and Nonprofit Institution Grant Funds identifies that funds not disbursed within three days of being drawn down may be subject to heightened scrutiny by the U.S. Department of Education, the institution’s auditors, and/or the Department’s Office of the Inspector General. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct material noncompliance in a timely manner. Condition - During testing of the cash management compliance requirements, it was noted that Sterling College was not compliant with cash management requirements. During the year ending June 30, 2023, the College drew Institutional Aid funds multiple times through the G5 system and did not disburse the funds within three calendar days of the drawdown. The College drew $80,035 on August 26, 2022. $47,835 of the amount that was drawn was not disbursed until September 1, 2022. The College drew $20,662 on November 2, 2022 which was not disbursed until January 18, 2023. Cause - A material weakness in internal control over compliance exists relating to cash management. Personnel responsible for maintaining compliance with cash management did not have sufficient education on the cash management requirements. In addition, there was no review over compliance with cash management requirements to monitor compliance. Effect - The College was not compliant with Federal requirements of the COVID-19 Education Stabilization Fund. Questioned Costs - There were no unspent funds as of June 30, 2023. Context - During the year ended June 30, 2023, the College drew a total of $257,405 in COVID-19 Education Stabilization Funds from the G5 system. $68,497 of the amount drawn during the year ended June 30, 2023 was not disbursed timely. Identification as a Repeat Finding - The College had similar findings for the year ended June 30, 2022 identified as findings 2022-001 and 2022-002. Recommendation - We recommend the College provide education to those responsible for compliance with the requirements and have an individual independent of the drawdown process review drawdown requests prior to execution to ensure the drawdowns will be expended in the appropriate time frame. Views of Responsible Official - Management concurs with the finding and is in the process of reviewing policies and procedures to comply with the requirements.
U.S. Department of Commerce Congressionally Identified Projects – 11.617 Award Number - 60NANB22D201 Criteria or Specific Requirement – Cash Management 2 CFR 200.305(b) of the compliance supplement requires organizations receiving federal funds to establish controls and procedures that would minimize the amount of time between drawdowns and disbursement of the funds. As required per the Department of Commerce Financial Assistance Standard Terms and Conditions, Section B, "Financial Requirements", paragraph .02.b1, advanced payments must be limited to immediate cash needs and must time advance payment requests so that Federal funds are on hand for a maximum of 30 calendar days before being disbursed by the non-Federal entity for allowable award costs. Condition – RI requested an advance payment in October 2022 for anticipated expenditures and did not expend all funding within the 30 day period. Questioned Costs – None noted. Context – We selected one drawdown for $1,000,000 out of three drawdowns totaling $3,000,000 during fiscal year 2023 for testing. During our testwork, we noted that a portion of the drawdown was not expended within the 30 day period following the receipt of the drawdown. The sample was not intended to be, and was not a statistically valid sample. Effect – RI did not comply with the 30 day period required for advanced payments. Cause – RI had issued purchase orders to vendors prior to advance payment request, but did not receive invoices from vendors for payment within the 30 day period and, as such, did not disburse funding. Identification as a Repeat Finding – Not applicable. Recommendation – We recommend RI only request advance payments up to the amount they are able to disburse within the required time in order to minimize the time elapsing between the receipt and disbursement of federal funds. Views of Responsible Officials and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Program Name – Federal Transit Formula Grant and State of Good Repair Grant Assistance Listing Number – 20.507 and 20.525 Finding Type – Significant Deficiency and Non-Compliance Criteria – In accordance with 2CFR section 200.305(b) of the OMB compliance supplement, 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. Condition – During our audit we noted that the federal funds paybacks resulting from prior year grant reconciliations were not refunded in a timely manner. Questioned Costs – Unknown Cause/Effect – DTC is not in compliance with the cash management requirement.
Internal Controls over Compliance and Other Matters C. Cash Management – Lack of Documented Procedures Related to Advance Payments U.S. ENVIRONMENTAL PROTECTION AGENCY Geographic Programs - Great Lakes Restoration Initiative – Assistance Listing No. 66.469 Criteria: The federal sub-award grant agreement number 208171 for the EPA Perch Lake Habitat Restoration Project from the State of Minnesota requires Minnesota Land Trust to comply with all federal requirements imposed on the awarded funds, which includes Title 2 U.S. Code of Federal Regulation (CFR) section 200.305. In accordance with 2 CFR section 200.305, a non-federal entity must maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Condition: Minnesota Land Trust does not have documented procedures over advance payments that incorporate all the requirements of 2 CFR section 200.305. Cause: Internal controls were not in place to ensure Minnesota Land Trust was aware of the compliance requirements per 2 CFR 200.305 for advance payments. Questioned Costs: None. Effect: Minnesota Land Trust is not in compliance with 2 CFR section 200.305. Context: The federal sub-award grant agreement number 208171 allows for Minnesota Land Trust to request advance payments. Minnesota Land Trust requested and received advance payments related to this project during fiscal year 2023. Recommendation: We recommend that Minnesota Land Trust adopt a written advance payment policy which includes all requirements of 2 CFR section 200.305. Views of Responsible Officials: Minnesota Land Trust agrees with the finding and will adopt a documented advance payment policy consistent with the standards of 2 CFR section 200.305 to use for advance payment requests under federal awards or sub-awards.
Internal Controls over Compliance and Other Matters C. Cash Management – Lack of Documented Procedures Related to Advance Payments U.S. ENVIRONMENTAL PROTECTION AGENCY Geographic Programs - Great Lakes Restoration Initiative – Assistance Listing No. 66.469 Criteria: The federal sub-award grant agreement number 208171 for the EPA Perch Lake Habitat Restoration Project from the State of Minnesota requires Minnesota Land Trust to comply with all federal requirements imposed on the awarded funds, which includes Title 2 U.S. Code of Federal Regulation (CFR) section 200.305. In accordance with 2 CFR section 200.305, a non-federal entity must maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Condition: Minnesota Land Trust does not have documented procedures over advance payments that incorporate all the requirements of 2 CFR section 200.305. Cause: Internal controls were not in place to ensure Minnesota Land Trust was aware of the compliance requirements per 2 CFR 200.305 for advance payments. Questioned Costs: None. Effect: Minnesota Land Trust is not in compliance with 2 CFR section 200.305. Context: The federal sub-award grant agreement number 208171 allows for Minnesota Land Trust to request advance payments. Minnesota Land Trust requested and received advance payments related to this project during fiscal year 2023. Recommendation: We recommend that Minnesota Land Trust adopt a written advance payment policy which includes all requirements of 2 CFR section 200.305. Views of Responsible Officials: Minnesota Land Trust agrees with the finding and will adopt a documented advance payment policy consistent with the standards of 2 CFR section 200.305 to use for advance payment requests under federal awards or sub-awards.
Internal Controls over Compliance and Other Matters C. Cash Management – Lack of Documented Procedures Related to Advance Payments U.S. ENVIRONMENTAL PROTECTION AGENCY Geographic Programs - Great Lakes Restoration Initiative – Assistance Listing No. 66.469 Criteria: The federal sub-award grant agreement number 208171 for the EPA Perch Lake Habitat Restoration Project from the State of Minnesota requires Minnesota Land Trust to comply with all federal requirements imposed on the awarded funds, which includes Title 2 U.S. Code of Federal Regulation (CFR) section 200.305. In accordance with 2 CFR section 200.305, a non-federal entity must maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Condition: Minnesota Land Trust does not have documented procedures over advance payments that incorporate all the requirements of 2 CFR section 200.305. Cause: Internal controls were not in place to ensure Minnesota Land Trust was aware of the compliance requirements per 2 CFR 200.305 for advance payments. Questioned Costs: None. Effect: Minnesota Land Trust is not in compliance with 2 CFR section 200.305. Context: The federal sub-award grant agreement number 208171 allows for Minnesota Land Trust to request advance payments. Minnesota Land Trust requested and received advance payments related to this project during fiscal year 2023. Recommendation: We recommend that Minnesota Land Trust adopt a written advance payment policy which includes all requirements of 2 CFR section 200.305. Views of Responsible Officials: Minnesota Land Trust agrees with the finding and will adopt a documented advance payment policy consistent with the standards of 2 CFR section 200.305 to use for advance payment requests under federal awards or sub-awards.
Internal Controls over Compliance and Other Matters C. Cash Management – Lack of Documented Procedures Related to Advance Payments U.S. ENVIRONMENTAL PROTECTION AGENCY Geographic Programs - Great Lakes Restoration Initiative – Assistance Listing No. 66.469 Criteria: The federal sub-award grant agreement number 208171 for the EPA Perch Lake Habitat Restoration Project from the State of Minnesota requires Minnesota Land Trust to comply with all federal requirements imposed on the awarded funds, which includes Title 2 U.S. Code of Federal Regulation (CFR) section 200.305. In accordance with 2 CFR section 200.305, a non-federal entity must maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Condition: Minnesota Land Trust does not have documented procedures over advance payments that incorporate all the requirements of 2 CFR section 200.305. Cause: Internal controls were not in place to ensure Minnesota Land Trust was aware of the compliance requirements per 2 CFR 200.305 for advance payments. Questioned Costs: None. Effect: Minnesota Land Trust is not in compliance with 2 CFR section 200.305. Context: The federal sub-award grant agreement number 208171 allows for Minnesota Land Trust to request advance payments. Minnesota Land Trust requested and received advance payments related to this project during fiscal year 2023. Recommendation: We recommend that Minnesota Land Trust adopt a written advance payment policy which includes all requirements of 2 CFR section 200.305. Views of Responsible Officials: Minnesota Land Trust agrees with the finding and will adopt a documented advance payment policy consistent with the standards of 2 CFR section 200.305 to use for advance payment requests under federal awards or sub-awards.
Noncompliance and Significant Deficiency in Internal Controls over Compliance for Cash Management Identification data: U.S. Department of Health and Human Services (HHS) – Mental and Behavioral Health Education and Training Grants, Assistance Listing No. 93.732, Agreement Identifying No. M0142518. Criteria: Title 2 CFR §200.305 establishes the criteria for cash management requirements for states and non-Federal entities other than states. This includes non-Federal entities utilizing the reimbursement method and requires that expenditures were incurred prior to the date of the reimbursement request. Condition: The Organization drew funds before expenditures were incurred. Cause: A breakdown in the Organization’s internal controls over cash management did not allow the Organization to meet the reporting requirements of the program. Effect or potential effect: The control deficiency is a significant deficiency that prevented the Organization from complying with the cash management requirements of the program. Identification of a Repeat Finding: New finding. Recommendation: The Organization should review its system of internal control over cash management to determine improvements that can be made to ensure the Organization has processes for remaining in compliance with all cash management criteria identified above. Views of Responsible Officials: The Organization misunderstood the directions given by the Grants Management Specialist in this instance. The Organization has reviewed the requirements of Compliance for Cash Management and has controls in place to ensure those requirements are followed.
Finding 2023-002 Cash Management Internal Controls: Federal Program: Title IV-E Prevention Program – Family Preservation Program [AL #93.472]. Criteria: Per the Uniform Guidance in 2 CFR section 200.305, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions 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 of the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Condition: During testing of compliance requirements and internal controls for cash management, it was determined that the February, 2023 invoice was not reviewed prior to submission and the invoice was overstated by $17,712 as it also contained the MCO portion and not just the federal portion. Cause: The individual that normally performs the review of invoices submitted for payment was on vacation and the review was not performed. Effect: When internal controls are not always being performed, this could result in compliance requirements not being met or errors being made. Questioned Costs: None Context: This is not a systematic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization have a procedure in place for reviewing invoices sent for payment that can be consistently applied even in the event of an absence or vacation of the normal reviewer. Views of Responsible Officials: The Organization is in agreement with the finding. The Organization will implement a procedure to ensure that invoices are approved by someone other than the normal reviewer if there is an absence or vacation.