Finding 2025-005: Inadequate Controls Over Federal Reimbursement Draw Requests - Significant Deficiency Federal Program: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Numbers: 5H79TI084239-03, 5H79TI084239-04, 5H79TI084739-02, 5H79TI084739-03, 5H79TI082707-05 Award Year: 2024 and 2025 Criteria: Per 2 CFR § 200.305(b), payment methods must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds by the recipient. For reimbursement payment methods, draw requests should be based solely on allowable, allocable, and paid expenditures. Effective internal controls, as required by 2 CFR § 200.303, include supervisory review of supporting documentation to verify the accuracy, completeness, and allowability of expenditures prior to submitting reimbursement requests. Condition: For 10 of 10 reimbursement draw requests tested, Mending Hearts’ did not maintain controls to ensure draw requests were supported by a review of actual expenditures paid prior to submission. Specifically, reimbursement requests were not tied directly to actual expenditures incurred and paid by Mending Hearts. In addition, there was no documented review of supporting invoices, payment documentation, schedules, or other reports to verify that expenditures had been paid with Mending Hearts’ funds before reimbursement was requested. Cause: Management has not established or implemented formal procedures requiring reimbursement requests to be reconciled to paid expenditures and independently reviewed prior to submission. Effect: Without adequate review procedures, Mending Hearts is at increased risk of requesting reimbursement for expenditures that have not yet been paid, are unsupported, or are otherwise unallowable. This increases the risk of noncompliance with federal cash management requirements and may result in questioned costs, repayment of federal funds, or other administrative action. Questioned Costs: None noted. Context: This condition was identified through testing of 10 reimbursement draw requests selected from the population of federal reimbursement requests submitted during the audit period. Exceptions were noted in all 10 items tested. The transactions tested were selected using a nonstatistical sampling approach and were not intended to be statistically representative of the population. Recommendation: We recommend that management implement formal cash management procedures requiring all reimbursement draw requests to be supported by detailed expenditure schedules and documentation demonstrating that expenditures have been paid with Organization funds. Prior to submitting reimbursement requests, an independent review should be performed and documented to verify that all requested amounts are accurate, supported, allowable, and based on actual paid expenditures. Views of Responsible Officials: Management acknowledges this finding and will address remediation in management's corrective action plan.
FA 2025-003 Strengthen Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425U210012 (Year: 2024) Questioned Costs: $52,211 Description: The School District made cash drawdowns in excess of the immediate cash needs of the Elementary and Secondary School Emergency Relief Fund program. Background Information: The School District may request Elementary and Secondary School Emergency Relief program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE- 0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the Elementary and Secondary School Emergency Relief program funds are typically disbursed to the School District through an electronic payment process the next week. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance Section 200.305(b) state, “For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement by the recipient or subrecipient…” In addition, the Uniform Guidance Section 200.302(b)(6) requires that the entity develop written cash management procedures. Condition: A review of all cash drawdowns and disbursements related to the Elementary and Secondary School Emergency Relief program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Excessive cash balances at fiscal year-end totaled $52,211. Questioned Costs: Questioned costs of $52,211 were identified for cash drawdowns in excess of reimbursable expenditures. Cause: Excess cash drawdowns resulted from failure to follow established procedures and claiming expenditures on completion reports that were not based on actual general ledger expenditures. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should follow established procedures to accurately forecast the cash needs of the Elementary and Secondary School Emergency Relief program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
Material Weakness Finding No. 2025-006: Cash Management U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria Pursuant to 2 CFR §200.305, the payment methods for Federal payments to recipients must minimize the time elapsing between the transfer of funds from the Federal agency to the recipient and the disbursement of funds by the recipient. Condition We noted that the Organization’s director of administrative operations has implemented a methodology designed to minimize the time that advance payment requests are expended; however there are no internal controls in place over this process. Cause The Organization’s policies and procedures do not require an internal review of the payment requests and the subsequent disbursements of the Federal funds to ensure compliance with 2 CFR §200.305. Effect The lack of internal controls could result in noncompliance with 2 CFR §200.305. Recommendation We again recommend that the Organization incorporate internal controls over cash management to ensure compliance with 2 CFR §200.305. Views of Responsible Officials and Planned Corrective Action The Organization acknowledges the importance of compliance with 2 CFR §200.305, rules for federal payments; and understood and concurred with the prior year finding (2024-006) and current year renumbered recommendation (2025-006). A. U.S. Department of Health and Human Services (HHS) Substance Abuse and Mental Health Services Federal Assistance Listing Number 93.243. The Organization received this award from the HHS, Substance Abuse and Mental Health Services Administration (SAMHSA), via the State of Hawaii, Department of Health (DOH). In other words, SAMHSA awarded federal dollars to the DOH, who then sub-awarded federal dollars to the Organization. The Organization further sub-awarded to eligible community-based organizations (CBOs), for the purpose of SAMHSA emergency response grants (SERG), as a result of the impacts of the Lahaina wildfires in August 2023. Payments from the DOH, is based on the Organization’s meeting the billing parameters as established by the DOH at the time of contracting. Actual billing by the Organization to the DOH, includes the aggregation of eligible expenditures incurred by sub-recipient CBOs, that are subject to reimbursement from the Organization via the DOH reimbursement. Sub-recipient CBO invoices are reviewed and validated by the Organization’s program staff prior to submission for the Organization’s aggregation and invoicing to DOH. 1. The Organization notes the following process in place as of the June 30, 2025 fiscal year end: Process & Review Controls – Finance Committee & Full Board. The Organization’s monthly Board process and review controls includes the review of the Organization’s: Statement of Financial Position, Statement of Revenues and Expenditures, Statement of Revenues and Expenditures – Net Income/(Loss) by Fund, Fund Details – Additional Information and Statistics, Active Subcontract Summary, Active Subcontract Listing Related to Funds. This monthly process and review controls functioned to mitigate any internal control non-compliance. 2. The Organization also notes the following processes implemented after the June 30, 2025 fiscal year end: Internal Control Environment Policy – July 2025, Updated August 2026. Established and updated the following policies: Internal Control Environment; Implementation of Significant Accounting Policies; Revenue Recognition Policy, Including Federal Draws; and Implementation of Health Resources & Services Administration (HRSA) Related Policies, including cash management processes and procedures. Effective September 2026, the Organization will implement an internal control review of the federal funds to ensure compliance with 2 CFR §200.305 for Federal Assistance Listing Number 93.243.B. U.S. Department of Health and Human Services (HHS) Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. This federal award is referred to as either Public Health Services (PHS) or the Native Hawaiian Healthcare Improvement Act (Act) federal dollars. For context, the Organization’s progressive and corrective actions as of the fiscal year ended (FYE) June 30, 2024 report included the following: 1. System, Process & Review Controls In Practice. a. System Controls. Continued to operate in an environment in which system, process & review controls of the United States Department of Health and Human Services (HHS) are practiced in processing cash (draw) transactions in both the Electronic Handbook (EHB) and Payment Management System (PMS) systems, operated by HHS. Only the director of administrative operations and the CEO have system access to the EHB and PMS systems. b. Process & Review Controls – Finance Committee & Full Board. The Organization’s monthly Board process and review controls includes the review of the Organization’s: Statement of Financial Position, Statement of Revenues and Expenditures, Statement of Revenues and Expenditures – Net Income/(Loss) by Fund, Fund Details – Additional Information and Statistics, Active Subcontract Summary, Active Subcontract Listing Related to Funds, and Native Hawaiian Health Program (Fund 007V), and Native Hawaiian Health Scholarship Program (Fund 017V). This monthly process and review controls functioned to mitigate any internal control non-compliance. c. HHS Drawdown Restriction - The Organization remained on HHS imposed drawdown restriction as of June 30, 2024 and June 30, 2025. The restriction was removed by HHS in July 2026. 2. The Organization also notes the following processes implemented after the June 30, 2025 fiscal year end: a. Internal Control Environment Policy – July 2025, Updated August 2026. Implemented and updated the following policies: Internal Control Environment; Implementation of Significant Accounting Policies; Revenue Recognition Policy, Including Federal Draws; and Implementation of Health Resources & Services. Administration (HRSA) Related Policies, including cash management processes and procedures. b. Additional Process & Review Controls – EHB & PMS. Effective March 1, 2026, the Organization implemented, federal draws, process and review of internal controls implemented, via the chief of staff’s review of the director of administrative operations cash management analyses, federal grant receivable composition, reconciliation and related federal grant revenue computations, prior to any director of administrative operations and chief executive officer action in EHB and PMS, respectively.
Criteria – 2 CFR 200.305(b) requires recipients and subrecipients other than States, to minimize the time elapsing between the transfer of funds from the Federal agency or pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made byelectronic funds transfer or by other means. Condition – NICJR did not minimize the time elapsed between the drawdown of funds and payment of related expenditures in accordance with 2 CFR 200.305(b). Context – NICJR did not pay expenses prior to requesting a transfer of funds from the federal agency, did not minimize the time elapsed between payment and request of funds, and did not calculate interest earned on any advanced payments. Cause – NICJR does not have formal policies and procedures in place to minimize the time elapsing between transfer of funds and related disbursements. Effect – The federal agency paid down funds to NICJR before costs were paid. NICJR has not met the Cash Management requirements of 2 CFR 200.305(b). Questioned costs – None Repeat Finding – This is not a repeat finding. Recommendation – We recommend NICJR enhance policies and procedures to minimize the time elapsed between payment and request of funds. Management’s response - NICJR’s drawdowns were due to extraordinary circumstances. There was an unprecedented action taken by the federal government in announcing the pending cancellation of more than $800 million grants to thousands of non-profit organizations around the country. During the significant uncertainty surrounding the changing funding environment, as well as our commitment to our subgrantee organizations, NICJR continued submitting reimbursement requests while awaiting additional guidance. NICJR will create a cash management policy to minimize the time elapsed between payment and request of funds to meet requirements of 2 CFR 200.305(b).
FA 2025-001 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016 (Year: 2021) Questioned Costs: None Identified Description: The School District made cash drawdowns in excess of immediate cash needs of the Comprehensive Literacy Development program. Background Information: The School District may request Comprehensive Literacy Development program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the Comprehensive Literacy Development program funds are typically disbursed to the School District through an electronic payment process the next week. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance Section 200.305(b) state, “For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement by the recipient or subrecipient…” In addition, the Uniform Guidance Section 200.302(b)(6) requires that the entity develop written cash management procedures. Condition: A review of all cash drawdowns and disbursements related to the Comprehensive Literacy Development program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Excessive cash balances totaling as much as $43,073.23 were maintained for a cumulative total of 94 days throughout FY25, occurring across multiple periods, with the longest continuous occurrence lasting 41 days. Cause: In discussing this issue with the School District, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred fund and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for the Comprehensive Literacy Development program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Comprehensive Literacy Development program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur a review of the cash ledger for the Comprehensive Literacy (L4GA) grant fund 418 indicated there was an excessive cash balance for several days throughout FY25, however we respectfully disagree with the statements that the excessive cash balance was maintained for a total of 94 days and was due to the lack of review of the grant. While the LEA does agree there was an excessive cash balance in the Comprehensive Literacy/L4GA grant fund 418 for at least 94 days throughout FY25, the LEA would like to submit that per the analysis performed by the FY2025 DOAA audit team, the longest number of consecutive days for which the excessive cash balance was maintained was 41 days. It is also the view of the LEA that the excessive cash balance was not due to the lack of review of the federal grant nor due to intentionally drawing down funds from GADOE in excess of immediate cash needs, but instead largely due in part to the LEA receiving a duplicate reimbursement payment from GADOE for specific expenditures that were erroneously submitted twice by the LEA to GADOE. Finally, the LEA’s would like to submit that the cause for not immediately detecting and rectifying the excessive balance error was due to the timing of the posting of other numerous expenditures coinciding with the posting of the duplicate reimbursement payment within the 418 ledger, and the lack of review of specific reports that would have helped to identify that the cash ledger reflected an excessive cash balance from the duplicate reimbursement payment for grant expenditures. The LEA acknowledges this was unacceptable; the error should have been detected and corrected earlier in the fiscal year and there was a deficiency in the process of monitoring the cash ledger for fund 418. Auditor's Concluding Remarks: We acknowledge the LEA's response. The LEA does not dispute that an excessive cash balance existed in fund 418 during FY25 or that a deficiency in its review of the fund 418 cash ledger prevented timely detection and correction. This remains the substance of the finding. Our analysis confirms the excessive balance occurred over a cumulative 94 days, with the longest continuous occurrence lasting 41 days, and we will revise the finding to reflect this distinction. Regardless of the initiating event, including the duplicate GADOE reimbursement cited by the LEA, the LEA's response confirms that reports which would have identified the excessive balance were not reviewed, a deficiency in monitoring sufficient to ensure compliance with federal cash management requirements under 2 CFR 200.305. We reaffirm our finding, revised as noted above, and will review the LEA's corrective action during our next audit.
Finding Type: Material Weakness in Internal Control over Major Programs Assistance Listing #: 84.116Z Fund for the Improvement of Postsecondary Education Award Year: July 1, 2024, through June 30, 2025 Criteria: Under 2 CFR 200.305(b)(1), non-Federal entities must minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement by the non-Federal entity for direct program or project costs. Furthermore, 2 CFR 200.305(b)(8) requires that non-Federal entities maintain advance payments of Federal awards in interest-bearing accounts. Entities may retain up to $500 per year for administrative expenses, but any additional interest earned must be remitted annually to the Department of Health and Human Services Payment Management System. SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2025-003 Cash Management (Continued) Condition: During our testing of Cash Management, we noted that the University requested and received federal funds in advance of its immediate cash needs. The University drew down a total of $1,928,536 during the audit period; however, approximately $1,000,000 of these funds remained undisbursed at various points throughout the year, with federal cash sitting idle for periods ranging from 3 days to over 150 days. Additionally, the University failed to maintain these advance payments in an interest-bearing account. As a result, no interest was calculated, and no interest was remitted to the federal government Cause: Internal controls over Cash Management were not properly designed or operating effectively. Management utilized a spreadsheet that calculated drawdown requests based on broad expenditure estimates rather than limiting requests to the immediate cash needs of the grant. Furthermore, management was unaware of the federal requirement to hold advance payments in an interest-bearing account. Effect or Potential Effect: The University maintained excess federal cash on hand, which constitutes noncompliance with the timing requirements of the Uniform Guidance. By holding these excess funds in a non-interest-bearing account, the federal government was deprived of the time value of money (interest earnings). Questioned Costs: None reported. We calculated the imputed lost interest resulting from the excess cash balances to be approximately $16,800. Because this amount is below the statutory reporting threshold of $25,000, no questioned costs are formally reported.
FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Condition of Records Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-051-PN01,24611-051-PN01, 22611-051-ARP, 23619-051-PN01, 25619-051-PN01, 22619-051-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $12,668,761 from the Special Education Cluster (IDEA) federal awards during the audit period. The reimbursements were associated with six separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $12,668,761 received in the Special Education Cluster (IDEA) funds during the audit period was based on 23 reimbursement requests for expenditures incurred. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The reimbursement requests for the reimbursements received during the audit period included dates of July 1, 2021 to March 31, 2025. It was not easily determined what was requested for reimbursement for the earlier dates due to the School Corporation including in the "Dates Included in this Request" section descriptions such as "Entire Grant Period" and "Start to March 21, 2025". The supporting documentation with the reimbursement requests did not always have detail or specifically state which disbursements were included in the amount for the request. Several had documentation that showed detail for a period of time then a calculation was done to subtract what was previously requested for reimbursement. The total received in reimbursements was $12,668,761. The total detailed disbursement ledgers for the population that could be determined reflected total expenditures of $15,894,839. This resulted in $3,226,078 in disbursements in excess of what the School Corporation requested for reimbursement. Of the six federal awards reported on the Schedule Expenditures of Awards, four reached the award's performance end date, and of those four, three reported a Grant Balance After Reimbursement on the last Reimbursement Form. o Grant 23619-051-PN01 reported a Grant Balance After Reimbursement of $1,367 on February 26, 2024. The dates included in this final request were "01/01/24 - 01/31/24." INDIANA STATE BOARD OF ACCOUNTS 29 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o Grant 22611-051-ARP reported a Grant Balance After Reimbursement of $55,581 on December 15, 2023. The dates included in this final request were "06/01/23 - 09/30/23." o Grant 22619-051-ARP reported a Grant Balance After Reimbursement of $82,677 on December 13, 2023. The dates included in this final request were "Entire Grant Period." Of the 23 reimbursement requests submitted, only 10 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 13 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional information was provided; however, these records lacked sufficient detail, such as transactions, reasons for overspending, and which transactions were not requested for reimbursement due to overspending. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $12,668,761 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): INDIANA STATE BOARD OF ACCOUNTS 30 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." 2 CFR 200.309 states: "If a Federal awarding agency or pass-through entity approves an extension, or if a recipient extends under § 200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation experienced turnover in key personnel over the federal program which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $12,668,761 in questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change, and that all reimbursement requests are properly supported by detailed records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-014 Subject: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) - Condition of Records Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) Assistance Listings Number: 84.374 Federal Award Number and Year (or Other Identifying Number): S374A200039 Compliance Requirements: Matching, Level of Effort, Earmarking; Period of Performance; Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $3,530,669 from Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) (TSL) federal awards during the audit period. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the U.S. Department of Education. The School Corporation was responsible for complying with requirements of the grant per the grant agreements. We found the following deficiencies: Matching, Level of Effort, Earmarking The School Corporation did not provide documentation of how the matching requirement was met. Grant award letters were not provided; therefore, we could not ensure the required percentage local match was met. Period of Performance Grant award letters would indicate the period of the grant in which expenditures are allowed to be reimbursed. However, those letters were never provided. Therefore, we could not test to ensure compliance with the Period of Performance compliance requirement. Reporting According to our understanding of the grant, there should have been two final Annual Performance Reports and two mid-year Annual Performance Reports submitted within the audit period. Two reports were provided; however, they were from outside the audit period. Since the appropriate reports were not provided for audit, we could not test to ensure compliance with the Reporting compliance requirement. There were multiple Directors over the Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) during the audit period. At the time the audit was conducted, no previous Directors were employed with the School Corporation and there were no current employees that were knowledgeable of the grant and its requirements. The lack of internal controls and failure to maintain and provide adequate supporting documentation were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 50 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. INDIANA STATE BOARD OF ACCOUNTS 51 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate documentation. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-004 – U.S. Department of Education (ED) – Title III Program-Noncompliance With Cash Management, (Significant Deficiencies): Information on the federal program – Strengthening Historically Black Colleges and Universities (HBCU), ALN 84.031B, June 30,2025. Criteria – Under 2 CFR § 200.305, non-Federal entities must request Federal funds only for allowable program costs that have been incurred and must maintain supporting documentation available at the time of the drawdown demonstrating: 1. Actual, allowable expenditures existed at the time Federal funds were drawn; and 2. Records supporting the nature and timing of those expenditures were maintained and readily available for review. These requirements ensure that drawdowns reflect immediate cash needs supported by verifiable program expenditures. Condition – One (1) of eight (8) drawdowns tested for the Title III program was not based on actual expenditures incurred at the time the drawdown was requested. Audit testing determined that the University drew down $30,568 to fund a future payroll cycle more than fifteen (15) days before payroll costs were earned and incurred. As a result, Federal funds were requested in advance of immediate cash needs and were not supported by allowable program expenditures existing at the time of the drawdown. Cause – The condition occurred because the University did not have adequate procedures to ensure payroll expenditures included in drawdown requests had been incurred prior to requesting Federal funds. Management review controls did not detect that the drawdown included future payroll costs that had not yet been earned by employees. Effect – The University held Federal funds in advance of actual program expenditures, which is not consistent with the requirement that advance payments be limited to immediate cash needs. This condition increased the risk of excess Federal cash on hand, questioned costs, and noncompliance with Federal cash management requirements. Questioned Costs – $0. Repeat Finding – No. Auditor’s Perspective – From the auditors' perspective, the University's controls over cash management were not operating effectively to ensure that Federal drawdowns were based on allowable expenditures incurred and immediate cash needs. Specifically, the University drew down $30,568 for a future payroll cycle more than fifteen (15) days before the related payroll costs were earned and incurred. The lack of procedures to verify that expenditures had been incurred prior to requesting Federal funds resulted in noncompliance with Federal cash management requirements. Because this exception was identified in one of eight drawdowns tested, the deficiency increased the risk that Federal funds could be drawn and held in advance of program needs without timely detection. Auditor's Recommendation – We recommend that the University strengthen its cash management procedures to ensure that Federal drawdown requests are based solely on allowable expenditures that have been incurred as of the drawdown date. Prior to submitting a draw request, grant and finance personnel should reconcile requested amounts to supporting payroll records, general ledger expenditures, or other documentation evidencing incurred costs. In addition, management should perform and document a review of all drawdown requests to verify that requested funds are limited to the program's immediate cash needs and do not include future payroll or other anticipated expenditures. View of Responsible Officials – Management agrees with the finding. See the accompanying Corrective Action Plan for the University's planned corrective actions, responsible officials, and implementation dates.
2025-004 Finding – Federal Award Type: Material Weakness in Internal Control over Compliance – Cash Management Criteria / Requirement: In accordance with 2 CFR 200.303, non-Federal entities receiving Federal awards must establish and maintain effective internal control over Federal awards that provides reasonable assurance the awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR 200.302 requires recipients to maintain financial management systems that adequately identify and support expenditures charged to Federal awards. Further, 2 CFR 200.305 requires recipients to minimize the time elapsed between the transfer of Federal funds and their disbursement for program purposes. Condition / Context: Cash draw requests were prepared and submitted by a single employee without documented supervisory review or approval. The draw requests were supported by an external workbook rather than directly by the Organization's accounting system or general ledger. Consequently, the Organization did not have documented internal controls within the cash draw process to prevent or detect inaccurate or unsupported draw requests prior to submission. Cause: The Organization had not implemented procedures requiring supervisory review and approval of cash draw requests prior to submission. In addition, cash draw requests were prepared using information maintained outside of the accounting system rather than being supported directly by the general ledger. Effect: The lack of documented review and reliance on records maintained outside the accounting system increases the risk that cash draw requests may include inaccurate, duplicate, or unallowable expenditures or amounts that are not adequately supported by the accounting records. In addition, the Organization may draw Federal funds in advance of eligible expenditures, resulting in noncompliance with the cash management requirements of 2 CFR 200.305. Questioned Costs: None. Recommendation: We recommend the Organization implement formal internal controls over the cash management process, including documented supervisory review and approval of all cash draw requests prior to submission. Cash draw requests should be prepared and supported using information maintained within the accounting system and reconciled to the general ledger to ensure that only allowable, properly recorded Federal expenditures are included in reimbursement requests. Additionally, management should develop and implement a written cash management policy that establishes procedures for preparing, reviewing, approving, reconciling, documenting, and retaining cash draw records in accordance with the Uniform Guidance. Management’s Response: Management concurs with the finding and will implement effective internal controls over Cash Management.
Condition: CRMHS’ internal controls were not functioning as designed to ensure that federal draw requests were reviewed and reconciled to underlying allowable expenditures for the above program, resulting in CRMHS drawing down federal funds in advance of immediate cash needs. This finding is a repeat of finding 2024-002. Criteria: Under 2 CFR Part 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes. Funds should only be drawn down as needed for immediate cash requirements. Cause: CRMHS made a draw prior to the year ended June 30, 2025 in excess of what was needed for immediate cash needs. Effect: Holding excess federal funds for extended periods can result in non-compliance with federal regulations and could potentially increase the risk of mismanagement or misuse of funds. Questioned Costs: During testing of cash draws under Assistance Listing 93.696, we noted CRMHS requested reimbursement of $193,046 in advance of incurring allowable costs. At June 30, 2025, this amount remained unspent and was properly recorded as part of refundable advances in the consolidated financial statements. This excess draw was subsequently expended for allowable program expenses. Accordingly, no questioned costs were identified. Recommendation: We recommend management review the current controls over cash management procedures and ensure a proper reconciliation of all federal draw requests to supporting expenditure records prior to submission of the draw request.
CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Cash Management Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Questioned Costs: None Criteria: Per 2 CFR Part 200, Section 200.305, Federal payment, "payment methods must minimize the time elapsing between the transfer of funds from the Federal agency...and the disbursement of funds by the recipient… 2 CFR Part 200, Section 200.302(b)(6) also requires written procedures to implement the requirements of Section 200.305. Per HHS Grant Policy Statement: “In accordance with Dept of Treasury regulations, you must draw federal cash only for your immediate needs. At the time of draw down, you will certify you will not hold cash beyond three working days… Do not request cash to cover unliquidated encumbrances, obligation, or accrued expenditures until payment is pending”. Condition: On June 30, 2024, the Organization drew the remaining H8F funds of $1,253,464, and recorded this amount as a credit to a balance sheet account, indicating these were unspent or unearned grant funds. Throughout the year ended May 31, 2025, as expenditures were made, the Organization recorded debits to this balance sheet account, crediting a grant revenue account. The Organization's internal controls over compliance failed to prevent, or detect and correct, this noncompliance. Cause: Organization personnel were not aware of the cash management compliance requirement with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026, and they were spreading it out to what they thought was the deadline. Effect or Potential Effect: By drawing federal award funds prior to expenditure, the Organization did not comply with the requirements of 2 CFR Part 200, Section 200.305, Federal payment and of the HHS Grants Policy Statement. Context: Draws for this Federal award were taken in July, 2024 for $1,270,464. We requested supporting detail of the $1,270,464 expenditures made during the year for this Federal award as reported in the Schedule of Expenditures of Federal Awards. We received a spreadsheet that contained a list of 26 descriptions and amounts, but no transactional detail such as check numbers, check dates, payee, invoice number, invoice date, etc. After determining the check numbers and check dates for 9 of the 26 items in the spreadsheet, we noted that disburesments for 8 of those 9 occurred more than 3 days after the date the draw, with 2 disbursements made more than 5 months after the date of the draw. Repeat Finding? No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures that ensure grant funds are drawn at the time of, or following, expenditures for allowable costs by the Organization. These policies and procedures should include that, for each draw from a Federal award, 1) detailed documentation of the expenditures for which the grant funds are being drawn is prepared prior requesting the draw, including transactional details such as vendor, invoice number, invoice amount, check number, check date, payee, and check amount; 2) that the documentation supporting the draw is reviewed and approved by a member of management (other than the person who prepares the documentation) prior to requesting the draw, and 3) that the documentation supported each draw is maintained as part of the Organization's accounting records. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-005.
2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.
Finding Number: 2025-001 Award Identification: Assistance listing program title and number: NSF Technology, Innovation, and Partnerships – 47.084 Federal award identification number: 2303493 Award Date: May 9, 2023 Name of the federal agency: National Science Foundation Repeat Finding: No Questioned Costs: There are no questioned costs related to this finding Type of Finding: Significant Deficiency in Internal Control over Cash Management Criteria: Section 2 CFR 200.305 establishes the requirements over the management of federal payments. Under this regulation, the grantee must minimize the time lapse between the draw down of federal funds and the disbursement of those funds as well as demonstrate written procedures and a system of financial management that meets control and accountability requirements. Condition: While testing of internal controls over cash management it was noted that the Center did not follow the procedures in place for the draw down of federal funds. Cause: The Center was guided by the NSF program manager to draw down the funds as they became available in accordance with the grant agreement as opposed to following procedures in accordance with Section 2 CFR 200.305. Effect: The Center did not incur the costs in-line with the draw down of federal funds. Recommendation: We recommend the Center follow cash management procedures in accordance with Section 2 CFR 200.305. These procedures should ensure that funds are drawn on a reimbursement basis, supported by actual expenditures incurred or very soon to be incurred and paid. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Material Weakness Finding: 2025-002 Cash Management – Federal Grants Federal Programs: Department of Health and Human Services Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Assistance Listing No. 93.912 Criteria: Cash Management, 2 CFR 200.305(b)(1) Condition: The Organization did not reconcile federal grant expenditures in a timely manner, resulting in a lack of draws of federal funds for which qualifying expenditures had been made prior to the end of the Organization’s financial statement year end. This resulted in unrecorded revenue and receivables of approximately $224,564 at March 31, 2025. Without proper reconciliations and timely draws of federal grant funds, the Organization could be impacted by lost federal funding. Cause: The Organization did not reconcile federal grant expenditures or make federal grant draws in a timely manner. Effect: The Organization failed to properly recognize federal grant revenue and receivables of $224,564. Questioned Costs: None Context/Sampling: Not applicable. Repeat Finding from Prior Year: No Recommendation: The Organization should ensure that qualifying expenditures are reconciled, recorded in the Organization’s financial statements, and drawn from the Payment Management System in a timely manner. Views of Responsible Officials: The Organization understands the importance of timely reconciliations of federal grant expenditures and timely draws of federal grant funds. The Organization will review its processes and procedures to ensure that federal grants are reconciled in a timely manner. Contact Person: Brian Morton, CFO Anticipated Date of Completion: November 30, 2025
Material Weakness Finding: 2025-002 Cash Management – Federal Grants Federal Programs: Department of Health and Human Services Health Center Program Cluster Assistance Listing No. - 93.224 and 93.527 Department of Health and Human Services Grants for Capital Development in Health Centers Assistance Listing No.- 93.526 Criteria: Cash Management, 2 CFR 200.305(b)(1) Condition: The Organization made three draws of federal funds for which qualifying expenditures were not made prior to the end of the Organization’s financial statement year end. This resulted in excess federal cash on hand at March 31, 2025. The Organization is required to incur qualifying expenditures prior to drawing funds from the U.S. Treasury. Cause: The Organization made drawdowns of federal grant funds for which qualifying expenditures were not incurred. Effect: The Organization held excess federal cash due to lack of qualifying expenditures. Questioned Costs: $430,732. Context/Sampling: Out of 39 drawdowns during the fiscal year, three of the drawdowns were received for expenditures that had yet to be incurred and paid. The finding appears to be a systemic issue. Repeat Finding from Prior Year: No Recommendation: The Organization should ensure that qualifying expenditures are incurred prior to making the related draws of funds from the U.S. Treasury. Views of Responsible Officials: The Organization understands the requirements to incur qualifying expenditures prior to drawing funds from the U.S. Treasury. Procedures will be established to ensure that excess federal cash is not held by the Organization. Contact Person: Dr. Aretha Powers, CEO Anticipated Date of Completion: November 30, 2025
2025-002 Cash Management Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00540-23, H8GCS48292, H8LCS51370 Criteria Title 2 CFR 200.305 requires that organizations “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Condition The Organization was not able to provide documentation for certain cash draws made from the Payment Management System (PMS) to show that expenditures were incurred or expected to be incurred within a minimal amount of time. This finding appears to be a systemic issue. Cause The Organization did not always maintain documentation of the qualifying expenditures used to support amounts drawn from the payment management system. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs $0. Although the auditee did not retain documentation of the expenditures supporting certain draws, our testing indicated that the total program expenditures for the period were sufficient to cover all draws of federal funds under the program in the period. Context For two of six draws tested, the Organization was not able to provide documentation to show that expenses were incurred prior to or within a reasonable time after the draws. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation, along with the supporting invoices and payroll reports supporting the expenditures. In addition, we recommend that the listing of expenditures be reviewed by appropriate personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
CFR section 200.305 requires Public Housing Authorities (PHA) to minimize the time federal funds are drawn down to expenditure. The Public Housing Capital Fund provides guidelines of three business days from draw down to expenditure to minimize the interest accrued by the PHA. Per review of all Public Housing Capital Fund funding received by the Authority we noted $1,024,894 of received funding identified as not being expensed within three business days of being received. 2 CFR Subpart F § 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the County’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. Errors and omissions were noted related to various programs on the Authority’s 2025 schedule, including a $816,389 overstatement of expenditures for the Public Housing Capital Fund program. We recommend the Authority implement increased training on the requirements of not drawing down Public Housing Capital Fund funding until either an allowable expenditure has occurred or will occur within three days after the funding was received. We recommend the Authority implement increased training on the requirements for preparing the Schedule of Expenditures of Federal Awards. We also recommend a greater number of quality control reviews to identify errors before requesting funds and preparing the Schedule of Expenditures of Federal Awards.
Non-major program, reported in accordance with 2 CFR 200.516(a) (4)) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public Housing Capital Fund Program Federal Assistance Listing Numbers: 14.872 Noncompliance - C. Cash Management Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Cash Management Criteria: In accordance with 2 CFR 200.305, payment methods for federal awards must minimize the time elapsing between the transfer of federal funds and the disbursement of those funds by the recipient. Federal funds drawn under the Public Housing Capital Fund Program should be limited to amounts needed to meet the Authority’s immediate cash requirements for allowable program expenditures. Accordingly, the Authority should implement procedures to ensure grant funds are not drawn in advance of actual or imminent eligible expenditures. Condition: The Authority drew down federal funds in advance of immediate cash needs for allowable program expenditures. As of year end, a portion of the funds drawn remained unexpended and was reported as unearned revenue in the financial statements. This indicates that federal funds were received prior to the incurrence of eligible expenditures. Context: During review of the financial statements, the Authority was noted to have unexpended federal funds on hand at year end that had been drawn prior to the disbursement of allowable program costs. Specifically, amounts recorded as unearned revenue represented federal funds received in advance of immediate cash needs. This condition was identified through review of drawdown activity, general ledger balances, and year end financial reporting records. Known Questioned Costs: $828,938* * Represents federal funds drawn under the Public Housing Capital Fund Program in advance of immediate cash needs, which remained unexpended at year end and are not in compliance with cash management requirements under 2 CFR 200.305. Cause: The Authority did not have adequate procedures in place to monitor the timing of grant drawdowns in relation to actual program cash needs and allowable expenditures. As a result, federal funds were requested and received prior to the incurrence of eligible costs under the Public Housing Capital Fund Program. Effect: The Authority was not in compliance with federal cash management requirements governing the timing of federal fund drawdowns. As a result, federal funds were held in advance of immediate cash needs, increasing the risk of improper cash management and noncompliance with Uniform Guidance and HUD requirements. Recommendation: We recommend the Authority strengthen its cash management procedures to ensure federal funds are drawn only for immediate cash needs related to allowable program expenditures. Management should implement monitoring and review controls over grant drawdown activity, including periodic reconciliation of drawdowns to incurred expenditures, to ensure compliance with 2 CFR 200.305 and HUD requirements.
2025-004 Cash Management (repeat of finding 2024-008) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” Condition The Organization did not maintain supporting documentation for cash draws made from the Payment Management System (PMS). This finding appears to be a systemic problem. Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs None noted. Context Out of seven draws tested, the Organization was not able to provide any supporting documentation or expenditure detail to support two draws. Due to this, we were unable to verify the time elapsing between the funds transfer from the PMS system and the disbursement of funds. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures to be paid or reimbursed. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
2025-004 Cash Management (repeat of finding 2024-008) Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 CFR 200.305 requires that organizations “must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.” Condition The Organization did not maintain supporting documentation for cash draws made from the Payment Management System (PMS). This finding appears to be a systemic problem. Cause The Organization’s internal controls over cash management and PMS draws does not include procedures for non-payroll expenditures. As a result, draws were made without supporting documentation. In addition, the Organization did not always maintain documentation of the payroll calculations supporting draws, as required by company policy. Effect The Organization may not have minimized the timing between draws from the PMS and the related payments for expenditures incurred as required. Questioned Costs None noted. Context Out of seven draws tested, the Organization was not able to provide any supporting documentation or expenditure detail to support two draws. Due to this, we were unable to verify the time elapsing between the funds transfer from the PMS system and the disbursement of funds. Recommendation We recommend the Organization implement controls requiring all draws from the PMS to be based on detailed reports of expenditures claimed for reimbursement and retain this documentation along with the supporting invoices and payroll reports supporting the expenditures to be paid or reimbursed. In addition, we recommend that the listing of expenditures be reviewed by qualified personnel to ensure that the expenditures claimed are allowable and cash payments for the expenditures are made before the date of the draw or within a reasonable time after the draw. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.
U.S. Department of Health and Human Services Health Center Program Cluster - Health Center Program, Assistance Listing No. 93.224 Compliance Requirements: Cash Management Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance (Repeat Finding) Condition - During our testing of grant drawdowns, we noted that the expenditure support provided for individual drawdowns did not consistently agree to the amounts requested. Specifically, on a sample-by-sample basis, certain drawdowns were either overstated or understated when compared to the underlying payroll expenditures incurred for the respective period. While the aggregate payroll expenditures tested did reconcile to the total drawdown activity, the lack of alignment at the individual draw level indicates that draw requests were not consistently calculated based on contemporaneous, actual expenditures incurred at the time of each request. Criteria - In accordance with 2 CFR §200.305 (Payment), non-federal entities must minimize the time elapsing between the transfer of funds from the federal government and disbursement for program purposes. Additionally, entities are required to establish and maintain effective internal controls over compliance to ensure that drawdowns are based on actual, allowable expenditures and reflect immediate cash needs. Federal guidance further requires that amounts reported through drawdown systems agree to underlying accounting records. Cause - The Center does not have adequate internal controls in place to ensure that individual drawdown requests are supported by detailed, contemporaneous expenditure data. Specifically: there is no formal reconciliation process performed at the individual draw level between payroll expenditures and requested amounts prior to submission. Drawdowns appear to be based on cumulative or estimated balances, rather than actual expenditures incurred for the specific draw period. Review controls over the preparation and approval of draw requests are not sufficiently granular to detect discrepancies at the transaction level. Effect - Federal funds may not have been drawn in alignment with immediate cash needs at the time of each request. There is an increased risk of: temporary overdraws, which could result in excess federal cash on hand and potential interest liability. Underdraws, which could impact cash flow and program operations. Although total drawdowns for the reporting period reconciled in the aggregate, the lack of precision at the individual draw level indicates a systemic control deficiency that could lead to material noncompliance if not corrected. Context - Certain drawdowns were either overstated or understated when compared to the underlying payroll expenditures incurred for the respective period. While the aggregate payroll expenditures tested did reconcile to the total drawdown activity, the lack of alignment at the individual draw level indicates that draw requests were not consistently calculated based on contemporaneous, actual expenditures incurred at the time of each request. Questioned Costs - None Recommendation - We recommend that management strengthen internal controls over cash management by: Implementing a formal reconciliation process at the time of each drawdown, comparing: Actual payroll expenditures incurred for the draw period; the specific amount requested; requiring all draw requests to be supported by detailed, contemporaneous payroll reports; enhancing supervisory review procedures to ensure that each draw is individually supported and accurate, rather than relying on aggregate reconciliation; establishing documented procedures to ensure compliance with 2 CFR §200.305 requirements for timing and accuracy of federal cash draws. Management Response to Findings - Management concurs with the finding.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.
2024-005 - Lack of Written Federal Policies and Procedures Required by Uniform Guidance Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Condition/Finding: The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. Criteria: Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318–320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Cause: The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect: The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Recommendation: We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.
2024-005 - Lack of Written Federal Policies and Procedures Required by Uniform Guidance Finding Type: Material weakness in internal control over compliance Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Condition/Finding: The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. Criteria: Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318–320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Cause: The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect: The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Recommendation: We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
Criteria: According to 2 CFR §200.305(b), when a non-federal entity receives advance payments of federal funds, it must deposit those funds in interest-bearing accounts, unless certain exceptions apply, and must remit any interest earned on advances in excess of $500 per year to the federal agency. Furthermore, advance payments should be segregated to ensure proper tracking and safeguarding of federal funds. Condition: During our audit of the Organization’s federal awards, we identified deficiencies in the grantee’s cash management procedures related to advance payments received from federal awarding agencies. Specifically, the grantee did not segregate advance payments into separate insured interestbearing accounts as required by the Uniform Guidance. Cause: The Organization did not have adequate policies and procedures or internal controls in place to ensure compliance with the cash management requirements related to advance payments. Effect: The federal awarding agency did not receive interest that could have been earned on the advances. All advances received during 2024 were expended by December 31, 2024. There was no loss from uninsured funds or from lack of segregating funds into separate accounts. Recommendation: We recommend that the Organization implement policies and procedures to ensure that all advance payments are deposited into separate, insured, interest-bearing accounts as required. The Organization should also establish controls to track interest earned on these accounts and remit amounts due to the federal awarding agencies in a timely manner. Training should be provided to staff responsible for cash management to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management agrees with the finding and procedures have been implemented to address the related issues.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
Internal control deficiency and noncompliance over cash management related to advance payments. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.305(b) Federal payment. (b) (1) Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During our testing over cash management, we observed management used the advance method for cash management; however, the entity did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. Cause: Management did not have internal controls in place over the compliance requirement as stated in the criteria or specific requirement section above. Effect or potential effect: Advance payments were not supported by internal controls and management did not minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. This can potentially result in interest earned on Federal funds. Questioned costs: $981,704 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the expenditures incurred between July and December 2024 which were after the advance method payment was completed in June 2024. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over cash management, we observed management submitted and received an advance method payment for the full amount of the federal award in June of 2024. However, there were $981,704 expenditures incurred between July and December 2024 which were incurred after the advance method payment was completed. Therefore, management did not implement procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity. We were unable to quantify the interest earned on Federal funds. Identification as a repeat finding, if applicable: No. Recommendation: Management should develop and implement internal controls over advance method payments to ensure the entity minimizes the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the entity or switch to the reimbursement method. Management should review the advance method payment identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: The Company acknowledges non-compliance with 2 CFR § 200.305 that the entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury or the pass-through entity and the disbursement of funds by the recipient or subrecipient. However, the questioned costs that were transferred in advance were ultimately deemed reasonable because they were disbursed during the grant period for allowable costs as part of the federal contract awarded. The Company will ensure a proper understanding of the compliance requirements for all federal contracts prior to requesting funds and will ensure funds transferred are compliant with the requirement that the Company minimize the time elapsed from the time of transfer and the disbursement of funds in accordance with the grant terms.
Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.
Finding 2024-002 Type of Finding: Cash Management – Noncompliance and Internal Control (Significant Deficiency) Community Development Financial Institutions Fund Equitable Recovery Program (FAL #21.033) Federal Agency: U.S. Department of Treasury Federal Award Number: 22ERP061764 Funding Years: 4/1/2023 - 3/31/2029 Criteria: Per 2 CFR §200.305(b)(11), a recipient or subrecipient must maintain advance payments of Federal funds in interest-bearing accounts, unless one of the following applies: i. The recipient or subrecipient receives less than $250,000 in Federal funding per year; ii. The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; iii. The depository would require an average or minimum balance so high that it would not be feasible with the expected Federal and non-Federal cash resources; iv. A foreign government or banking system prohibits or precludes interest-bearing accounts; or v. An interest-bearing account is not readily accessible. Furthermore, per 2 CFR §200.305(b)(12), the recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS) through either the Automated Clearing House network or a Fedwire Funds Service payment. All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS. Condition/Context: REDC received a grant advance payment of approximately $3.2 million from the U.S. Department of Treasury in 2023. However, REDC did not maintain such funds in an interest-bearing account and did not either meet any of the exempting requirements described in 2 CFR §200.305(b)(11) or obtain a waiver that would relieve REDC of the criteria referred to above. Statistically Valid Sample: No, as no sample was tested in connection with the Cash Management compliance requirement. Cause: Management was not aware of the specific Uniform Guidance and grant requirement regarding the maintenance of advance payments of Federal funds in interest-bearing accounts. Effect: REDC did not maintain the federal advance in an interest-bearing account and therefore missed the opportunity to earn interest on the unspent portion of the Federal advance. Questioned Costs: During the year ended December 31, 2024, $35,610 of estimated interest would have been earned on the unspent portion of REDC’s federal advance if the federal advance was maintained in REDC’s interest-bearing account. Identified as a Repeat Finding: No. Recommendation: REDC should establish procedures to ensure that all federal advances are deposited into interest-bearing accounts, unless an applicable exception under 2 CFR §200.305(b)(11) applies. Additionally, REDC should periodically review account balances and remit any interest earned on federal funds to the federal awarding agency in accordance with the requirements described in 2 CFR §200.305(b)(12). Views of Responsible Officials: We recognize the auditor’s finding regarding our cash management because we were not fully aware of the requirement to use interest-bearing accounts for advanced federal funds. This was unintentional and we acknowledge the gap in the cash management compliance process for federal grants. We will update our grant cash management policy to ensure all advance payments from federal or similar grants are placed in interest-bearing accounts where applicable. We will have separate interest-bearing accounts established for any federal grant advances with this requirement. Staff will be trained on federal grant cash management. Remittance of interest earned over $500 per year to the federal government. On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. Management is committed to full compliance with federal grant requirements and has taken steps to ensure this issue does not recur. 1) Renaissance booked a payable to federal government of $48,248 on 12/31/2024 financials for the interest. The interest was paid to the federal government on 9/12/2025 regarding the federal CDFI grant contracts. 2) Federal grants to be held in interest bearing accounts will be completed by Sept 30, 2025. 3) Staff will be trained on federal grant cash management to be completed by Sept 30, 2025. 4) Grant cash management policy update to be completed by Oct 31, 2025. 5) On-going quarterly reviews of all federal grant accounts will be conducted to ensure compliance with interest-bearing requirements. The interest earned over $500 will be remitted to federal government each year before the organization’s fiscal year end.
2024-002 Noncompliance with Cash Management (Public Housing Capital Fund CFDA 14.872) Criteria: Federal Code of Regulations, 2 CFR § 200.305 requires the Authority to maintain both written procedures that minimize the time elapsing between the transfer of funds from HUD and disbursement of those funds for eligible costs and financial management systems that meet the standards for fund control and accountability. Advance payments to the Authority must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the Authority in its Capital Fund Program. Furthermore, in accordance with 2 CFR § 905.310, the Authority shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305. The Capital Fund Program rules provide guidelines of 3 business days from drawdown to expenditure. Condition: During the year, the Authority had 24 transactions in its Capital Fund Program for grants ranging from CFP 2019-2022. All transactions made during the year did not adhere to the requirements to minimize the time federal funds were drawn down to expenditures of 3 business days. Questioned Costs: None. Effect: The Authority did not properly follow the requirements of 2 CFR § 200.305 and 905.310. Cause: The Authority did not have an adequate understanding of the Capital Fund Program requirements as related to Cash Management. Recommendation: The Authority’s staff should familiarize themselves with Capital Fund Program rules and guidelines in relation to Cash Management. Management Response: Management was unaware of the Cash Management rules and guidelines of the Authority’s Capital Fund Program. We will ensure all future eligible Capital Fund draws are made within 3 business days of expenditures.
Assistance Listing Number, Federal Agency, and Program Name - 11.611, United States Department of Commerce, National Institute of Standards and Technology Federal Award Identification Number and Year - 70NANB20H067 Pass through Entity - Not applicable - Direct funded Finding Type - Significant deficiency and material noncompliance with laws and regulations Repeat Finding - Yes, 2023-002/2023-003 Criteria - The Federal Funding Accountability and Transparency Act (FFATA), as amended by 6202 of Public Law 110-252, requires a prime grant awardee to report its subgrants using the FFATA Subaward Reporting System (FSRS) tool. The prime recipient will have until the end of the month plus one additional month after an award or subaward is obligated to fulfill the reporting requirement. In addition, written procedures to implement cash management requirements should be in place and updated in accordance with 2 CFR Part 200.305. Condition The Organization did not have the appropriate controls in place over FFATA reporting and did not file the required reports. Further, while the Organization had written procedures over cash management, they were outdated and did not reflect the current staffing model. This finding is repeated from the December 31, 2023 audit. Questioned Costs - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The following table summarizes the transactions examined and the noncompliance identified for FFATA: Additionally, the cash management policy was not updated when there was restructuring in the finance department during the prior fiscal year. Cause and Effect - A process was not in place for the Organization to determine the required reports to be submitted under the grant. The outdated cash management policy was not reflective of the actual process. Recommendation - The Organization must implement processes and controls to identify and comply with funding agency reporting requirements. Additionally, the cash management policy should be updated to reflect the new process. Views of Responsible Officials and Corrective Action Plan - Reporting was completed in SAM.gov in May 2025 for subrecipient subaward amount based on the award period running from calendar periods of July to June.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.305 requires that for reimbursement based grants, the entity should incur the costs for which reimbursement was requested prior to the date of the reimbursement request. Condition During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Questioned Costs $3,819 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the exception identified in our testing was used to calculate questioned costs. Context Of the 9 draws selected for testing, there was one draw that included one invoice submitted for reimbursement twice on the same draw as it was incorrectly entered into the system. Cause and Effect A check was voided and expense was never paid as the invoice was incorrectly coded to the incorrect vendor, but was still included as a check on the reimbursement request. Recommendation We recommend that the internal controls be put in place to ensure that there are no duplicate expenses being submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.305 requires that for reimbursement based grants, the entity should incur the costs for which reimbursement was requested prior to the date of the reimbursement request. Condition During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Questioned Costs $3,819 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the exception identified in our testing was used to calculate questioned costs. Context Of the 9 draws selected for testing, there was one draw that included one invoice submitted for reimbursement twice on the same draw as it was incorrectly entered into the system. Cause and Effect A check was voided and expense was never paid as the invoice was incorrectly coded to the incorrect vendor, but was still included as a check on the reimbursement request. Recommendation We recommend that the internal controls be put in place to ensure that there are no duplicate expenses being submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward.