Material Instance of Non-Compliance Cash Management of Federal Funds This finding impacts the cash management compliance requirement for the major program, Health Center Program Cluster, Assistance Listing Numbers 93.224 - Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and 93.527 - Grants for New and Expanded Services under the Health Center Program, funded by the Health Resources and Services Administration, Department of Health and Human Services. Criteria: The Health Center must follow the cash management standards set out in 2 CFR section 200.305 whereby they must minimize the time elapsing between the transfer of funds from the Federal awarding agency and disbursing the funds if they are not following the reimbursement method. Condition: During our audit of the Health Center, we noted unearned revenue (conditional grant advance) of $2,081,951 of Federal funds related to the Health Center Program Cluster. Cause: During fiscal year 2022, the Health Center had planned expenditures late in the fiscal year that they could fund from the Health Center Program. In order to have the cash on hand to fund these expenditures, they drew the funds in advance of incurring the expenses. Circumstances changed and they were unable to spend the funds in a timely manner and, therefore, the Health Center did not incur allowable expenses to recognize the revenue during fiscal year 2022. Effect: The Health Center is not in compliance with Federal regulations regarding cash management. Recommendation: Management should do a thorough review of all contracts to ensure they are not drawing funds prior to incurring expenditures to ensure they are properly following cash management regulations for Federal contracts. Management Response: Codman Square Health Center, Inc. (the Health Center) received a two-year $4.053 million HRSA Workforce Development grant from April 1, 2021, through March 31, 2023. The funding was provided to support staffing recruitment and retention efforts as summarized by HRSA ? ?On Thursday, April 1, 2021, HRSA awarded more than $6.1 billion in funding provided by the American Rescue Plan Act (ARPA) to 1,377 HRSA-funded health centers (activity code H8F). The purposes of the ARPA funding are to prevent, mitigate, and respond to Coronavirus disease 2019 (COVID-19) and to enhance health care services and infrastructure. Consistent with these purposes, funding may support a wide range of in-scope activities, which may change as COVID-19 circumstances and related community, patient, and organizational needs evolve over the two-year period of performance?. We began program implementation on September 6, 2021, and management drew down $1 million on November 17, 2021, to cover eligible spent monies for that period. An additional $1 million was drawn down on June 1, 2022, to cover eligible expenditures as of May 2022, in the amount of $1,176,844. It was anticipated that there was a total of $1.9 million in eligible expenses to be spent in the month of September 2022 which included items such as retention bonuses, leadership training, staff recruitment, and placement costs. These expenses were never realized prior to August 2022 draw down. The remaining HRSA ARPA funds were expended by March 31, 2023. The Health Center was consistent with adhering to the proper grant billing procedures for the first two drawdowns. The Health Center will follow HRSA Compliance requirements detailed in Compliance Requirements - Cash Management and will draw down HRSA grants on an incurred cost reimbursement basis.
Material Instance of Non-Compliance Cash Management of Federal Funds This finding impacts the cash management compliance requirement for the major program, Health Center Program Cluster, Assistance Listing Numbers 93.224 - Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and 93.527 - Grants for New and Expanded Services under the Health Center Program, funded by the Health Resources and Services Administration, Department of Health and Human Services. Criteria: The Health Center must follow the cash management standards set out in 2 CFR section 200.305 whereby they must minimize the time elapsing between the transfer of funds from the Federal awarding agency and disbursing the funds if they are not following the reimbursement method. Condition: During our audit of the Health Center, we noted unearned revenue (conditional grant advance) of $2,081,951 of Federal funds related to the Health Center Program Cluster. Cause: During fiscal year 2022, the Health Center had planned expenditures late in the fiscal year that they could fund from the Health Center Program. In order to have the cash on hand to fund these expenditures, they drew the funds in advance of incurring the expenses. Circumstances changed and they were unable to spend the funds in a timely manner and, therefore, the Health Center did not incur allowable expenses to recognize the revenue during fiscal year 2022. Effect: The Health Center is not in compliance with Federal regulations regarding cash management. Recommendation: Management should do a thorough review of all contracts to ensure they are not drawing funds prior to incurring expenditures to ensure they are properly following cash management regulations for Federal contracts. Management Response: Codman Square Health Center, Inc. (the Health Center) received a two-year $4.053 million HRSA Workforce Development grant from April 1, 2021, through March 31, 2023. The funding was provided to support staffing recruitment and retention efforts as summarized by HRSA ? ?On Thursday, April 1, 2021, HRSA awarded more than $6.1 billion in funding provided by the American Rescue Plan Act (ARPA) to 1,377 HRSA-funded health centers (activity code H8F). The purposes of the ARPA funding are to prevent, mitigate, and respond to Coronavirus disease 2019 (COVID-19) and to enhance health care services and infrastructure. Consistent with these purposes, funding may support a wide range of in-scope activities, which may change as COVID-19 circumstances and related community, patient, and organizational needs evolve over the two-year period of performance?. We began program implementation on September 6, 2021, and management drew down $1 million on November 17, 2021, to cover eligible spent monies for that period. An additional $1 million was drawn down on June 1, 2022, to cover eligible expenditures as of May 2022, in the amount of $1,176,844. It was anticipated that there was a total of $1.9 million in eligible expenses to be spent in the month of September 2022 which included items such as retention bonuses, leadership training, staff recruitment, and placement costs. These expenses were never realized prior to August 2022 draw down. The remaining HRSA ARPA funds were expended by March 31, 2023. The Health Center was consistent with adhering to the proper grant billing procedures for the first two drawdowns. The Health Center will follow HRSA Compliance requirements detailed in Compliance Requirements - Cash Management and will draw down HRSA grants on an incurred cost reimbursement basis.
2022-006 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management C – Cash Management Material Weakness and Noncompliance Criteria: The SRF Loan program is a reimbursable grant administered by ADEM. When non-Federal entities are funded under the reimbursement method, the entity they request reimbursement for expenses paid that are allowable to the grant under (2CFR section 200.305(b)(3)) and Section 2.2(b) of the Special Conditions Loan Agreement. Condition: During test work, instances were noted where The Water Works and Gas Board of the City of Red Bay did not pay the cost of the invoices prior to requesting reimbursement. The expenditures were allowable and approved by Alabama State Department of Environmental Management for reimbursement, but the invoices were not paid prior to requesting the reimbursement from Alabama State Department of Environmental Management. Context: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to submitting them for reimbursement to Alabama State Department of Environmental Management. Effect: The entity is not in compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement. Cause: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to requesting reimbursement. Repeat Finding: No Recommendation: The Water Works and Gas Board of the City of Red Bay should ensure that invoices are paid prior to requesting reimbursement from the pass-through entity. Board’s Response: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
2022-006 Department of State ? Bureau of Population, Refugees, and MigrationFederal Financial Assistance Listing #19.517, Overseas Refugee Assistance Programs for Africa Agency for International DevelopmentDepartment of State - Federal Financial Assistance Listing #98.001, USAID Foreign Assistance for Programs OverseasCash ManagementType of Finding: Significant Deficiency in Internal Control over ComplianceGrant Award Number: Affects all grant awards included under Federal Financial Assistance Listing #19.517 on the Schedule, and award number 720BHA22GR00046 under Federal Financial Assistance Listing #98.001 on the Schedule.Criteria: Uniform Guidance and 2 CFR section 200.305 sets forth the advance payments? standards non-federal entities, other than states, must follow when operating federal programs and the requirement that cash advances be placed in an interest-bearing account. CVT?s internal control structure should be designed to properly place funds received as cash advances are placed in an interest-bearing account.Condition: CVT does not have internal control system designed to ensure advance payments are placed in an interest-bearing account.Cause: Controls were not adequately designed due to lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections.Effect: Risk of interest income that should be earned and reported.Questioned Costs: None reportedContext/Sampling: For Federal Financial Assistance Listing #19.517, a nonstatistical sample of 6 requests out of 31 total requests were selected for testing. For Federal Financial Assistance Listing #98.001, a nonstatistical sample of 4 requests out of 17 total requests were selected for testing.Repeat Finding from Prior Year: NoRecommendation: We recommend management complete an extensive review over cash management policies to make sure requirements under the CFR section are met.Views of Responsible Officials: Management agrees with this finding.
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE Identification of the Federal Program: U.S. Department of Health and Human Services 93.224/93.527 Health Center Program Cluster Criteria: In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the federal agency or pass-through entity and disbursement by the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section 52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable, allowable, and reasonable contract costs that have already been paid or incurred. Condition: During our testing of draw requests, we noted certain draw requests were made prior to the related costs being incurred. Although the funds were ultimately expended on items approved by the federal award, they were not expended in a timely manner. Cause: The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request to support the amount requested in the Payment Management System. Additionally, the Center did not maintain documentation of such review or approval that such costs were incurred prior to the draw request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect: Requests for draws per the Payment Management System may not have minimized the time elapsing between payment by the federal agency or pass-through entity and disbursement by the Center and the amounts drawn down may be inaccurate. Questioned Costs: None Context: We selected a sample of draw requests submitted through the Payment Management System during the year ended September 30, 2022. The Center was unable to provide evidence of timely review and approval of two requests out of 44, totaling $352,340. Repeat Finding: No Recommendation: We recommend the Center establish formal internal controls and documentation of its performance relating to the determination of cash drawn downs and review and approval of drawn downs by appropriate personnel who are knowledgeable of such requirements. View of Responsible Officials: See accompanying Corrective Action Plan.
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE Identification of the Federal Program: U.S. Department of Health and Human Services 93.224/93.527 Health Center Program Cluster Criteria: In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the federal agency or pass-through entity and disbursement by the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section 52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable, allowable, and reasonable contract costs that have already been paid or incurred. Condition: During our testing of draw requests, we noted certain draw requests were made prior to the related costs being incurred. Although the funds were ultimately expended on items approved by the federal award, they were not expended in a timely manner. Cause: The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request to support the amount requested in the Payment Management System. Additionally, the Center did not maintain documentation of such review or approval that such costs were incurred prior to the draw request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect: Requests for draws per the Payment Management System may not have minimized the time elapsing between payment by the federal agency or pass-through entity and disbursement by the Center and the amounts drawn down may be inaccurate. Questioned Costs: None Context: We selected a sample of draw requests submitted through the Payment Management System during the year ended September 30, 2022. The Center was unable to provide evidence of timely review and approval of two requests out of 44, totaling $352,340. Repeat Finding: No Recommendation: We recommend the Center establish formal internal controls and documentation of its performance relating to the determination of cash drawn downs and review and approval of drawn downs by appropriate personnel who are knowledgeable of such requirements. View of Responsible Officials: See accompanying Corrective Action Plan.
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE Identification of the Federal Program: U.S. Department of Health and Human Services 93.224/93.527 Health Center Program Cluster Criteria: In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the federal agency or pass-through entity and disbursement by the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section 52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable, allowable, and reasonable contract costs that have already been paid or incurred. Condition: During our testing of draw requests, we noted certain draw requests were made prior to the related costs being incurred. Although the funds were ultimately expended on items approved by the federal award, they were not expended in a timely manner. Cause: The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request to support the amount requested in the Payment Management System. Additionally, the Center did not maintain documentation of such review or approval that such costs were incurred prior to the draw request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect: Requests for draws per the Payment Management System may not have minimized the time elapsing between payment by the federal agency or pass-through entity and disbursement by the Center and the amounts drawn down may be inaccurate. Questioned Costs: None Context: We selected a sample of draw requests submitted through the Payment Management System during the year ended September 30, 2022. The Center was unable to provide evidence of timely review and approval of two requests out of 44, totaling $352,340. Repeat Finding: No Recommendation: We recommend the Center establish formal internal controls and documentation of its performance relating to the determination of cash drawn downs and review and approval of drawn downs by appropriate personnel who are knowledgeable of such requirements. View of Responsible Officials: See accompanying Corrective Action Plan.
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE Identification of the Federal Program: U.S. Department of Health and Human Services 93.224/93.527 Health Center Program Cluster Criteria: In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the federal agency or pass-through entity and disbursement by the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section 52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable, allowable, and reasonable contract costs that have already been paid or incurred. Condition: During our testing of draw requests, we noted certain draw requests were made prior to the related costs being incurred. Although the funds were ultimately expended on items approved by the federal award, they were not expended in a timely manner. Cause: The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request to support the amount requested in the Payment Management System. Additionally, the Center did not maintain documentation of such review or approval that such costs were incurred prior to the draw request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect: Requests for draws per the Payment Management System may not have minimized the time elapsing between payment by the federal agency or pass-through entity and disbursement by the Center and the amounts drawn down may be inaccurate. Questioned Costs: None Context: We selected a sample of draw requests submitted through the Payment Management System during the year ended September 30, 2022. The Center was unable to provide evidence of timely review and approval of two requests out of 44, totaling $352,340. Repeat Finding: No Recommendation: We recommend the Center establish formal internal controls and documentation of its performance relating to the determination of cash drawn downs and review and approval of drawn downs by appropriate personnel who are knowledgeable of such requirements. View of Responsible Officials: See accompanying Corrective Action Plan.
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE Identification of the Federal Program: U.S. Department of Health and Human Services 93.224/93.527 Health Center Program Cluster Criteria: In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the federal agency or pass-through entity and disbursement by the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section 52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable, allowable, and reasonable contract costs that have already been paid or incurred. Condition: During our testing of draw requests, we noted certain draw requests were made prior to the related costs being incurred. Although the funds were ultimately expended on items approved by the federal award, they were not expended in a timely manner. Cause: The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request to support the amount requested in the Payment Management System. Additionally, the Center did not maintain documentation of such review or approval that such costs were incurred prior to the draw request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect: Requests for draws per the Payment Management System may not have minimized the time elapsing between payment by the federal agency or pass-through entity and disbursement by the Center and the amounts drawn down may be inaccurate. Questioned Costs: None Context: We selected a sample of draw requests submitted through the Payment Management System during the year ended September 30, 2022. The Center was unable to provide evidence of timely review and approval of two requests out of 44, totaling $352,340. Repeat Finding: No Recommendation: We recommend the Center establish formal internal controls and documentation of its performance relating to the determination of cash drawn downs and review and approval of drawn downs by appropriate personnel who are knowledgeable of such requirements. View of Responsible Officials: See accompanying Corrective Action Plan.
2022-003—Excess Drawdown of Federal Funds Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.137 – Community Programs to Improve Minority Health Grant Program Award #: 5 AIAMP170017-05-00 Award Period: 07/01/2021 – 07/29/2022 Estimated Questioned Costs: $26,426 Compliance Requirement: Cash Management Statement of Condition During our analysis of total grant revenues and expenditures reported on the SEFA, we noted that the entity had drawn down $26,426 more in federal funds than it expended under the Community Programs to Improve Minority Health grant. The excess drawdown remained outstanding as of September 30, 2022, the end of the audit period, and as of the date of this report. Criteria In accordance with 2 CFR § 200.305(b), non-federal entities must minimize the time elapsing between the drawdown of federal funds and the disbursement for program purposes. Additionally, per 2 CFR § 200.302(b)(6), entities must maintain effective internal controls over cash management to ensure that drawdowns are based on actual, allowable expenditures. Effect The entity is not in compliance with federal cash management requirements. The federal award has an outstanding overdrawn balance of $26,426, which may be subject to repayment to the federal awarding agency. Cause The excess drawdown appears to have resulted from an error during the drawdown request process. The entity indicated it was likely due to administrative oversight but was unable to provide specific details due to the passage of time. The discrepancy was disclosed to the auditor during the audit. Recommendation We recommend that the entity remit the excess federal funds or consult with the awarding agency to determine the appropriate resolution. In addition, the entity should strengthen its procedures to reconcile cash drawdowns to actual expenditures on a timely basis to prevent similar overdraws in the future.
Finding 2022 – 007: Cash Collateralization Criteria: Uniform Guidance 2 CFR § 200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Organization’s cash, it was noted that as of September 30, 2022, they have not collateralized cash balances in excess of the amounts insured by the Federal Deposit Insurance Corporation. Cash balances of $11,685,898 were uninsured at September 30, 2022. Unearned revenue was reported at approximately $10,704,037 which includes advance payments of Federal funds. Questioned Costs: None. Cause: The Organization has not entered into a cash collateralization agreement with their financial institution. Effect: The Organization is not in compliance with Uniform Guidance 2 CFR § 200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Organization enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2022 – 007: Cash Collateralization Criteria: Uniform Guidance 2 CFR § 200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Organization’s cash, it was noted that as of September 30, 2022, they have not collateralized cash balances in excess of the amounts insured by the Federal Deposit Insurance Corporation. Cash balances of $11,685,898 were uninsured at September 30, 2022. Unearned revenue was reported at approximately $10,704,037 which includes advance payments of Federal funds. Questioned Costs: None. Cause: The Organization has not entered into a cash collateralization agreement with their financial institution. Effect: The Organization is not in compliance with Uniform Guidance 2 CFR § 200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Organization enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding No.: 2022-016 Federal Agency: U.S. Department of Education AL Program: 84.047A TRIO Upward Bound Federal Award No.: P047A171556-21 Area: Cash Management Questioned Costs: $ Undeterminable Criteria: Per OMB Compliance Supplement April 2022, non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, no detailed listing of expenditures supporting the following drawdowns during the year was on file to ascertain whether the expenditures were incurred prior to the date of the reimbursement request: Drawdown Amount $ 31,928 $ 31,929 $ 44,991 $ 41,652 $112,832 Cause: The College lacks written policies and procedures over cash management, including retaining documentation supporting cash drawdowns. Effect: The College is not in compliance with the applicable cash management requirements. Questioned costs, if any, that may result from inadequate records are not determinable. Recommendation: College management should establish written internal control policies and procedures, including retaining documentation supporting cash drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
Finding No.: 2022-021 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund AL Sub-Program: 84.425E Higher Education Emergency Relief Fund (HEERF) - Student Aid Portion Federal Award No.: COVID-19 P425E204126 AL Sub-Program: 84.425F HEERF - Institutional Portion Federal Award No.: COVID-19 P425F202732 AL Sub-Program: 84.425L HEERF - Minority Serving Institution Federal Award No.: COVID-19 P425L200219 Area: Cash Management Questioned Costs: $ Undeterminable Criteria: Per OMB Compliance Supplement April 2022, non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305. Specifically, 2 CFR section 200.305(b) states that for recipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Furthermore, per OMB Compliance Supplement April 2022, for CRRSAA HEERF II and ARP HEERF III, the Certification and Agreements and/or Supplemental Agreements requires that Student Aid Portion (ALN 84.425E) should be disbursed within 15 calendar days of the drawdown from ED’s G5 grants system and Institutional Aid Portion, (a)(2), and (a)(3) funds (all other ALNs) should be disbursed within 3 calendar days of the drawdown from G5. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The College does not have written procedures to implement the requirements set in the criteria above. Furthermore, monitoring of actual disbursements of the following drawdowns during the year was not performed: AL Sub-Program Drawdown Amount 84.425E $750,000 84.425E $250,000 84.425E $650,000 84.425F $350,000 84.425F $552,500 84.425F $900,000 84.425F $550,000 84.425F $351,000 84.425F $350,000 84.425F $450,000 84.425F $820,000 84.425F $250,000 84.425F $350,000 84.425F $292,650 84.425F $150,000 84.425F $150,000 84.425L $750,000 84.425L $360,589 84.425L $1,150,000 84.425L $350,000 84.425L $150,000 Cause: The College lacks written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Effect: The College is not in compliance with the applicable cash management requirements. Questioned costs, if any, that may result from non-monitoring of actual disbursements are not determinable. Recommendation: College management should establish written policies and procedures over cash management, including monitoring of actual disbursements of drawdowns. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
Finding 2022-001: Cash Management ? Disbursement U.S. Department of Education ? Education Stabilization Fund COVID-19 Supplemental Assistance to Institutions of Higher Education Program ? ALN 84.425S Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Management self-identified the issue, and self-corrected as they became aware of the requirement. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the SAIHE subprogram. A mitigating factor is the uniqueness of the SAIHE subprogram. Effect: The portion of the SAIHE funds allocated to provide financial aid grants to students was not disbursed within the required 15 calendar days of the drawdown from ED?s G5 grants system. Recommendation: Before drawing down from ED?s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization?s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding and has implemented a system to minimize the time elapsing between the transfer of funds from ED?s G5 grants system and disbursement by the organization for both institutional aid and student financial aid purposes. In addition, management has designated a responsible and capable employee to monitor the new system and to review the terms, conditions, and requirements governing any future grants to ensure the system?s compatibility. Implementation of the corrective action is further evidenced by timely disbursement of subsequent drawdowns from ED?s G5 grants system in FY22.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Condition: The Center?s written policies and procedures related to financial management do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Center is required to have a written financial management policy. Cause: The Center was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Center update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor?s finding and will update the Center?s written policies and procedures for the Uniform Guidance requirements.
Finding 2022-001: Cash Management ? Disbursement U.S. Department of Education ? Education Stabilization Fund COVID-19 Institutional Portion ? ALN 84.425F Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the Institutional Portion subprogram. A mitigating factor is the uniqueness of the Institutional Portion subprogram. Effect: Institutional Portion funds used to defray expenses associated with coronavirus was not disbursed within the required 3 calendar days of the drawdown from ED?s G5 grants system. Recommendation: Before drawing down from ED?s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization?s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding. Since the program is not applicable to the organization after the issuance date of the financial statements, no corrective action is necessary.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
2021-002 Overdrawing of federal funds Information on Federal Programs: Assistance Listing #: 93.421, 93.318, 93.185 Federal Agency: United States Department of Heath and Human Services Criteria: Cash management compliance requirements under Subpart B of 31 CFR Part 205 require that nonfederal entities minimize the time elapsing between the transfer of funds from the Payment Management System (PMS) or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. (2 CFR section 200.305(b)). Condition: There was an overdraw of funds of $200,000 where costs had not been incurred to support the draw, nor were all the funds spent prior within a reasonable time frame. Effect: There is a refundable advance on the books for $131,858 for funds that were drawn and unspent at year end. Cause: Due to changes in staffing around this time, a draw was made for part of the funds and then a second draw was made for the full amount of expenses, without accounting for the previously drawn funds. Recommendation: We recommend that the Organization ensure there controls in place for review and approval of all draws and a reconciliation be done at each draw to ensure that there are sufficient expenditures to support the draw. Any overdraws should be caught immediately and steps taken to remedy the draw or to expend the funds within a reasonable timeframe.
Finding 2022-001: Cash Management ? Disbursement U.S. Department of Education ? Education Stabilization Fund COVID-19 Supplemental Assistance to Institutions of Higher Education Program ? ALN 84.425S Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Management self-identified the issue, and self-corrected as they became aware of the requirement. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the SAIHE subprogram. A mitigating factor is the uniqueness of the SAIHE subprogram. Effect: The portion of the SAIHE funds allocated to provide financial aid grants to students was not disbursed within the required 15 calendar days of the drawdown from ED?s G5 grants system. Recommendation: Before drawing down from ED?s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization?s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding and has implemented a system to minimize the time elapsing between the transfer of funds from ED?s G5 grants system and disbursement by the organization for both institutional aid and student financial aid purposes. In addition, management has designated a responsible and capable employee to monitor the new system and to review the terms, conditions, and requirements governing any future grants to ensure the system?s compatibility. Implementation of the corrective action is further evidenced by timely disbursement of subsequent drawdowns from ED?s G5 grants system in FY22.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Finding No. 2022-001 Cash Management U.S. Department of the Education Upward Bound Program ? CFDA #84.047A Talent Search Program - CFDA #84.044A Criterion: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Based upon our testwork, we noted the Organization did not have support for funds being drawndown on a consistent basis. Cause and Effect: Management did not follow the established process for drawdown requests to ensure that the amount of funds being drawn down were property supported to a specific federal program. Therefore, the resulting effect was excess funds on hands. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that the amount of funds being drawn down are properly allocated to the appropriate Federal programs. View of Responsible Officials: Management agrees with the findings and has hired a Contract Manager to oversee office management processes. In addition, all drawdowns in the future will be scheduled and done bi-monthly.
Condition: The Center?s written policies and procedures related to financial management do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Center is required to have a written financial management policy. Cause: The Center was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Center update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor?s finding and will update the Center?s written policies and procedures for the Uniform Guidance requirements.
Finding 2022-001: Cash Management ? Disbursement U.S. Department of Education ? Education Stabilization Fund COVID-19 Institutional Portion ? ALN 84.425F Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: Management implemented a financial management system that meets the specified standards for fund control and accountability, but the system failed to ensure disbursement of funds within the required timeframe. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding. Cause: Management did not accurately identify the required timeframe of disbursement for funds received under the Institutional Portion subprogram. A mitigating factor is the uniqueness of the Institutional Portion subprogram. Effect: Institutional Portion funds used to defray expenses associated with coronavirus was not disbursed within the required 3 calendar days of the drawdown from ED?s G5 grants system. Recommendation: Before drawing down from ED?s G5 grants system, management should familiarize themselves with the applicable terms, conditions, and requirements governing the organization?s use of the grant funds, and then implement a system of controls that will ensure compliance with those terms. Views of Responsible Parties and Corrective Action Plan: Management concurs with the finding. Since the program is not applicable to the organization after the issuance date of the financial statements, no corrective action is necessary.
Federal programs: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) CFDA Number: 84.425E / 84.425F Federal award identification number: P425E205418 / P425F204999 Grant period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Material Weakness Compliance requirement: Other ? Policies and procedures requirements Condition and context When obtaining an understanding of the internal controls, policies, and procedures regarding the administration of federal programs, and grant term and conditions, we noted the following deficiencies: a. There is no written policy, nor the procedures designed and implemented by the Institution related to Cash Management were documented. The Institution opted to request the funds on a reimbursement basis. b. There were no written procedures for determining the allowability of costs in accordance with 2 CFR 200 subpart E of this part and the terms and conditions of the Federal award. c. After examination of the Institution procurement policy, we noted that the document was not signed by all members required from management and was not dated. Upon inquiry, we noted that the procurement policy was drafted and submitted to the Institution for review in February 2023. Therefore, no written policy and formal procedures were designed and implemented for the procurement transactions tested for the fiscal year ended July 31, 2022 and thereafter. Criteria 2 CFR 200.302 (b) (6) and (7) establish that the financial management system of each non-Federal entity must provide for the following: written procedures to implement the requirements of ? 200.305, and 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 200.303 establish that 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); (b) comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards; (c) evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards; (d) take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; and (e) take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. 2 CFR 200.318 (a) establishes that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) the non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices; (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award; (c) the non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award; (d) the application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal award. Cause The Institution?s federal programs received prior the fiscal year ended July 31, 2020 did not require the implementation of written procedures as mentioned in the condition and context section, except for Cash Management policies and procedures for the Student Financial Assistance Programs Cluster for which the Institution has designed and implemented written procedures for such compliance requirement. The Covid-19 pandemic related programs were the reason why this new federal program funds were received, and the entity failed to design and implement on a timely basis the required written documentation and procedures. Effect Noncompliance with the above-mentioned requirement could lead to administrative sanctions by the grantor, including disallowance of costs. It could also be interpreted as a failure to achieve the program?s objectives. Questioned costs None. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to implement written policies and procedures needed for the administration of federal grants before the acceptance of new grants. Having well sounded policies and procedures will reduce the Institution risk of non-compliance with federal regulations and grants terms and conditions. Also, they will provide guidance to the Institution?s personnel on how to carry-out their responsibilities and functions in relation to the administration of federal programs transactions. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Significant Deficiency Compliance requirement: Cash Management Condition and context In testing compliance and internal controls over cash management, we selected a sample of four (4) drawdowns which amounted to $342,787 of the total HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our test, we noted that in one (25%) of the four (4) drawdowns selected, for three payments made by the Institution the time elapsed between the receipt of funds and the check issuance was between 20 to 48 days. The total amount disbursed after the three elapsed days requirement was $4,020 from a drawdown total of $56,065. Criteria 2 CFR 200.302 (b) (6) requires written procedures to implement the requirements of 200.305. 2 CFR 200.305 (b) and (b) (1) establish that for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. See also 200.302(b)(6). Except as noted elsewhere in this part, Federal agencies must require recipients to use only OMB-approved, governmentwide information collection requests to request payment. The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Cause The Institution did not design and implemented internal controls and procedures for this compliance requirement, including written policies and procedures. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to design and implement written internal controls and procedures for the administration of federal funds requests in accordance with the requirements of grant agreements and 2 CFR 200. Internal controls and procedures must consider maintaining adequate documentation to support the petitions of funds and to maintain the audit trail of the payments that will be issued. The Institution shall request only the amount of funds necessary to meet its immediate cash needs to prevent excess cash balances. Whenever payment amounts are adjusted after the funds were requested or received, such excess cash should be returned to the federal agency immediately. Establishing reliable and thorough cash forecasting procedures and subjecting such forecasts to the formal review and approval of Institution?s management should meet this objective. Also, the Institution shall coordinate and provide pertinent training to the finance personnel regarding the federal regulations related to the cash management requirements. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Federal programs: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) CFDA Number: 84.425E / 84.425F Federal award identification number: P425E205418 / P425F204999 Grant period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Material Weakness Compliance requirement: Other ? Policies and procedures requirements Condition and context When obtaining an understanding of the internal controls, policies, and procedures regarding the administration of federal programs, and grant term and conditions, we noted the following deficiencies: a. There is no written policy, nor the procedures designed and implemented by the Institution related to Cash Management were documented. The Institution opted to request the funds on a reimbursement basis. b. There were no written procedures for determining the allowability of costs in accordance with 2 CFR 200 subpart E of this part and the terms and conditions of the Federal award. c. After examination of the Institution procurement policy, we noted that the document was not signed by all members required from management and was not dated. Upon inquiry, we noted that the procurement policy was drafted and submitted to the Institution for review in February 2023. Therefore, no written policy and formal procedures were designed and implemented for the procurement transactions tested for the fiscal year ended July 31, 2022 and thereafter. Criteria 2 CFR 200.302 (b) (6) and (7) establish that the financial management system of each non-Federal entity must provide for the following: written procedures to implement the requirements of ? 200.305, and 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 200.303 establish that 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); (b) comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards; (c) evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards; (d) take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; and (e) take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. 2 CFR 200.318 (a) establishes that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) the non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices; (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award; (c) the non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award; (d) the application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal award. Cause The Institution?s federal programs received prior the fiscal year ended July 31, 2020 did not require the implementation of written procedures as mentioned in the condition and context section, except for Cash Management policies and procedures for the Student Financial Assistance Programs Cluster for which the Institution has designed and implemented written procedures for such compliance requirement. The Covid-19 pandemic related programs were the reason why this new federal program funds were received, and the entity failed to design and implement on a timely basis the required written documentation and procedures. Effect Noncompliance with the above-mentioned requirement could lead to administrative sanctions by the grantor, including disallowance of costs. It could also be interpreted as a failure to achieve the program?s objectives. Questioned costs None. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to implement written policies and procedures needed for the administration of federal grants before the acceptance of new grants. Having well sounded policies and procedures will reduce the Institution risk of non-compliance with federal regulations and grants terms and conditions. Also, they will provide guidance to the Institution?s personnel on how to carry-out their responsibilities and functions in relation to the administration of federal programs transactions. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Significant Deficiency Compliance requirement: Cash Management Condition and context In testing compliance and internal controls over cash management, we selected a sample of four (4) drawdowns which amounted to $342,787 of the total HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our test, we noted that in one (25%) of the four (4) drawdowns selected, for three payments made by the Institution the time elapsed between the receipt of funds and the check issuance was between 20 to 48 days. The total amount disbursed after the three elapsed days requirement was $4,020 from a drawdown total of $56,065. Criteria 2 CFR 200.302 (b) (6) requires written procedures to implement the requirements of 200.305. 2 CFR 200.305 (b) and (b) (1) establish that for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. See also 200.302(b)(6). Except as noted elsewhere in this part, Federal agencies must require recipients to use only OMB-approved, governmentwide information collection requests to request payment. The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Cause The Institution did not design and implemented internal controls and procedures for this compliance requirement, including written policies and procedures. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to design and implement written internal controls and procedures for the administration of federal funds requests in accordance with the requirements of grant agreements and 2 CFR 200. Internal controls and procedures must consider maintaining adequate documentation to support the petitions of funds and to maintain the audit trail of the payments that will be issued. The Institution shall request only the amount of funds necessary to meet its immediate cash needs to prevent excess cash balances. Whenever payment amounts are adjusted after the funds were requested or received, such excess cash should be returned to the federal agency immediately. Establishing reliable and thorough cash forecasting procedures and subjecting such forecasts to the formal review and approval of Institution?s management should meet this objective. Also, the Institution shall coordinate and provide pertinent training to the finance personnel regarding the federal regulations related to the cash management requirements. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Criteria 2 CFR Part 200.305 The non-Federal entity may be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity. There is also a need to maintain a financial management system that meets the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition Higher Education Institutional Aid From a sample of twenty-five disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified five instances in which the time elapsed exceeded what we understand is a reasonable time. For these five instances, the time elapsed ranged between eight days and two-hundred and twenty-three days since the transfer of funds. Higher Education Emergency Relief Fund From a sample of one hundred and one disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified thirty instances in which the time elapsed exceeded what we understand is a reasonable time. For these thirty instances, the time elapsed ranged between seven days and two-hundred and eighty-five days since the transfer of funds was received. Cause The University requested the funds for the complete contract instead of requesting the funds when invoices were received. Although the University has written cash management procedures, they lack clear procedures to ascertain the timely disbursements of project liabilities after federal funds have been drawn down. Effect or Potential Effect If a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, such as requiring payments as reimbursements rather than as advances. Questioned Cost None Identification as a Repeated Finding Refer to Item No. 2021-003 in the Summary of Prior Year Audit Findings. Recommendation We recommend the University follow its cash management policies under Section 7.2 Drawdown of its External Funds Administration Policy and Procedures Manual by limiting their requests for the invoices received for payment and ascertaining payments are released one or two business days after the funds have been drawn. The University could process all disbursements before drawing down the federal funds; hence, once funds appear in the bank account, it is a matter of stamping the envelopes and mailing the checks. Views of Responsible Officials Refer to Unaudited Corrective Action Plan.
Criteria 2 CFR Part 200.305 The non-Federal entity may be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity. There is also a need to maintain a financial management system that meets the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition Higher Education Institutional Aid From a sample of twenty-five disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified five instances in which the time elapsed exceeded what we understand is a reasonable time. For these five instances, the time elapsed ranged between eight days and two-hundred and twenty-three days since the transfer of funds. Higher Education Emergency Relief Fund From a sample of one hundred and one disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified thirty instances in which the time elapsed exceeded what we understand is a reasonable time. For these thirty instances, the time elapsed ranged between seven days and two-hundred and eighty-five days since the transfer of funds was received. Cause The University requested the funds for the complete contract instead of requesting the funds when invoices were received. Although the University has written cash management procedures, they lack clear procedures to ascertain the timely disbursements of project liabilities after federal funds have been drawn down. Effect or Potential Effect If a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, such as requiring payments as reimbursements rather than as advances. Questioned Cost None Identification as a Repeated Finding Refer to Item No. 2021-003 in the Summary of Prior Year Audit Findings. Recommendation We recommend the University follow its cash management policies under Section 7.2 Drawdown of its External Funds Administration Policy and Procedures Manual by limiting their requests for the invoices received for payment and ascertaining payments are released one or two business days after the funds have been drawn. The University could process all disbursements before drawing down the federal funds; hence, once funds appear in the bank account, it is a matter of stamping the envelopes and mailing the checks. Views of Responsible Officials Refer to Unaudited Corrective Action Plan.