Condition: During our audit, we noted the Agency did not comply with the cash management requirements for federal awards. Specifically, the Agency drew down federal funds in advance of immediate cash needs, resulting in excess cash balances being held for extended periods. Criteria: Under 2 CFR Part 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes. Funds should be drawn down only as needed to meet immediate cash requirements. Cause: The Agency made periodic draws of federal awards without ensuring such draws were for immediate cash needs. Effect: Holding excess federal funds for extended periods can result in non-compliance with federal regulations, and could potentially increase the risk of mismanagement or misuse of funds. Recommendation: We recommend the Agency revise federal award cash draw procedures to ensure compliance with cash management requirements. Such draws should be made solely for immediate cash needs. Management Response: Management agrees with this finding and has begun implementing corrective actions. Such actions include implementing a process whereby federal draws are based on upcoming cash needs rather than periodic draws.
2024-001: CASH MANAGEMENT Type: Considered a significant deficiency in internal control over compliance/immaterial noncompliance Program: ALN 93.788 Opioid STR; grant number H79TI085750 ALN 93.959 Block Grants for Prevention and Treatment of Substance Abuse (SUD Block Grant); grant number B08TI085813 Criteria: As detailed by 2 CFR 200.305(b), “For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means.” Condition: During testing, it was noted that cash was requested prior to disbursement of funds by a month or more. Cause/Effect: This condition appears to be the result of a misunderstanding of the cash management requirements by management. Questioned Cost: Immaterial Recommendation: We recommend that the CMHSP review its methods to ensure that cash requests are made for expenditures for which disbursement has been made.
2024-001: CASH MANAGEMENT Type: Considered a significant deficiency in internal control over compliance/immaterial noncompliance Program: ALN 93.788 Opioid STR; grant number H79TI085750 ALN 93.959 Block Grants for Prevention and Treatment of Substance Abuse (SUD Block Grant); grant number B08TI085813 Criteria: As detailed by 2 CFR 200.305(b), “For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means.” Condition: During testing, it was noted that cash was requested prior to disbursement of funds by a month or more. Cause/Effect: This condition appears to be the result of a misunderstanding of the cash management requirements by management. Questioned Cost: Immaterial Recommendation: We recommend that the CMHSP review its methods to ensure that cash requests are made for expenditures for which disbursement has been made.
Item: 2024-001 Assistance Listing Number: 93.243 Program: Substance Abuse and Mental Health Services, Projects of Regional and National Significance Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Contract Number: 5H79TI082775-02 Award Year: 9/30/2023 – 9/29/2024 Compliance Requirement: Cash Management, Reporting Criteria: Per 2 CFR 200.305, under the reimbursement method, expenditures must be incurred prior to the date of the reimbursement request. The Organization is also responsible for submitting an annual Federal Financial Report (“FFR” or SF-425) to the U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration. Condition: The Organization erroneously included a duplicate request for reimbursement in a monthly reimbursement request report submitted to the granting agency and was overpaid by the amount of this duplicate request for reimbursement totaling $41,042. Additionally, the total expenditures reported in the FFR/SF-425 were misstated by $23,058. Questioned Costs: $41,042 Context: In our testing of the annual FFR/SF-425, we noted that the total expenditures reported did not agree to the expenditures reported on the Schedule of Expenditures of Federal Awards by $23,058. Upon further investigation and review of each monthly request for reimbursement submitted for fiscal 2024, we noted a duplicate reimbursement request totaling $41,042. Additionally, we noted that $17,984 representing an expense accrual at September 30, 2024, while properly reflected on the Schedule of Expenditures of Federal Awards, was not properly included in the detail of expenditures noted in the FFR/SF-425 for fiscal 2024. As a result, the FFR/SF-425 misreported expenditures by $23,058, the net of the two errors noted above. Effect: The duplicate federal draw request resulted in a duplicate payment from the grantor. Thus, the Organization has drawn federal funds in excess of the federal expenditures incurred totaling $41,042, which is reported as a questioned cost as the overpayment is due back to the granting agency. Additionally, the expenditures reported on the FFR/SF-425 for fiscal 2024 were misstated by $23,058. This is deemed to be a material weakness in internal control over compliance. Cause: Review and approval controls of the monthly reimbursement request and the annual FFR/SF-425 report were not operating effectively. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should ensure monthly requests for reimbursement and reviewed and approved prior to submission. Additionally, the annual FFR/SF-425 should be reviewed and reconciled to the monthly draws. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Reportable Finding Considered a Material Weakness – Lack of Supporting Documentation for Cash Draws Program Name: Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhood Assistance listing #: 84.215K Program year: 2024 Federal Awarding Agency: Department of Education Compliance requirement: Cash Management Criteria: According to 2 CFR 200.305(b)(4) – If the recipient or subrecipient cannot meet the criteria for advance payments, an advance payment for an initial period may be made, however, after that, the Federal agency or pass-through entity must reimburse the recipient or subrecipient for its actual cash disbursements. In addition, per 2 CFR 200.305(b)(9), the recipient or subrecipient must be able to account for all Federal funds received, obligated, and expended. Condition: During our testing of cash draws, it was noted that the reimbursement requests submitted for this award were not based on actual cash disbursements, lacked adequate documentation with no internal support retained that showed internal review and approval for the cash draws. Cause: Policies and internal controls over draw requests were not in place during the year, due in part to turnover in the positions that were in charge of approvals. Effect: The requests for reimbursement were not in line with actual expenses incurred during the draw period. Questioned costs: There are no questioned costs related to this finding. Repeat finding: This is not a repeat finding. Recommendation: We recommend that the Organization update their policies and procedures surrounding cash management to ensure that funds are drawn on a reimbursement basis, supported by actual expenditures incurred. Views of Responsible Officials and Corrective Action Plan (unaudited): See corrective action plan.
Finding 2024-001 Significant deficiency in internal controls over compliance and instances of noncompliance with cash management for subrecipients. Federal Agency: National Science Foundation Assistance Listing Number: 47.050 Assistance Listing Name: Geosciences Award Number: 2208081 Award Year: October 1, 2023 through September 30, 2024 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards section 200.305(b)(3) requires that when the reimbursement method is used, the pass-through entity must make payment within 30-calendar days after receipt of the payment request unless the pass-through entity reasonably believes the request to be improper. Condition/Context for Evaluation During our testing, we noted that the Institute paid three subrecipient invoices beyond the 30-calendar day standard. The sample size was six selections. These subrecipients were under the reimbursement method for payment. Cause The Institute does not have an adequate system of internal control to ensure payments to subrecipients are disbursed within 30-calendar days after receiving the subrecipient’s request for reimbursement. Effect or Potential Effect The Institute is not in compliance with the requirements of 2 CFR section 200.305(b)(3). Payments to subrecipients were not made timely and exceed the 30-calendar day standard. Questioned Costs Not applicable. Repeat Finding This is not a repeat finding. Recommendation We recommend management update its system of internal controls to add processes in place that ensure payments to subrecipients are paid within 30 days after receipt of reimbursement request from the subrecipient. Views of Responsible Officials and Correct Action Management concurs with the finding and has provided the accompanying corrective action plan.
Finding 2024-001 Lack of Internal Controls over Cash Management Federal Agency: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Numbers: 21.027 Award Number: SLFRP3171/4774 Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $8,470,564 at September 30, 2024. The unearned revenues were $8,727,660 which resulted in a shortfall of $257,096. The unearned revenue for the CSLFRF Program (ARPA Special Revenue Fund) was $269,930. Cause: Lack of internal controls over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village. Questioned Costs: $257,096, which is the shortfall between cash and cash equivalent balance and the unearned revenue balance. Repeat Finding: This is a repeat of Finding 2023-001, and since this is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments.
Finding 2024-001: Significant Deficiency and known questioned costs related to activities allowed or unallowed and allowable costs/cost principles Major Program: HOME Investment Partnership Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.239 Criteria: The City is responsible for ensuring compliance with all applicable provisions of the HOME Investment Partnerships Program (HOME) as prescribed by the U.S. Department of Housing and Urban Development. According to requirements included in the OMB Compliance Supplement, all HOME Funds may be used by participating jurisdictions to provide for: (a) incentives to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or rehabilitation of non-luxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; (b) tenant-based rental assistance, including security deposits; (c) the payment of reasonable administrative and planning costs; and (d) the payment of operating expenses of Community Housing Development Organizations (CHDOs). The housing must be permanent or transitional. The acquisition of vacant land or demolition can only be undertaken with respect to a particular housing project intended to provide affordable housing, and when construction is expected to begin within 12 months. Conversion of an existing structure to affordable housing is rehabilitation unless certain circumstances exist. Manufactured housing may be purchased or rehabilitated and the land upon which it is built may be purchased with HOME funds. HOME funds may be used to pay for development construction hard costs, refinancing costs, acquisition costs, related soft costs, CHDO costs, relocation costs, and costs related to the repayment of loans (24 CFR sections 92.205(a) and 92.206).” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition and Context: During testing of HOME activities allowed or unallowed and allowable costs/cost principles (AB) compliance requirements, it was noted that one (1) out of thirty-nine (39) disbursement transactions reviewed did not meet the AB compliance requirements. 2 CFR 200.305(b)(8) states that “a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work.” The City requested reimbursement for retainage amounts that were not released as of September 30, 2024. Cause: The City had turnover in the project manager department related to HOME construction projects. The project manager turnover caused a miscommunication between the project managers and grant accounting employees which resulted in the request for reimbursement of retainage that had not yet been paid by the City. Effect or Potential Effect: The City received grant reimbursements related to expenditures that were not paid as of September 30, 2025. Known Questioned Costs: $112,539 from October 1st, 2023 through September 30th, 2024. These are for all projects that retainage was requested for reimbursement but the retainage was not released as of September 30, 2024. Repeat Finding: No Recommendation: We recommend the City continue to train its employees to on allowable activities and costs related to the HOME grant. View of Responsible Officials: See Corrective Action Plan on page 10
No written procedures for advance receipt of federal award payments Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Alabama Department of Environmental Management Contract Number and Year: FS-10269-02 and CS010896-01 2023 Finding Type: Significant Deficiency Known Questioned Costs: None Criteria – 2 CFR Section 200.303(a) requires nonfederal entities receiving federal awards to establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR 200.305 Federal Payment requires nonfederal entities to establish written procedures to implement the requirements of cash management of federal funding. Condition – The Organization received federal funds prior to paying contractors and had no written procedures in place for appropriately handling those funds. Cause – The Organization has not developed or implemented written procedures for appropriately handling advance federal funds. Effect – Possible noncompliance with requirements of the program. Recommendation – The Organization should develop, implement and comply with written procedures to meet the requirements of 2 CFR Section 200.303(a) and 2 CFR 200.305 Federal Payment. Views of responsible officials – The Mayor has implemented policies to no longer hold contractor invoices until ARPA funding is received but will follow the reimbursement guidelines per the grant agreements.
No written procedures for advance receipt of federal award payments Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Alabama Department of Environmental Management Contract Number and Year: FS-10269-02 and CS010896-01 2023 Finding Type: Significant Deficiency Known Questioned Costs: None Criteria – 2 CFR Section 200.303(a) requires nonfederal entities receiving federal awards to establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR 200.305 Federal Payment requires nonfederal entities to establish written procedures to implement the requirements of cash management of federal funding. Condition – The Organization received federal funds prior to paying contractors and had no written procedures in place for appropriately handling those funds. Cause – The Organization has not developed or implemented written procedures for appropriately handling advance federal funds. Effect – Possible noncompliance with requirements of the program. Recommendation – The Organization should develop, implement and comply with written procedures to meet the requirements of 2 CFR Section 200.303(a) and 2 CFR 200.305 Federal Payment. Views of responsible officials – The Mayor has implemented policies to no longer hold contractor invoices until ARPA funding is received but will follow the reimbursement guidelines per the grant agreements.
Housing Voucher Cluster Condition: During the audit of the Authority, it was noted that federal funds were inappropriately loaned to affiliated entities without proper authorization or adherence to federal cash management requirements. Specifically, the entity disbursed $43,533 in federal funds to the Housing Authority of Florence under the guise of a temporary loan, which was not supported by a formal agreement, lacked board approval, and was not repaid within the fiscal year. Criteria: According to 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds. The OMB Compliance Supplement further clarifies that program costs must be paid by non-federal entity funds before submitting a payment request, and that advance payments must be limited to immediate cash needs. Cause: The entity lacked adequate internal controls to prevent the unauthorized use of federal funds for non-programmatic purposes. There was no formal cash management policy in place to govern inter-entity transactions or to ensure compliance with federal requirements. Effect: The use of federal funds as a loan to an affiliate exposed the entity to potential noncompliance with federal regulations, risked the misappropriation of funds, and may result in questioned costs subject to repayment. Questioned Costs: $43,533Recommendation: We recommend that the entity immediately cease the practice of loaning federal funds to affiliates, implement a formal cash management policy that includes controls over disbursements and inter-entity transactions and rain finance personnel on federal cash management requirements. Management Response: Today’s Marlboro County Housing Authority management concurs with the auditor’s finding that federal funds were disbursed to an affiliated entity without proper authorization, documentation, or compliance with federal cash management requirements. The Authority acknowledges that this disbursement represented a lapse in internal controls and was not consistent with the requirements outlined in 2 CFR §200.305(b). During the fiscal year ended September 30, 2024, the Authority also had a payable to the same affiliate in its Public Housing Program totaling $37,658. During the current 2024-2025 fiscal year, the Authority reimbursed its HCV program the amount loaned from its HCV program by the funds owed to the affiliate in its Public Housing Program. Today’s Marlboro County Housing Authority currently has an amount of $2,015 due to its affiliate as of May 31, 2025.
Assistance Listing, Federal Agency, and Program Name 97.039, Hazard Mitigation Grant Program Federal Award Identification Number and Year 4394-31, 2024 Pass through Entity South Carolina Emergency Management Division Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria In accordance with 2 CFR section 200.302(b)(6), all non federal entities must establish written procedures to implement the cash management requirements of 2 CFR section 200.305. Condition The Organization did not have a formal cash management policy in place for the period under audit. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context After discussion with management, it was identified that the organization does not maintain a formal cash management policy. Cause and Effect There is not an established control to ensure that a written policy is in place. Because there is no written policy, the Organization is not in compliance with 2 CFR 200.302(b)(6). Recommendation We recommend that the Organization implement a formal cash management policy and that controls are implemented to ensure that it is maintained and updated, as necessary. Views of Responsible Officials and Planned Corrective Actions The Organization implemented a Federal Awards Administration Policy which includes a formal cash management policy in February 2025.
Finding Number: 2024-029 Prior Year Finding Number: N/A Compliance Requirement: Cash Management Program: U.S. Department of Health and Human Services Opioid STR ALN: 93.788 Award #: Various Award Year: 09/30/2020 – 09/29/2024 Government Department/Agency: Department of Behavioral Health (DBH) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. When entities are funded on a reimbursement basis, program costs must be incurred prior to the date of the reimbursement request (2 CFR Section 200.305(b)(3)). US Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing (Catalog of federal Domestic Assistance) that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a Treasury-State Agreement are subject to procedures prescribed by Treasury in Subpart B of 31 CFR Part 205 (Subpart B), which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. Condition – During our testing of individual draws of federal funds, we noted that for one (1) sample selected and tested, the review of drawdown was made after it has been requested. Questioned Costs – Not determinable. Context – This is a condition identified per review of DBH’s compliance with specified requirements using a statistically valid sample. The sample drawdown, which is related to expenditures incurred during fiscal year 2024, was requested on December 24, 2024 but the review of the drawdown request did not happen until January 28, 2025. The total drawdown selected for testing amounted to $19,381,854. Effect – DBH is not in compliance with cash management requirements. Failure to timely review cash draw requests could result in cash draws that do not accurately reflect eligible program costs. Cause – DBH did not appear to adhere to internal control procedures to ensure the timely review of cash draws. Recommendation – We recommend DBH evaluate its existing cash management control procedures and ensure all federal draw requests are reviewed timely. We also recommend DBH establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – DBH concurs with the finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Unsupported MTW Capital Fund Program (CFP) Drawdowns Funds (ALN 14.881) Condition: During testing of the Moving to Work Demonstration Program - Capital Fund Program, we selected a sample of eight eLOCCS drawdown vouchers for review. Of these, the Authority was unable to provide sufficient supporting documentation to substantiate the eligibility, timing, or purpose of the drawdowns for two vouchers. In addition, for one voucher, the Authority did not provide evidence of immediate obligations or expenditures to support the drawdown, indicating a potential violation of the federal “just-in-time” funding requirement. Criteria: Under 2 CFR §200.302(b)(3) and §200.305(b), non-Federal entities must maintain adequate documentation to support all federal fund drawdowns and ensure that funds are drawn only when needed for immediate disbursement. Additionally, under the Moving to Work Demonstration Program (ALN 14.881), participating agencies must adhere to the terms of their HUD-approved MTW Agreement, which incorporates applicable requirements of the Uniform Guidance, including principles of financial management and internal control. MTW agencies must ensure that drawdowns are supported by actual, timely obligations and expenditures, and must maintain records sufficient to permit the tracing of funds to a level that ensures proper use in accordance with MTW statutory purposes and HUD requirements. Cause: The Authority lacked sufficient internal controls to ensure that drawdowns were properly documented at the time of request and reimbursement requests aligned with immediate, allowable expenditures. Effect: The drawdowns associated with the two unsupported vouchers are considered potentially unallowable, and the improperly timed drawdown may be noncompliant with federal cash management standards, increasing the risk of recapture, repayment, or audit findings. Questioned Costs: $1,501,783 Recommendation: The Authority should establish or strengthen internal procedures to ensure all drawdown requests are tied to documented and eligible obligations and align with HUD’s “just-in-time” funding policy. Additionally, the Authority should train staff on federal documentation and cash management requirements under 2 CFR Part 200 and HUD guidance. Reply and Corrective Action Plan: To address documentation gaps and timing issues in MTW Capital Fund drawdowns, the Authority will implement a process requiring that all drawdown requests be accompanied by complete supporting documentation. Each request will be reviewed for eligibility and compliance with “just-in-time” funding requirements prior to approval by the Executive Director.
Incomplete Support for Capital Fund Program (CFP) Drawdown Sample (ALN 14.872) Condition: As part of the testing of the Capital Fund Program (CFP) major program, a sample of six drawdown vouchers was selected for review. The Public Housing Authority (Authority) was unable to provide adequate supporting documentation for one voucher in the sample. The missing documentation prevented verification of the eligibility, timing, and allowability of the associated expenditures. Criteria: Under 2 CFR §200.302(b)(3) and §200.305(b), recipients of federal awards must maintain financial records that identify the source and application of federal funds and ensure that all drawdowns are based on actual, allowable, and allocable costs. HUD also requires that all drawdown activity be supported by sufficient records to allow for audit and monitoring review. Cause: The Authority did not have sufficient internal controls or procedures in place to ensure complete documentation was retained and made available for all drawdowns under the CFP program. Effect: The unsupported drawdown identified in the sample raises concerns about the reliability of the Authority’s internal controls over the Capital Fund Program (CFP) drawdown process, may indicate a broader risk of noncompliance affecting the allowability of other drawdowns, and increases the risk of repayment, audit findings, and potential program sanctions due to inadequate supporting documentation. Questioned Costs: $299,305 Recommendation: The Authority should strengthen internal control procedures to ensure all Capital Fund Program (CFP) drawdowns are fully supported and audit-ready, and provide staff training on federal documentation and record retention requirements under 2 CFR Part 200 and applicable HUD guidance. Reply and Corrective Action Plan: The Authority will implement a process to ensure that all Capital Fund Program drawdown requests are supported by documentation that verifies eligibility, timing, and allowability. This includes a review step to confirm completeness before submission.
Unsupported and Improper Timing of MTW Capital Fund Program (CFP) Drawdowns (ALN 14.881) Condition: During testing of the Moving to Work Demonstration Program - Capital Fund Program, we selected a sample of eight eLOCCS drawdown vouchers for review. Of these, the Authority was unable to provide sufficient supporting documentation to substantiate the eligibility, timing, or purpose of the drawdowns for four vouchers. For another voucher, the Authority could only partially support the amount drawn. These issues reflect a lack of adequate documentation necessary to substantiate the allowability and propriety of the expenditures charged to the CFP grants. Criteria: Under 2 CFR §200.302(b)(3) and §200.305(b), non-Federal entities must maintain adequate documentation to support all federal fund drawdowns and ensure that funds are drawn only when needed for immediate disbursement. Additionally, under the Moving to Work Demonstration Program (ALN 14.881), participating agencies must adhere to the terms of their HUD-approved MTW Agreement, which incorporates applicable requirements of the Uniform Guidance, including principles of financial management and internal control. MTW agencies must ensure that drawdowns are supported by actual, timely obligations and expenditures, and must maintain records sufficient to permit the tracing of funds to a level that ensures proper use in accordance with MTW statutory purposes and HUD requirements. Cause: The Authority lacked sufficient internal controls to ensure that drawdowns were properly documented at the time of request and reimbursement requests aligned with immediate, allowable expenditures. Effect: The lack of supporting documentation for certain voucher draws impairs the audit team's ability to verify the allowability and propriety of the expenditures. This may result in questioned costs, findings of noncompliance with federal requirements, and potential recovery actions by HUD Questioned Costs: $332,356 Recommendation: The Authority should enhance its internal controls to ensure all voucher draws are fully supported by appropriate documentation, reconciled to actual expenditures, retained in compliance with federal recordkeeping requirements, and that unsupported draws are reviewed for potential corrective actions, including reimbursement to HUD if warranted. Reply and Corrective Action Plan: The Authority will implement a process requiring that all MTW Capital Fund drawdown requests be accompanied by complete supporting documentation. Each request will be reviewed for eligibility and compliance with “just-in-time” funding requirements prior to approval by the Executive Director.
Condition: Out of the 72 grant drawdowns during the year, 24 drawdowns were tested and it was noted that 1 of the drawdowns was made in advance of the supporting invoices being paid to the vendors and subsequently the invoices were not paid within the 72-hours, as required. Context: The auditor haphazardly selected 24 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Agency is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Authority to be properly spent within 72 hours of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Agency experienced staff turnover in the finance department as well as difficulty replacing personnel knowledgeable with HUD and grant reporting requirements. Effect: The Agency did not disburse the capital funds in a timely manner for one of the draws made during the year. Questioned Costs: $40,500 Auditor’s Recommendations: The Agency should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan
Finding 2024-004 – Cash Collateralization (Repeat Finding 2023-003) Criteria: Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Coalition’s cash, it was noted that as of September 30, 2024, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $7,596,383 were uninsured at September 30, 2024. Unearned revenue was reported at approximately $4,434,584 which includes advance payments of Federal funds. Questioned Costs: None Cause: The Coalition has not entered into a cash collateralization agreement with their financial institution. Effect: The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Coalition enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2024-004 – Cash Collateralization (Repeat Finding 2023-003) Criteria: Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible. Condition: During our review of the Coalition’s cash, it was noted that as of September 30, 2024, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $7,596,383 were uninsured at September 30, 2024. Unearned revenue was reported at approximately $4,434,584 which includes advance payments of Federal funds. Questioned Costs: None Cause: The Coalition has not entered into a cash collateralization agreement with their financial institution. Effect: The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure. Recommendation: We recommend the Coalition enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure. Views of Responsible Officials: See the corrective action plan that accompanies the schedule of findings and questioned costs.
Finding 2024-003: Unsupported Payroll Charges and Improper Drawdown of Federal Funds Compliance Requirements: Allowable Costs/Cost Principles; Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services (Centers for Disease Control and Prevention) AL Numbers and Titles: 93.809 – National Organizations for Chronic Disease Prevention and Health Promotion Federal Award Number: NU58DP007562 Questioned Costs: $423,094 Repeat Finding: No Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to a federal award must be necessary, reasonable, and allocable, and must conform to the terms and conditions of the award. Per 2 CFR §200.430(i), charges for salaries and wages must be supported by records that accurately reflect the work performed and be supported by a system of internal control. Furthermore, 2 CFR §200.305(b) requires that non-federal entities minimize the time between federal fund drawdown and disbursement, and limits advances to amounts needed for the immediate cash requirements of the program. Condition: During our testing of payroll-related transactions charged to the 93.809 federal program, we identified a significant reallocation of personnel costs from unrestricted funds to the federal grant that occurred late in the audit period. These charges related to multiple employees whose compensation was not included in the originally approved budget for the federal program. At the time of our testing, no formal budget revision had been submitted to the awarding agency, and the names of these staff had not been recorded in the federal grant reporting system as required by the award terms. Additionally, the auditee was unable to provide any documentation, such as certifications, labor distribution reports, calendars, or other records, to support that these employees worked on activities allocable to the federal program. We further noted that the auditee drew down federal funds prior to the recording of these payroll charges, at a time when the costs in question had neither been incurred nor documented. This resulted in federal funds being drawn in advance of need, contrary to federal cash management requirements. Cause: The auditee did not have adequate internal controls to ensure that only appropriately budgeted and documented payroll costs were charged to the federal award. In addition, the organization lacked procedures to confirm that federal funds were drawn only for costs that were allowable, incurred, and supported at the time of drawdown. These weaknesses allowed significant payroll reallocations to be processed retroactively without timely budget amendments or sufficient documentation of allocability. Effect: As a result of these control deficiencies, a total of $423,094 in personnel-related costs, including direct salaries, fringe benefits, and associated indirect costs, was charged to the federal program without appropriate budget authorization or time and effort support. These unsupported costs were also used as the basis for a drawdown of federal funds that occurred before the expenditures were recorded or substantiated. This resulted in noncompliance with both cost principles and cash management requirements and exposes the auditee to potential disallowance or repayment of federal funds. Recommendation: We recommend that the auditee enhance internal controls related to grant budgeting, payroll allocations, and cash management. These controls should ensure that payroll costs charged to federal awards are included in the approved budget or are formally revised and submitted to the grantor, are supported by accurate time and effort documentation, and that federal funds are drawn only when actual, allowable costs have been incurred and documented. We further recommend that the auditee consult with the awarding agency to determine whether any retroactive budget revision or corrective action is available or whether repayment of questioned costs will be required. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
Finding 2024-002: Overdrawn Federal Funding Compliance Requirements: Cash Management; Reporting Type: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: Corporation for National and Community Service AL Numbers and Titles: 94.006 – AmeriCorps National Federal Award Number: 22NDHGA003 Questioned Costs: $748,053 Repeat Finding: No Criteria: Under 2 CFR § 200.305(b), federal funds must be drawn only as needed to meet the immediate cash requirements of the program. Recipients must minimize the time between the transfer of funds and disbursement. Per 2 CFR § 200.516(c), the auditor must report known questioned costs greater than $25,000 for a federal program, even if the program is not audited as a major program. Condition: As of September 30, 2024, NACDD has overdrawn a total of $748,053 in excess of expenditures to date in federal funds under the AmeriCorps grant. The overdrawn amount remained outstanding at year-end and had not been repaid or offset by additional allowable expenditures as of the date of this report. Cause: The overdrawn funds were caused by a failure in internal processes for reconciling drawdowns to actual expenditures. The drawdown analysis file used to request funds was corrupted, and no compensating control was in place to detect or prevent overdraws. Furthermore, NACDD did not implement timely corrective action after identifying the issue, and their internal control processes did not ensure compliance with federal cash management regulations. Additionally, Federal Financial Reports (FFRs) submitted by the organization did not accurately reflect actual allowable expenditures, and overstated cumulative grant activity. There was no timely reconciliation between the organization’s accounting records and amounts reported to the granting agency, as required. Effect: NACDD is in violation of federal cash management requirements, having drawn down $748,053 more in federal funds than expended as of year-end. This represents questioned costs and could result in a requirement to return funds to the granting agency. This issue exposes the organization to noncompliance risk and potential findings by federal oversight agencies. Additionally, incorrect reporting on the FFRs may have misled the grantor regarding the organization’s use of federal funds and the timing of expenditures. This constitutes a noncompliance with the Reporting requirement under 2 CFR 200.327–328, and calls into question the accuracy and completeness of required grantor submissions. Recommendation: We recommend that NACDD take immediate steps to address the overdrawn federal funds of $748,053 related to AmeriCorps grant by either remitting the excess to the granting agency or applying eligible FY25 expenditures, if allowable. To prevent recurrence, NACDD should implement formal monthly reconciliation procedures to ensure that all federal drawdowns are fully supported by actual expenditures recorded in the general ledger. Additionally, internal controls over financial reporting should be strengthened to ensure that amounts reported on the Federal Financial Reports (FFRs) and AmeriCorps’ eGrants system are accurate and agree to supporting records. Staff responsible for grant compliance should receive training on Uniform Guidance requirements, particularly those related to allowable costs, cash management, and reporting. Finally, NACDD should conduct a retrospective review of prior reports submitted to AmeriCorps for this project to assess whether corrections or disclosures are necessary and notify the grantor as appropriate. Views of Responsible Officials Corrective Actions: Management agrees with this finding. Please refer to the Corrective Action Plan.
Criteria - Title 2 CFR 200.305 of the Uniform Guidance requires that program costs be paid with recipient or subrecipient funds before requesting reimbursement from the federal government or pass-through entity. When awards provide for advance payments, recipients must follow procedures to minimize the time between drawdown of funds from the U.S. Treasury and expenditure of funds by the recipient or subrecipient. Condition - During the audit for the year ended September 30, 2024, we noted three instances of reimbursements requested from the pass-through entity for expenditures that were not paid prior to the request. The School subsequently made payments to the vendors in August 2025. Cause - Funds were requested to reimburse for School expenditures that were not paid to vendors. Questioned costs - $7,180. Effect - The School did not minimize the time between the drawdown of funds and the disbursement of funds to the vendors. Recommendation - We recommend that the School should implement adequate policies and procedures to ensure requests for drawdowns are reimbursements of program expenditures and, when the drawdown is an advance payment, the time period between the drawdown of funds and the use of the funds is minimized. Management response - See corrective action plan provided by the Head of School.
Condition: The Organization’s expenditure reports filed with the grantor for the cost reimbursement-based grant were overstated, and the Organization was overpaid by $182,167, of which $26,730 was received after year-end. The overpayment has not yet been refunded back to the grantor, over a year after the performance period of the grant had ended. Criteria: The Organization did not comply with 2 CFR 200.302 and 2 CFR 200.305 of the Uniform Guidance and the terms of the grant for the major program tested. Expenditure reports are required to be accurate and supported by the Organization’s financial management system, books, and records. The time between receipt of funds by the Organization and disbursement of funds by the Organization is required to be minimized. The grant agreement establishes that payments received in excess of qualifying expenditures occurred must be returned back to the grantor. Cause: The expenditure reports filed were based on estimates that later changed once more information was available. There was a weakness in controls involving the reconciliation of expenditure reports filed to the Organization’s financial management system, books, and records. Effect: The Organization was overpaid by $182,167. Recommendation: The Organization should coordinate with the grantor the return of the unspent funds. The Organization should reevaluate its grant expenditure reporting procedures to better mitigate the risk of inaccurate filing and improper reimbursement. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding. See the Corrective Action Plan.
Finding 2024-006: Cash Management Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Compliance Finding Criteria: Under 2 CFR § 200.303, organizations that receive Federal funding are required to “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). Under 2 CFR § 200.305(b)(3), when using the reimbursement method, entities should request payment as soon as possible after the costs are incurred to minimize the time between expenditure and Federal reimbursement. Condition: PFI does not have documentation of the review and approval of Federal cash drawdown requests prior to submission. During testing, we noted that drawdowns totaling $219,376 for ALN 81.113 and $188,631 for ALN 19.901 were processed without evidence of supervisory review. Additionally, we noted that PFI submitted a late cash drawdown request for Federal expenditures of $74,111 under ALN 81.113 that occurred during prior years but were newly identified and reimbursed during the year under audit. Cause: PFI has not implemented a formal review process for cash drawdowns. Furthermore, PFI lacks written procedures to ensure timely submission of reimbursement requests. Effect or Potential Effect: Lack of review increases the risk of drawing excessive funds, noncompliance with cash management requirements, and potential misuse of Federal funds. Delayed drawdowns resulted in PFI using non-Federal funds for an extended period of time, which may have impacted cash flow and program operations. Questioned Costs: None. Context: 4 out of 4 drawdown requests selected for testing under ALN 81.113 and 3 out of 3 drawdown requests selected for testing under ALN 19.901 did not have documented supervisory review and approval. 1 of 4 drawdown requests tested for ALN 81.113 was submitted late for expenditures that had occurred in prior fiscal years. The samples are representative of the population. Repeat Finding: Not applicable Recommendation: It is recommended that PFI establish and document a formal review and approval process for all cash drawdown requests, including maintaining evidence of supervisory approval. Furthermore, we recommend that PFI implement procedures to ensure reimbursement requests are submitted promptly after costs are incurred, ideally within 30 days.
Finding No.: 2024-010 Federal Agencies: U.S. Department of Agriculture U.S. Department of the Interior AL Programs: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children 15.875 Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $ Undeterminable Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. TSA also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205, which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. GovGuam entered into TSA effective October 1, 2023 through September 30, 2024. The funding technique indicated in the TSA Section 6.3.2 for the program is Payment Schedule – Weekly, wherein, GovGuam shall request funds such that they are deposited in a State account on the median business day of the week. The request shall be made in accordance with the appropriate Federal agency cut-off time. The amount of the request shall be a prorated share of the lesser of (1) the annual grant divided by 52, or (2) the total amount of Federal funds expected to be paid out for program purposes during the year divided by 52. This funding technique is interest neutral. Condition: For nine (or 100%) of nine items tested under ALN 10.557 and for eight (or 100%) of eight items tested under ALN 15.875, the Department of Administration (DOA) drew funds in a manner that was inconsistent with the funding technique indicated in TSA. Specifically, DOA requested funds after expenditures have been incurred or on “as needed” basis. Finding No.: 2024-010, continued Federal Agencies: U.S. Department of Agriculture U.S. Department of the Interior AL Programs: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children 15.875 Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $ Undeterminable Cause: DOA did not enforce compliance with the requirements of the TSA due to inefficiencies caused by data migration during the year. Effect: GovGuam is in noncompliance with the applicable cash management requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA should implement monitoring over compliance with the cash management requirements and enforce compliance with the TSA. Views of Responsible Officials: The Federal and Compliance section will establish a Standard Operating Procedure for draw downs. As well as, conducting drawdowns daily to minimize the time between the drawdowns of federal funds and the disbursement for federal program purposes.
Finding No.: 2024-033 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 Area: Cash Management Questioned Costs: $333,147 Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and by default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205. 31 CFR 205.12(b)(5) states that reimbursable funding means that a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes. Condition: ALN 66.600 is not covered by a TSA and Department of Administration (DOA) management represents that the program is funded on a reimbursement basis For two (or 40%) of five items, aggregating $433,893 of $3,129,853 in total cash drawdowns during the year, 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: See the Notes to the SEFA for chart/table. Finding No.: 2024-033, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 Area: Cash Management Questioned Costs: $333,147 Cause: DOA management did not respond to audit requests in a timely manner. Effect: We are unable to make selection of transactions necessary to provide us with sufficient appropriate audit evidence to support an opinion on compliance with cash management compliance requirements. The reportable questioned cost is $333,147 based on the item identified in Condition above. Recommendation: DOA management should establish internal policies and procedures over timely response to audit-related matters. Views of Responsible Officials: Request to DOA will require immediate collaboration between Guam EPA and DOA, as all Guam EPA reimbursement requests are accompanied by the FGIA balance report and, currently, the GFMIS expenditure reports.
Finding No.: 2024-036 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and by default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205. 31 CFR 205.12(b)(5) states that reimbursable funding means that a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes. Condition: ALN 93.323 is not covered by a TSA and Department of Administration (DOA) management represents that the program is funded on a reimbursement basis For fourteen (or 35%) of forty items tested, aggregating $182,079 of $4,540,455 in total cash drawdowns during the year, supporting documentations (e.g., timesheet, payroll register, vendor invoice, check payment) to ascertain whether the expenditures were incurred prior to the date of the reimbursement request were not provided. Finding No.: 2024-036, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Condition, continued: See the Notes to the SEFA for chart/table. Cause: DOA had limited staffing and resources during the review period that may have hindered the ability to obtain and compile documentation from DPHSS, resulting in incomplete submissions. Effect: GovGuam is in noncompliance with applicable cash management requirements. The reportable questioned cost is $113,143 based on the item identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable cash management requirements, specifically, ensuring all supporting documentation is on file. Finding No.: 2024-036, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Views of Responsible Officials: The Federal and Compliance section will establish a Standard Operating Procedure for drawdowns. As well as, conducting drawdowns daily to minimize the time between the drawdowns of federal funds and the disbursement for federal program purposes.
Finding No.: 2024-053 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Special Tests and Provisions – Project Accounting Questioned Costs: $ Undeterminable Criteria: In accordance with 44 CFR 206.205(b)(1), for large projects, the recipient shall make an accounting to the Regional Administrator of eligible costs for each approved large project. In submitting the accounting the recipient shall certify that reported costs were incurred in the performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, and that payments for that project have been made in accordance with 2 CFR 200.305. Each large project shall be submitted as soon as practicable after the subrecipient has completed the approved work and requested payment. Condition: Guam Homeland Security (GHS) did not provide a listing of ongoing and completed large projects during the audit period. Cause: Department of Administration (DOA) assigned GHS as the agency responsible for providing required audit documentation, however, GHS did not provide timely responses to the audit team’s requests. GHS could not identify the personnel responsible for compliance with applicable special tests and provision requirements. Effect: We are unable to verify compliance with the requirements for special tests and provisions – project accounting. Specifically, we are unable to ascertain if (1) for ongoing large projects, costs submitted for reimbursement were in compliance with the requirements for eligible work under the applicable Project; and (2) for completed large projects, entity’s files document the total costs as allowable costs and if the costs are for allowable activities under the applicable Project. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable special tests and provisions requirements. Also, GHS management should clearly identify department/ personnel responsible for program’s compliance. Finding No.: 2024-053, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Special Tests and Provisions – Project Accounting Questioned Costs: $ Undeterminable Views of responsible officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures in compliance with applicable special tests and provision requirements. GHS will also identify department personnel responsible.
Finding 2024-001 Lack of Internal Controls over Cash Management Federal Agency: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Numbers: 21.027 Award Number: SLFRP3171/4774 Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $8,470,564 at September 30, 2024. The unearned revenues were $8,727,660 which resulted in a shortfall of $257,096. The unearned revenue for the CSLFRF Program (ARPA Special Revenue Fund) was $269,930. Cause: Lack of internal controls over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village. Questioned Costs: $257,096, which is the shortfall between cash and cash equivalent balance and the unearned revenue balance. Repeat Finding: This is a repeat of Finding 2023-001, and since this is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments.
We identified a material weakness in internal control over compliance related to allowable / unallowable cost requirements for excess drawdowns beyond 8% rate for the REAP program. Criteria: Under 2 CFR 200.414, indirect costs are recovered by applying an approved indirect cost rate to the appropriate base, generally modified total direct costs (MTDC), rather than by drawing the budgeted indirect cost amount. Nonfederal entities must maintain effective control over and accountability for all funds and ensure they are used solely for authorized purposes (2 CFR 200.302). Federal funds are to be drawn only as needed to meet immediate cash requirements for the federal award, minimizing the time between transfer from the U.S. Treasury and disbursement by the Center (2 CFR 200.305). In addition, the Center’s written Indirect Cost Rate Policy requires that indirect costs be applied as a percentage of MTDC, defines the MTDC base (including and excluding specific cost categories), and assigns responsibilities to finance and compliance personnel for ensuring proper calculation, monitoring, documentation, and reporting of indirect costs on federal awards. The policy also requires ongoing monitoring of the correct application of the indirect cost rate to MTDC and retention of supporting documentation for audit and review. Condition: For the Year 1 period of performance under the REAP award, the Center drew down the entire indirect cost budget of $625,013 included in the $8,437,681 Grant Award Notification (GAN), rather than limiting indirect cost draws to the amount calculated by applying the approved 8 percent indirect cost rate to the actual MTDC base. Total expenditures drawn for the period were $6,489,490, which included the full $625,013 of indirect costs. Some drawdowns applied the 8 percent rate to the MTDC base, while other drawdowns exceeded the amount supportable by the rate in order to reach the full budgeted indirect cost. Although the Center has an Indirect Cost Rate Policy that describes how the indirect cost rate is to be applied to MTDC and requires monitoring of the correct application of the rate, the procedures described in that policy were not effectively implemented or followed for this award.There is also an element in which training stipends need to be removed before calculating the allowable indirect cost amount. The Center has stipends that could related to the MTDC based on a template provided by the US Department of Education. Because of the clarity of how these stipends are undefined, this could further impact the calculation. Based on our recalculation, this resulted in approximately $155,875 of indirect costs drawn in excess of the allowable amount under the approved rate and MTDC base. This constitutes noncompliance with the award terms and the Uniform Guidance requirements for charging indirect costs and drawing federal funds based on actual allowable costs incurred. Cause: This was the Center’s first federal award. Management inadvertently misunderstood how to apply the approved indirect cost rate and believed it was appropriate to draw the full indirect cost amount budgeted in the GAN, rather than calculating indirect costs by applying the 8 percent rate to the actual MTDC base. While the Center has an established written Indirect Cost Rate Policy that is consistent with federal requirements and clearly describes the application of the rate to MTDC, the policy was not fully operationalized for this award. Specifically, staff responsible for drawdowns did not consistently follow the policy’s procedures for calculating indirect cost based on MTDC, monitoring the correct application of the rate, and retaining calculation worksheets; and there was no documented supervisory review to ensure compliance with both the policy and the Uniform Guidance prior to submitting drawdown requests. Also, the US Department of Education’s template that demonstrated for training stipend costs as a reduction has not been considered fully based on the definition of those costs. Effect or Potential Effect: By drawing down approximately $155,875 more than the allowable indirect costs for the period, the Center used federal funds in excess of what was permitted under the approved indirect cost rate and MTDC base. These excess draws represent costs that may be disallowed by the U.S. Department of Education and may require repayment. Continued reliance on budgeted indirect amounts, rather than applying the rate to the MTDC base in accordance with both the Uniform Guidance and the Center’s Indirect Cost Rate Policy, increases the risk of further over- or under-recovery of indirect costs and noncompliance with cash management requirements.Questioned Costs: We calculated questioned costs of $155,875 representing the excess of indirect costs drawn over the amount that would have been allowable had the approved 8 percent indirect cost rate been applied to the actual MTDC base for the period. This does not include the potential impact of training stipend costs being excluded in arriving at the allowable indirect cost. Because the questioned costs exceed $25,000, they are required to be reported in the Schedule of Findings and Questioned Costs. At the time of our audit, no portion of the $155,875 had been repaid, and the federal agency had not yet issued a determination regarding the resolution of these questioned costs. Perspective: The total Year 1 GAN amount was $8,437,681, including $625,013 of budgeted indirect costs. During the audit period, the Center drew down $6,489,490 in total, including the full $625,013 of indirect costs. The issue affected multiple drawdowns during the period; some draws were calculated at the approved 8 percent rate, while others either did not exceeded the amount supported by the rate to enable drawing the full budgeted indirect costs. The existence of a written Indirect Cost Rate Policy that was not consistently followed, combined with the pattern of excess indirect draws, indicates a systemic implementation and monitoring issue rather than an isolated error. Recommendation: We recommend that management: 1. Recalculate allowable indirect costs for the period by applying the approved 8 percent indirect cost rate to the actual MTDC base and work with the U.S. Department of Education to resolve the $155,875 in questioned costs, including returning any unallowable amounts as required. This includes ascertaining that training stipends, if applicable by definition, are excluded from total direct cost before the 8% multiplier is applied. 2. Fully implement and operationalize the existing Indirect Cost Rate Policy by: • Ensuring that the MTDC base is correctly determined for this and future awards and that the approved indirect cost rate is applied only to that base; • Requiring preparation and retention of indirect cost calculation worksheets that tie to MTDC and support each drawdown; and • Establishing a documented supervisory review to verify that indirect costs are calculated and drawn in accordance with the Indirect Cost Rate Policy, the GAN, and the Uniform Guidance prior to submission of drawdown requests.Provide targeted training to finance and program staff on the Indirect Cost Rate Policy, including the definition of MTDC, the appropriate application of the indirect cost rate, and the monitoring and documentation requirements described in the policy, to reinforce the otherwise sound policy framework already in place. Views of Responsible Officials: Management agrees with the finding. As this was the Center’s first federal award, management misunderstood the proper application of the approved indirect cost rate for this program and drew the full budgeted indirect cost amount instead of applying the rate to the MTDC base. Management notes that it has adopted an Indirect Cost Rate Policy that is intended to ensure consistent, compliant application and monitoring of indirect costs across federal awards; however, this policy was not consistently followed for the REAP award. Management plans to recalculate allowable indirect costs, consult with the U.S. Department of Education regarding resolution of the $155,875 in questioned costs, and strengthen implementation of its Indirect Cost Rate Policy through enhanced procedures, documentation, supervisory review, and staff training to ensure that future indirect cost calculations and drawdowns comply with both the policy and the Uniform Guidance.
2024-008 – Non-Compliance and Significant Deficiency in Internal Control over Compliance - CARES Institutional (HEERF) Federal Awards Assistance Listing Number: 84.425F Program Name: COVID-19 Education Stabilization Fund: HEERF – Institutional Portion Pass Through Identifying Number: N/A Award Year: 2023-2024 Federal Agency: U.S. Department of Education Criteria: In accordance with 2 CFR § 200.305(b) of the Uniform Guidance, which applies to the HEERF grants, grantees must seek to minimize the time between drawing down funds from the G5 system and applying those funds to support a grant award’s activities. Consistent with this requirement, grantees must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 per year must be remitted to the Federal government. In accordance with 2 CFR.303(a) of the Uniform Guidance, which applies to the HEERF grants, non-Federal entities are required to establish and maintain effective internal controls over federal awards. Condition: No internal controls were identified in regards to appropriate cash management for the Higher Education Emergency Relief Fund Institutional Aid. Cause: Only one person prepared, reviewed, and submitted the cash drawdown requests. In addition, the College did not appropriately monitor the cash deposits for interest earned. Effect: The college earned interest on the funds drawn from the G5 system that were in excess of $500 and did not comply with requirement to return funds. As a result, the college may be required to return the excess funds. Questioned costs: $31,057. Recommendation: It is recommended that the client establish controls in order to ensure that federal awards are prepared and reviewed by multiple personnel before processing. CRI will recommend controls be in place to ensure that there is a minimum period between grant drawdowns and grant expenditures. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 108.
2024-008 – Non-Compliance and Significant Deficiency in Internal Control over Compliance - CARES Institutional (HEERF) Federal Awards Assistance Listing Number: 84.425F Program Name: COVID-19 Education Stabilization Fund: HEERF – Institutional Portion Pass Through Identifying Number: N/A Award Year: 2023-2024 Federal Agency: U.S. Department of Education Criteria: In accordance with 2 CFR § 200.305(b) of the Uniform Guidance, which applies to the HEERF grants, grantees must seek to minimize the time between drawing down funds from the G5 system and applying those funds to support a grant award’s activities. Consistent with this requirement, grantees must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 per year must be remitted to the Federal government. In accordance with 2 CFR.303(a) of the Uniform Guidance, which applies to the HEERF grants, non-Federal entities are required to establish and maintain effective internal controls over federal awards. Condition: No internal controls were identified in regards to appropriate cash management for the Higher Education Emergency Relief Fund Institutional Aid. Cause: Only one person prepared, reviewed, and submitted the cash drawdown requests. In addition, the College did not appropriately monitor the cash deposits for interest earned. Effect: The college earned interest on the funds drawn from the G5 system that were in excess of $500 and did not comply with requirement to return funds. As a result, the college may be required to return the excess funds. Questioned costs: $31,057. Recommendation: It is recommended that the client establish controls in order to ensure that federal awards are prepared and reviewed by multiple personnel before processing. CRI will recommend controls be in place to ensure that there is a minimum period between grant drawdowns and grant expenditures. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 108.
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
Criteria: Under 2 CFR §200.302(b), §200.303, and §200.305, non-federal entities must establish internal controls over federal awards to ensure proper financial management, allowability of costs, timely and accurate reporting, and proper cash management. Additionally, under GAAP (ASC 958-605), grant revenue should be recognized when allowable costs have been incurred. Documentation and supervisory review are necessary to support revenue recognition and ensure expenditures and drawdowns are accurately reported. Condition: The Organization did not document a monthly reconciliation review process to confirm that federal revenues recorded in the general ledger and federal grant drawdowns were supported by allowable costs incurred. Additionally, there was no evidence of review or reconciliation of annual SF-425 Federal Financial Reports to verify that cumulative drawdowns reconciled to allowable costs and recorded revenue. Cause: The Organization lacked a formal internal control process requiring review and sign-off of the reconciliation of grant expenditures, grant revenue, drawdowns, and SF-425 federal financial reporting. Effect: Inadequate internal controls over allowable costs, cash management, and federal financial reporting increased the risk of improper grant revenue recognition recorded, expenditures not being accurately reported, and unallowable costs being claimed, which could lead to misstatements in the financial statements, Schedule of Expenditures of Federal Awards (SEFA), and required federal reports, and result in noncompliance with Uniform Guidance and GAAP. Questioned Cost: None Recommendation: Implement a documented monthly reconciliation process to verify that federal revenues recorded and drawn down are supported by allowable costs incurred in accordance with grant terms. Include supervisory review of SF-425 reports and supporting schedules to confirm alignment with recorded expenditures and revenues. Reconciliations should be reviewed and signed by the CFO and retained in grant records to ensure compliance with Uniform Guidance and GAAP.
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
2024-002 Drawdown Tracking Compliance Requirement Cash Management Finding Type Significant Deficiency in Internal Controls and Noncompliance Federal Agency US Department of Education ALN 84.031 Federal Program Higher Education Institutional Aid ALN 84.042A Federal Program TRIO Cluster Program Criteria 2 CFR § 200.305 (b) – Federal Payment ..... Payments for recipients and subrecipients other than States. For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition Higher Education Institutional Aid From a sample of sixty-six disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Twenty-four instances where the three-day rule was exceeded. Five instances where the specific drawdown related to the disbursement could not be identified. TRIO Cluster Programs From a sample of thirty-seven disbursements selected to test the three-day rule time elapsing between the transfer of funds from the Federal agency and the disbursement of funds, we identified the following: Fourteen instances where the three-day rule was exceeded. Three instances where the specific drawdown related to the disbursement could not be identified. Cause Lack of policies to control the number of days elapsed between the transfer of Federal funds and the date of the disbursement. The University is not completing and retaining the G5 Cash Summary Form or equivalent document for each drawdown. Effect Misuse of funds, failure to demonstrate timely use of funds, and inadequate cash flow management. These issues could lead to loss of federal funding eligibility, placement on Heightened Cash Monitoring Methods, and penalties. Additionally, there is a risk of overspending or duplicating payments, as well as difficulty detecting errors or fraud. This can lead to financial penalties, resulting in disallowed costs that are not reimbursed by federal funds. Furthermore, federal awards could be suspended or terminated, impacting the University's ability to fund its programs and operations. Increased scrutiny in future audits may lead to greater administrative burdens and oversight. In severe cases, the University may face suspension or debarment from receiving future federal funding. Questioned Costs None. Recommendation We recommend to enhance documentation practices by implementing a system that ensures all disbursements are clearly linked to their corresponding drawdowns. This will help accurately track the time elapsed between fund transfer and disbursement. Utilizing automated financial management systems can further reduce human error and improve compliance by efficiently tracking and linking drawdowns to disbursements. Regular internal audits should be scheduled to review compliance with the three-day rule and other cash management requirements, promptly identifying and correcting discrepancies. Finally, updating cash management policies to include specific procedures for associating drawdowns with disbursements and ensuring these policies are communicated and enforced across the organization will help maintain compliance and enhance overall cash management practices. Views of responsible official Refer to Corrective Action Plan (Unaudited)
Criteria: Under 2 CFR §200.302(b), §200.303, and §200.305, non-federal entities must establish internal controls over federal awards to ensure proper financial management, allowability of costs, timely and accurate reporting, and proper cash management. Additionally, under GAAP (ASC 958-605), grant revenue should be recognized when allowable costs have been incurred. Documentation and supervisory review are necessary to support revenue recognition and ensure expenditures and drawdowns are accurately reported. Condition: The Organization did not document a monthly reconciliation review process to confirm that federal revenues recorded in the general ledger and federal grant drawdowns were supported by allowable costs incurred. Additionally, there was no evidence of review or reconciliation of annual SF-425 Federal Financial Reports to verify that cumulative drawdowns reconciled to allowable costs and recorded revenue. Cause: The Organization lacked a formal internal control process requiring review and sign-off of the reconciliation of grant expenditures, grant revenue, drawdowns, and SF-425 federal financial reporting. Effect: Inadequate internal controls over allowable costs, cash management, and federal financial reporting increased the risk of improper grant revenue recognition recorded, expenditures not being accurately reported, and unallowable costs being claimed, which could lead to misstatements in the financial statements, Schedule of Expenditures of Federal Awards (SEFA), and required federal reports, and result in noncompliance with Uniform Guidance and GAAP. Questioned Cost: None Recommendation: Implement a documented monthly reconciliation process to verify that federal revenues recorded and drawn down are supported by allowable costs incurred in accordance with grant terms. Include supervisory review of SF-425 reports and supporting schedules to confirm alignment with recorded expenditures and revenues. Reconciliations should be reviewed and signed by the CFO and retained in grant records to ensure compliance with Uniform Guidance and GAAP.
Cash Management-Subrecipient Federal Agency: U.S. Federal Government Federal Program Title: Research and Development Cluster Assistance Listing Number: 93.859; 47.074 Federal Award Identification Number and Year: 1R01GM137083 – 2024; 2317969 - 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Other Matters • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Federal Government requires that when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR section 200.305(b)(4)). In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not make payment to Subrecipients within the required 30 calendar days after receipt of the billing. Context: Three subrecipient invoices, totaling $29,306, out of 5 tested, totaling $60,038, were not paid within the required 30 days. Questioned costs: None. Cause: Procedures were not in place to ensure subrecipients were paid within 30 days of receipt of the invoices. Effect: Subrecipients did not receive their reimbursement timely. Repeat finding: Yes, 2023-002 Recommendation: We recommend the University evaluate its procedures and implement an additional control to review and approve the Subrecipient reimbursements timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Cash Management-Subrecipient Federal Agency: U.S. Federal Government Federal Program Title: Research and Development Cluster Assistance Listing Number: 93.859; 47.074 Federal Award Identification Number and Year: 1R01GM137083 – 2024; 2317969 - 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Other Matters • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Federal Government requires that when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR section 200.305(b)(4)). In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not make payment to Subrecipients within the required 30 calendar days after receipt of the billing. Context: Three subrecipient invoices, totaling $29,306, out of 5 tested, totaling $60,038, were not paid within the required 30 days. Questioned costs: None. Cause: Procedures were not in place to ensure subrecipients were paid within 30 days of receipt of the invoices. Effect: Subrecipients did not receive their reimbursement timely. Repeat finding: Yes, 2023-002 Recommendation: We recommend the University evaluate its procedures and implement an additional control to review and approve the Subrecipient reimbursements timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.