Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Fossil Energy Research and Development; COVID19 – Discovery and Applied Research for Technological Innovations to Improve Human Health; Research and Technology Development; Office of Science and Financial Assistance Program; Air Force Defense Research Sciences Program; Cardiovascular Diseases Research; Health Center Program Cluster: Community Health Centers; and AIDS Education and Training Centers ALN #s: 12.630; 81.089; 93.286; 12.910; 81.049; 12.800; 93.837; 93.224; and 93.145 Award Numbers: ARMY W911NF-17-2-0196; DOE DE-FE0031581; DOE DE-FE0032049; NIH 1 R21 EB031310A; DARPA HR011-23-2-0004; DOE DE-SC0018420; AF FA9550-23-1-0609; SNAP 5R01HL152692-04; HRSA 5 U1OHA29293-09-03; and HRSA 5 U1OHA32109-07 Federal Award Year 2023 – 2024 Questioned Costs: None 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of thirty-two subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, twelve payments (38%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 35-201 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the Research & Development Cluster, one payment (13%) was not submitted within 30 days after receipt of the billing from the subrecipient. The payment was 32 days after the receipt of billing from the subrecipient. The sample was not intended to be, and was not, a statistically valid sample. Out of eighteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster: Community Health Centers and AIDS Education and Training Centers, five payments (28%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 42-120 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with staffing deficiencies and workload challenges caused the situations for the exceptions noted. University of Illinois Chicago officials stated the one payment was paid 32 days from receipt of the invoice due to high volumes of invoice processing at fiscal year end and the payment due date coinciding with a holiday. The five other subrecipient payments were due to high staff workloads and occurred prior to the fiscal year 2023 corrective action implementation. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2024-002; 2023-006; 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Fossil Energy Research and Development; COVID19 – Discovery and Applied Research for Technological Innovations to Improve Human Health; Research and Technology Development; Office of Science and Financial Assistance Program; Air Force Defense Research Sciences Program; Cardiovascular Diseases Research; Health Center Program Cluster: Community Health Centers; and AIDS Education and Training Centers ALN #s: 12.630; 81.089; 93.286; 12.910; 81.049; 12.800; 93.837; 93.224; and 93.145 Award Numbers: ARMY W911NF-17-2-0196; DOE DE-FE0031581; DOE DE-FE0032049; NIH 1 R21 EB031310A; DARPA HR011-23-2-0004; DOE DE-SC0018420; AF FA9550-23-1-0609; SNAP 5R01HL152692-04; HRSA 5 U1OHA29293-09-03; and HRSA 5 U1OHA32109-07 Federal Award Year 2023 – 2024 Questioned Costs: None 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of thirty-two subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, twelve payments (38%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 35-201 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the Research & Development Cluster, one payment (13%) was not submitted within 30 days after receipt of the billing from the subrecipient. The payment was 32 days after the receipt of billing from the subrecipient. The sample was not intended to be, and was not, a statistically valid sample. Out of eighteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster: Community Health Centers and AIDS Education and Training Centers, five payments (28%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 42-120 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with staffing deficiencies and workload challenges caused the situations for the exceptions noted. University of Illinois Chicago officials stated the one payment was paid 32 days from receipt of the invoice due to high volumes of invoice processing at fiscal year end and the payment due date coinciding with a holiday. The five other subrecipient payments were due to high staff workloads and occurred prior to the fiscal year 2023 corrective action implementation. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2024-002; 2023-006; 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Fossil Energy Research and Development; COVID19 – Discovery and Applied Research for Technological Innovations to Improve Human Health; Research and Technology Development; Office of Science and Financial Assistance Program; Air Force Defense Research Sciences Program; Cardiovascular Diseases Research; Health Center Program Cluster: Community Health Centers; and AIDS Education and Training Centers ALN #s: 12.630; 81.089; 93.286; 12.910; 81.049; 12.800; 93.837; 93.224; and 93.145 Award Numbers: ARMY W911NF-17-2-0196; DOE DE-FE0031581; DOE DE-FE0032049; NIH 1 R21 EB031310A; DARPA HR011-23-2-0004; DOE DE-SC0018420; AF FA9550-23-1-0609; SNAP 5R01HL152692-04; HRSA 5 U1OHA29293-09-03; and HRSA 5 U1OHA32109-07 Federal Award Year 2023 – 2024 Questioned Costs: None 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of thirty-two subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, twelve payments (38%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 35-201 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the Research & Development Cluster, one payment (13%) was not submitted within 30 days after receipt of the billing from the subrecipient. The payment was 32 days after the receipt of billing from the subrecipient. The sample was not intended to be, and was not, a statistically valid sample. Out of eighteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster: Community Health Centers and AIDS Education and Training Centers, five payments (28%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 42-120 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with staffing deficiencies and workload challenges caused the situations for the exceptions noted. University of Illinois Chicago officials stated the one payment was paid 32 days from receipt of the invoice due to high volumes of invoice processing at fiscal year end and the payment due date coinciding with a holiday. The five other subrecipient payments were due to high staff workloads and occurred prior to the fiscal year 2023 corrective action implementation. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2024-002; 2023-006; 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Fossil Energy Research and Development; COVID19 – Discovery and Applied Research for Technological Innovations to Improve Human Health; Research and Technology Development; Office of Science and Financial Assistance Program; Air Force Defense Research Sciences Program; Cardiovascular Diseases Research; Health Center Program Cluster: Community Health Centers; and AIDS Education and Training Centers ALN #s: 12.630; 81.089; 93.286; 12.910; 81.049; 12.800; 93.837; 93.224; and 93.145 Award Numbers: ARMY W911NF-17-2-0196; DOE DE-FE0031581; DOE DE-FE0032049; NIH 1 R21 EB031310A; DARPA HR011-23-2-0004; DOE DE-SC0018420; AF FA9550-23-1-0609; SNAP 5R01HL152692-04; HRSA 5 U1OHA29293-09-03; and HRSA 5 U1OHA32109-07 Federal Award Year 2023 – 2024 Questioned Costs: None 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of thirty-two subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, twelve payments (38%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 35-201 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the Research & Development Cluster, one payment (13%) was not submitted within 30 days after receipt of the billing from the subrecipient. The payment was 32 days after the receipt of billing from the subrecipient. The sample was not intended to be, and was not, a statistically valid sample. Out of eighteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster: Community Health Centers and AIDS Education and Training Centers, five payments (28%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 42-120 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with staffing deficiencies and workload challenges caused the situations for the exceptions noted. University of Illinois Chicago officials stated the one payment was paid 32 days from receipt of the invoice due to high volumes of invoice processing at fiscal year end and the payment due date coinciding with a holiday. The five other subrecipient payments were due to high staff workloads and occurred prior to the fiscal year 2023 corrective action implementation. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2024-002; 2023-006; 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Defense (DoD); US Department of Energy (DOE); US Health and Human Services (HHS) Program Names: Research & Development Cluster: Basic, Applied and Advanced Research in Science and Engineering; Fossil Energy Research and Development; COVID19 – Discovery and Applied Research for Technological Innovations to Improve Human Health; Research and Technology Development; Office of Science and Financial Assistance Program; Air Force Defense Research Sciences Program; Cardiovascular Diseases Research; Health Center Program Cluster: Community Health Centers; and AIDS Education and Training Centers ALN #s: 12.630; 81.089; 93.286; 12.910; 81.049; 12.800; 93.837; 93.224; and 93.145 Award Numbers: ARMY W911NF-17-2-0196; DOE DE-FE0031581; DOE DE-FE0032049; NIH 1 R21 EB031310A; DARPA HR011-23-2-0004; DOE DE-SC0018420; AF FA9550-23-1-0609; SNAP 5R01HL152692-04; HRSA 5 U1OHA29293-09-03; and HRSA 5 U1OHA32109-07 Federal Award Year 2023 – 2024 Questioned Costs: None 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and the controls in place did not identify the late payments. Condition: Out of thirty-two subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, twelve payments (38%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 35-201 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of eight subrecipient payments tested which were made by the University of Illinois Chicago under the Research & Development Cluster, one payment (13%) was not submitted within 30 days after receipt of the billing from the subrecipient. The payment was 32 days after the receipt of billing from the subrecipient. The sample was not intended to be, and was not, a statistically valid sample. Out of eighteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster: Community Health Centers and AIDS Education and Training Centers, five payments (28%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 42-120 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. 2024-002. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Criteria: Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. Cause: University of Illinois Urbana-Champaign officials stated the multi-layered review and approval process along with staffing deficiencies and workload challenges caused the situations for the exceptions noted. University of Illinois Chicago officials stated the one payment was paid 32 days from receipt of the invoice due to high volumes of invoice processing at fiscal year end and the payment due date coinciding with a holiday. The five other subrecipient payments were due to high staff workloads and occurred prior to the fiscal year 2023 corrective action implementation. Effect: Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2024-002; 2023-006; 2022-008) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Assistance Listing, Federal Agency, and Program Name - 19.510, Department of State, U.S. Refugee Admissions Program, Federal Award Identification Number and Year - SPRMCO23CA0007; SPRMCO23CA0371; SPRMCO23CA0368; SPRMCO23CA0189 Pass through Entity - HIAS, Inc. Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303 requires that recipients of federal awards establish, document and maintain effective internal control that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR 200 Appendix XI Part 3. Cash Management requires that recipients establish written procedures to meet the requirements of 2 CFR 200.305 and the terms of the grant award, expenditures must be incurred before reimbursement of federal funds is requested. 2 CFR 200 subpart E Cost Principles requires recipients to follow allowability requirements as defined in the grant award and within general cost principles. 2 CFR 200 requires that costs be expended in accordance with the period of performance defined within the award agreement. Condition - In performing our audit procedures, there was no evidence of a system of internal control over the cash management requirements, including a written policy, related to reimbursement of funds on a per refugee basis. In addition, we noted that reimbursement was requested prior to incurring expenses on a per refugee basis. There were also refugee costs coded incorrectly within the general ledger. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - When gaining an understanding of internal control over compliance for cash management, we noted a lack of internal controls in place to ensure that expenses on a per refugee basis were incurred prior to requesting reimbursement. In testing the compliance requirements for cash management, we were unable to test compliance on a per refugee basis. Each month, funds become available based on the number of refugees who arrived and been allocated to the program. We noted that in one month, $5,300 was available to be spent on new arrivals; however, only $2,285 was spent on the new arrivals and $3,015 was improperly spent on refugees who had arrived previously and for which reimbursement had already been received. In total, over the entire term of the grant, and based on the total number of refugees served, the appropriate amount of funds were requested for reimbursement. In addition, we noted one instance where refugee costs were applied to an incorrect award based on the period of performance and the allowable 90-day resettlement period. These costs were within the total amount allowed for each of the awards, but were not assigned correctly within the general ledger. Cause and Effect - There was not a sufficient cash management policy in place and there were no internal controls in place to ensure reimbursement requests were made only after expenses had been incurred on a per refugee basis. Recommendation - The organization should establish a written cash management policy which encompasses per refugee spending and ensure there is an effective review process in place to ensure that reimbursement is not requested prior to funds being incurred on a per refugee basis. This process should ensure that general ledger expenses are reconciled to per refugee spending and that the correct award funds are utilized for the specified refugee. In addition, the general ledger expenses should be coded in such a manner to facilitate this review on a per-refugee basis. These improvements will ensure that only allowable costs are recorded in the federal grant general ledger codes and are requested for reimbursement. Views of Responsible Officials and Corrective Action Plan - Agree with finding. Financial policies will be updated to include cash management requirements to ensure expenditures are incurred, including any required per client expenditures, prior to reimbursement requests. During the year under audit, there was not a reconciliation between individual refugee spending and the general ledger expenses. Subsequent to year end a new process was put in place to compare the individual refugee ledgers to the reimbursement request to ensure no expenditures were requested in advance and that refugee spending is coded to the appropriate general ledger account based on the specific award funding.
Assistance Listing, Federal Agency, and Program Name - 19.510, Department of State, U.S. Refugee Admissions Program, Federal Award Identification Number and Year - SPRMCO23CA0007; SPRMCO23CA0371; SPRMCO23CA0368; SPRMCO23CA0189 Pass through Entity - HIAS, Inc. Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303 requires that recipients of federal awards establish, document and maintain effective internal control that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR 200 Appendix XI Part 3. Cash Management requires that recipients establish written procedures to meet the requirements of 2 CFR 200.305 and the terms of the grant award, expenditures must be incurred before reimbursement of federal funds is requested. 2 CFR 200 subpart E Cost Principles requires recipients to follow allowability requirements as defined in the grant award and within general cost principles. 2 CFR 200 requires that costs be expended in accordance with the period of performance defined within the award agreement. Condition - In performing our audit procedures, there was no evidence of a system of internal control over the cash management requirements, including a written policy, related to reimbursement of funds on a per refugee basis. In addition, we noted that reimbursement was requested prior to incurring expenses on a per refugee basis. There were also refugee costs coded incorrectly within the general ledger. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - When gaining an understanding of internal control over compliance for cash management, we noted a lack of internal controls in place to ensure that expenses on a per refugee basis were incurred prior to requesting reimbursement. In testing the compliance requirements for cash management, we were unable to test compliance on a per refugee basis. Each month, funds become available based on the number of refugees who arrived and been allocated to the program. We noted that in one month, $5,300 was available to be spent on new arrivals; however, only $2,285 was spent on the new arrivals and $3,015 was improperly spent on refugees who had arrived previously and for which reimbursement had already been received. In total, over the entire term of the grant, and based on the total number of refugees served, the appropriate amount of funds were requested for reimbursement. In addition, we noted one instance where refugee costs were applied to an incorrect award based on the period of performance and the allowable 90-day resettlement period. These costs were within the total amount allowed for each of the awards, but were not assigned correctly within the general ledger. Cause and Effect - There was not a sufficient cash management policy in place and there were no internal controls in place to ensure reimbursement requests were made only after expenses had been incurred on a per refugee basis. Recommendation - The organization should establish a written cash management policy which encompasses per refugee spending and ensure there is an effective review process in place to ensure that reimbursement is not requested prior to funds being incurred on a per refugee basis. This process should ensure that general ledger expenses are reconciled to per refugee spending and that the correct award funds are utilized for the specified refugee. In addition, the general ledger expenses should be coded in such a manner to facilitate this review on a per-refugee basis. These improvements will ensure that only allowable costs are recorded in the federal grant general ledger codes and are requested for reimbursement. Views of Responsible Officials and Corrective Action Plan - Agree with finding. Financial policies will be updated to include cash management requirements to ensure expenditures are incurred, including any required per client expenditures, prior to reimbursement requests. During the year under audit, there was not a reconciliation between individual refugee spending and the general ledger expenses. Subsequent to year end a new process was put in place to compare the individual refugee ledgers to the reimbursement request to ensure no expenditures were requested in advance and that refugee spending is coded to the appropriate general ledger account based on the specific award funding.
Assistance Listing, Federal Agency, and Program Name - 19.510, Department of State, U.S. Refugee Admissions Program, Federal Award Identification Number and Year - SPRMCO23CA0007; SPRMCO23CA0371; SPRMCO23CA0368; SPRMCO23CA0189 Pass through Entity - HIAS, Inc. Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303 requires that recipients of federal awards establish, document and maintain effective internal control that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR 200 Appendix XI Part 3. Cash Management requires that recipients establish written procedures to meet the requirements of 2 CFR 200.305 and the terms of the grant award, expenditures must be incurred before reimbursement of federal funds is requested. 2 CFR 200 subpart E Cost Principles requires recipients to follow allowability requirements as defined in the grant award and within general cost principles. 2 CFR 200 requires that costs be expended in accordance with the period of performance defined within the award agreement. Condition - In performing our audit procedures, there was no evidence of a system of internal control over the cash management requirements, including a written policy, related to reimbursement of funds on a per refugee basis. In addition, we noted that reimbursement was requested prior to incurring expenses on a per refugee basis. There were also refugee costs coded incorrectly within the general ledger. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - When gaining an understanding of internal control over compliance for cash management, we noted a lack of internal controls in place to ensure that expenses on a per refugee basis were incurred prior to requesting reimbursement. In testing the compliance requirements for cash management, we were unable to test compliance on a per refugee basis. Each month, funds become available based on the number of refugees who arrived and been allocated to the program. We noted that in one month, $5,300 was available to be spent on new arrivals; however, only $2,285 was spent on the new arrivals and $3,015 was improperly spent on refugees who had arrived previously and for which reimbursement had already been received. In total, over the entire term of the grant, and based on the total number of refugees served, the appropriate amount of funds were requested for reimbursement. In addition, we noted one instance where refugee costs were applied to an incorrect award based on the period of performance and the allowable 90-day resettlement period. These costs were within the total amount allowed for each of the awards, but were not assigned correctly within the general ledger. Cause and Effect - There was not a sufficient cash management policy in place and there were no internal controls in place to ensure reimbursement requests were made only after expenses had been incurred on a per refugee basis. Recommendation - The organization should establish a written cash management policy which encompasses per refugee spending and ensure there is an effective review process in place to ensure that reimbursement is not requested prior to funds being incurred on a per refugee basis. This process should ensure that general ledger expenses are reconciled to per refugee spending and that the correct award funds are utilized for the specified refugee. In addition, the general ledger expenses should be coded in such a manner to facilitate this review on a per-refugee basis. These improvements will ensure that only allowable costs are recorded in the federal grant general ledger codes and are requested for reimbursement. Views of Responsible Officials and Corrective Action Plan - Agree with finding. Financial policies will be updated to include cash management requirements to ensure expenditures are incurred, including any required per client expenditures, prior to reimbursement requests. During the year under audit, there was not a reconciliation between individual refugee spending and the general ledger expenses. Subsequent to year end a new process was put in place to compare the individual refugee ledgers to the reimbursement request to ensure no expenditures were requested in advance and that refugee spending is coded to the appropriate general ledger account based on the specific award funding.
Assistance Listing, Federal Agency, and Program Name - 19.510, Department of State, U.S. Refugee Admissions Program, Federal Award Identification Number and Year - SPRMCO23CA0007; SPRMCO23CA0371; SPRMCO23CA0368; SPRMCO23CA0189 Pass through Entity - HIAS, Inc. Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303 requires that recipients of federal awards establish, document and maintain effective internal control that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR 200 Appendix XI Part 3. Cash Management requires that recipients establish written procedures to meet the requirements of 2 CFR 200.305 and the terms of the grant award, expenditures must be incurred before reimbursement of federal funds is requested. 2 CFR 200 subpart E Cost Principles requires recipients to follow allowability requirements as defined in the grant award and within general cost principles. 2 CFR 200 requires that costs be expended in accordance with the period of performance defined within the award agreement. Condition - In performing our audit procedures, there was no evidence of a system of internal control over the cash management requirements, including a written policy, related to reimbursement of funds on a per refugee basis. In addition, we noted that reimbursement was requested prior to incurring expenses on a per refugee basis. There were also refugee costs coded incorrectly within the general ledger. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - When gaining an understanding of internal control over compliance for cash management, we noted a lack of internal controls in place to ensure that expenses on a per refugee basis were incurred prior to requesting reimbursement. In testing the compliance requirements for cash management, we were unable to test compliance on a per refugee basis. Each month, funds become available based on the number of refugees who arrived and been allocated to the program. We noted that in one month, $5,300 was available to be spent on new arrivals; however, only $2,285 was spent on the new arrivals and $3,015 was improperly spent on refugees who had arrived previously and for which reimbursement had already been received. In total, over the entire term of the grant, and based on the total number of refugees served, the appropriate amount of funds were requested for reimbursement. In addition, we noted one instance where refugee costs were applied to an incorrect award based on the period of performance and the allowable 90-day resettlement period. These costs were within the total amount allowed for each of the awards, but were not assigned correctly within the general ledger. Cause and Effect - There was not a sufficient cash management policy in place and there were no internal controls in place to ensure reimbursement requests were made only after expenses had been incurred on a per refugee basis. Recommendation - The organization should establish a written cash management policy which encompasses per refugee spending and ensure there is an effective review process in place to ensure that reimbursement is not requested prior to funds being incurred on a per refugee basis. This process should ensure that general ledger expenses are reconciled to per refugee spending and that the correct award funds are utilized for the specified refugee. In addition, the general ledger expenses should be coded in such a manner to facilitate this review on a per-refugee basis. These improvements will ensure that only allowable costs are recorded in the federal grant general ledger codes and are requested for reimbursement. Views of Responsible Officials and Corrective Action Plan - Agree with finding. Financial policies will be updated to include cash management requirements to ensure expenditures are incurred, including any required per client expenditures, prior to reimbursement requests. During the year under audit, there was not a reconciliation between individual refugee spending and the general ledger expenses. Subsequent to year end a new process was put in place to compare the individual refugee ledgers to the reimbursement request to ensure no expenditures were requested in advance and that refugee spending is coded to the appropriate general ledger account based on the specific award funding.
Program AL# 93.224/93.527 Health Center Cluster Program - Cash Management - Significant Deficiency in Internal Control over Compliance Criteria - Health centers are required to maintain written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the non-Federal entity (2 CFR section 200.305). Condition - During audit procedures of federal draw downs we noted several significant delays in performing the draw down request. Context - During audit procedures, we tested payments received by the center to verify procedures were followed to minimize the time elapsed between the date payroll is processed and funds are requested. We noted 25 payments that were request greater than one week after the pay date that doesn’t appear to follow the Center’s written procedures. Effect - Delay in drawing down funds could lead to incorrect Federal Financial Report (SF-425) and compliance requirements with reporting. Incorrect financial reports could result in lost funding. Questioned Costs - There were no questioned cost regarding this finding. Cause - The delay in processing federal draw downs is due to lack of adequate review procedures. Recommendation - We recommend the Center’s management to monitor and evaluate the performance of their accounting staff and to make improvements to prevent and/or detect noncompliance when necessary. Additionally, the Center should provide training to all personnel involved in accounting for federal awards. Views of Responsible Officials - We concur with the audit finding. The Center hired and filled a key financial position subsequent to the year end. Management believes a lack of permanent staff a significant factor in causing this finding. The Center has established proper accounting procedures and controls, and with the key postion being filled, federal draw downs will be perfomed according the Center's policy.
Program AL# 93.224/93.527 Health Center Cluster Program - Cash Management - Significant Deficiency in Internal Control over Compliance Criteria - Health centers are required to maintain written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the non-Federal entity (2 CFR section 200.305). Condition - During audit procedures of federal draw downs we noted several significant delays in performing the draw down request. Context - During audit procedures, we tested payments received by the center to verify procedures were followed to minimize the time elapsed between the date payroll is processed and funds are requested. We noted 25 payments that were request greater than one week after the pay date that doesn’t appear to follow the Center’s written procedures. Effect - Delay in drawing down funds could lead to incorrect Federal Financial Report (SF-425) and compliance requirements with reporting. Incorrect financial reports could result in lost funding. Questioned Costs - There were no questioned cost regarding this finding. Cause - The delay in processing federal draw downs is due to lack of adequate review procedures. Recommendation - We recommend the Center’s management to monitor and evaluate the performance of their accounting staff and to make improvements to prevent and/or detect noncompliance when necessary. Additionally, the Center should provide training to all personnel involved in accounting for federal awards. Views of Responsible Officials - We concur with the audit finding. The Center hired and filled a key financial position subsequent to the year end. Management believes a lack of permanent staff a significant factor in causing this finding. The Center has established proper accounting procedures and controls, and with the key postion being filled, federal draw downs will be perfomed according the Center's policy.
Program: AL 12.401 – National Guard Military Operations and Maintenance (O&M) Projects – Cash Management & Reporting Grant Number & Year: Appendices – W91243-22-2-1001, FFY 2022; W91243-23-2-1001, FFY 2023; W91243-24-2-1001, FFY 2024; W91243-24-2-1021, FFY 2024; W91243-24-2-1024, FFY 2024 Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR § 1128.100 and 2 CFR § 1128.200 (January 1, 2024), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR § 200.303 (January 1, 2024): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Title 2 CFR § 200.302 (January 1, 2024) requires financial management systems of the State sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Title 2 CFR § 200.305(a) (January 1, 2024) states, in part, “For states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 . . . .” National Guard Policy (NG Policy) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states, in part, “[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days).” Grants and agreements Policy Letter (GCAPL) 20-02 AQ-A Policy (February 4, 2020) turned NGR 5-1 into NG Policy 5-1. It generally maintained the principles and operational aspects of NGR 5-1, except as provisions of the document were adjusted in the AQ-A Policy. The AQ-A Policy did not make any changes to the 45-day requirement found in NGR 5-1. The instructions for OMB Standard Form 270 (REV. 1/2016) include the following for line 11a: Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients. A good internal control plan would include procedures to ensure the time between the drawdown of Federal funds and disbursements are minimized and in compliance with National Guard regulations. Condition: The Agency was not in compliance with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2023-057 Questioned Costs: None Statistical Sample: No Context: We tested five drawdowns of Federal funds to support the Agency’s operations. We tested to determine whether the Agency had expended the cumulative amounts drawn down for the awards tested within the required timeframe and noted the following: • Three drawdowns were not in compliance with NG Policy 5-1. Cumulative drawdowns for two of the draws tested were expended 49 and 62 days after the drawdown of Federal funds. Cumulative draws for the other draw tested had yet to be fully expended as of January 7, 2025. The table below provides a summary of the three draws: See Schedule of Findings and Questioned Costs for chart/table. • For five of five SF-270s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Agency reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an underreporting of $265,642 to an overreporting of $660,608, with a net total overreporting of expenditures by $1,090,090 for the five reports tested. Cause: Inadequate procedures for estimating fund needs for the upcoming month. Regarding SF-270 reporting, the Agency has stated it agrees with the finding; however, it has yet to implement corrective action. Effect: The Agency is not in compliance with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with National Guard requirements. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The Agency agrees with the finding. The drawdown timeline is a partial result of the variances in federal reimbursement functionalities and the advance state requirement function. The agency has reduced the Average # of Days to spend Total Draws by 23 for those draws in which drawdown timing was reported, indicating a general improvement over the prior year finding.
2024-001 U.S. Department of the Interior Fish and Wildlife Management Assistance – ALN 15.608 Criteria: Per 2 CFR section 200.305(b), 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: For six months during the fiscal year the Town maintained a surplus cash balance of over 50 percent of the amount drawn down and maintained a surplus cash balance of $580,531.07 at year-end. Cause: The Town is utilizing Federal, state and local funds for the same project and did not estimate its cash needs properly. Effect: The Town is not in compliance with Federal cash management requirements. Questioned Costs: None Repeat Finding from Prior Year: No. Recommendation: The Town should implement procedures to more accurately estimate its cash needs in order to minimize the time elapsing between receipt of grants funds and payment of the vendors. Views of Responsible Official: Management agrees with the finding.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2024-001: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558, and 93.667 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 31 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted on March 11, 2025. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
(2024-037) Title: Internal control over WIC subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the WIC program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. All of WIC’s subawards are cost-settled. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: In fiscal year 2024, the Department provided $5.9 million to subrecipients from WIC grant funds totaling $22.8 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the WIC program. Corrective Action Plan: See F-18 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of the funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. The finding remains as stated. (State Number: 24-1113-03)
(2024-037) Title: Internal control over WIC subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Assistance Listing Number: 10.557 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the WIC program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. All of WIC’s subawards are cost-settled. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: In fiscal year 2024, the Department provided $5.9 million to subrecipients from WIC grant funds totaling $22.8 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the WIC program. Corrective Action Plan: See F-18 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of the funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. The finding remains as stated. (State Number: 24-1113-03)
(2024-046) Title: Internal control over CSLFRF subrecipient cash management needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Office of Aging and Disability Services Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. The Office of Aging and Disability Services (OADS) is responsible for ensuring its subrecipients that received Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) comply with Federal requirements; however, OADS’ subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. All of the CSLFRF subawards from OADS are cost-settled. Therefore, DCM and OADS procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Context: In fiscal year 2024, the Department provided $1.5 million to OADS subrecipients from CSLFRF grant funds totaling $209.6 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that OADS collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the CSLFRF program. Corrective Action Plan: See F-20 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. The finding remains as stated. (State Number: 24-1699-05)
(2024-050) Title: Internal control over ICA program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the Immunization Cooperative Agreement (ICA) program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The ICA program’s subawards are either cost-settled or cost-settled by invoice. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, MeCDC’s monitoring procedures do not include review of subrecipient invoices to ensure ICA grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $1.9 million to subrecipients from ICA grant funds totaling $31.1 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the ICA program. • implement monitoring procedures over ICA program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-22 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1118-01)
(2024-050) Title: Internal control over ICA program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the Immunization Cooperative Agreement (ICA) program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The ICA program’s subawards are either cost-settled or cost-settled by invoice. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, MeCDC’s monitoring procedures do not include review of subrecipient invoices to ensure ICA grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $1.9 million to subrecipients from ICA grant funds totaling $31.1 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the ICA program. • implement monitoring procedures over ICA program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-22 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1118-01)
(2024-055) Title: Internal control over TANF program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. The Office for Family Independence (OFI) is responsible for ensuring the Temporary Assistance for Needy Families (TANF) program’s subrecipients comply with Federal requirements; however, OFI’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The TANF program’s subawards are cost-settled, cost-settled by invoice, or fee-for-service. Therefore, DCM and OFI procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, OFI’s monitoring procedures do not include review of subrecipient invoices to ensure TANF grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $34.2 million to subrecipients from TANF grant funds totaling $92.4 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that OFI: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the TANF program. • implement monitoring procedures over TANF program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-23 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of the funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1111-04)
Dairy Business Innovation Initiatives—Cash Management Background: During FY 2023-24, UW-Madison expended $9.9 million in federal funds for the DBII grant, which is administered by the U.S. Department of Agriculture. This grant program was first authorized in 2018, and UW Madison has received annual awards for the program since 2019. At least one-half of each award is used for grants to farmers or dairy processors to diversify farming activities, create value-added products, or enhance dairy export programs. For each DBII award UW Madison received, it subawarded approximately 60.0 percent to a subrecipient to assist with administering the grants to farmers and dairy processors under the program. Criteria: Under 2 CFR s. 200.305 (b), UW-Madison is required to implement procedures to ensure that the time between payments it makes to the subrecipient and the subrecipient’s disbursement of the funds for program purposes is minimized. Under 2 CFR s. 200.305 (b) (4), UW-Madison is permitted to provide advanced payments to a subrecipient if it determines that the subrecipient lacks sufficient working capital. However, if such an advanced payment is made, the payment should be aligned to the anticipated disbursements and subsequent payments are required to be on a reimbursement basis. Finally, 2 CFR s. 200.305 (b) (12), requires that any payments UW Madison makes to a subrecipient should not result in the subrecipient retaining more than $500 in interest earnings and any interest earnings that exceed $500 should be annually remitted to the federal government. Condition: We noted three concerns with UW-Madison cash management procedures for advancing funds to the subrecipient. First, we identified that UW-Madison did not ensure that the time between the subrecipient receiving funds and the subrecipient disbursing the funds to grant recipients was appropriately minimized. According to the subrecipient records, the subrecipient did not begin disbursing funds it received in June 2023 until January 2024. Second, although UW Madison provided advanced payments to the DBII subrecipient, it did not use the reimbursement method when subsequent payments were made to the subrecipient. Third, UW Madison did not adequately monitor interest that had accrued on the subrecipient’s cash balance. As a result, the subrecipient’s records identified that it had accrued $148,357 in interest earnings in excess of federal requirements from August 2022 to August 2024, and no interest had been returned to the federal government as of June 30, 2024. Context: UW Madison made payments totaling $6.3 million to the DBII subrecipient during FY 2023 24, which included advancing funding to the subrecipient to enable the subrecipient to make payments as requested from grant recipients. We reviewed the subrecipient’s financial information to assess UW Madison’s decision to provide advanced payments to the subrecipient on the basis of a lack of sufficient working capital. We also reviewed UW Madison’s procedures for communicating the requirements for funds it advanced to the subrecipient, monitoring the subrecipient’s payments to grant recipients, and assessing how and when to advance funds to the subrecipient based on the payments anticipated for grants awarded. Information provided by the subrecipient indicated that, on average, the subrecipient held a cash balance of $3.9 million each month during FY 2023 24. Questioned Costs: None. Effect: UW Madison did not comply with federal requirements to ensure that time was minimized between payments to its subrecipient for the DBII grant and when the subrecipient disbursed the funds to grant recipients. In addition, UW-Madison did not comply with federal requirements to return interest earned by its subrecipient in a timely manner. Cause: First, UW Madison’s practice of making an advanced payment to the DBII subrecipient at the time a subaward was executed did not evaluate when the subrecipient would need to make payments to grant recipients. After UW-Madison made an initial advanced payment to the subrecipient to assist the subrecipient with managing cash flow needs, it required the subrecipient to expend 80.0 percent of the funds it had advanced before UW Madison would authorize additional payments. UW Madison also made decisions on whether to make further payments to the subrecipient for each subaward rather than reviewing the subrecipient’s available cash balance across multiple subawards. This resulted in the subrecipient having larger balances over time from advanced funds it received under multiple DBII awards. Second, UW Madison staff indicated that UW Madison did not typically provide advanced payments to a subrecipient. As a result, it did not sufficiently consider all the federal requirements, such as using the reimbursement method for payments to the subrecipient subsequent to the initial advanced payment. UW Madison also did not include all relevant information in its subrecipient agreement related to cash management requirements. Third, the DBII subrecipient did not inform UW Madison of interest earnings it had accumulated nor did UW Madison inquire with the subrecipient about any interest earnings to assess whether any had been earned in excess of federal requirements. UW Madison did not review aggregated balances from advance payments made under multiple subawards. In July 2024, the DBII subrecipient asked UW Madison how interest earnings it had accumulated could be expended. UW Madison determined that the funds were required to be returned to the federal government. In October 2024, the subrecipient reported its interest earnings to UW-Madison and subsequently remitted $148,357 to UW Madison. UW Madison returned these funds to the federal government in January 2025. Recommendation: We recommend the University of Wisconsin Madison revise and document its procedures for: -ensuring that its disbursements to the subrecipient complies with all federal cash management requirements; -identifying applicable federal requirements to include in its subrecipient agreements when advanced cash payments are made, including requirements for interest earnings that results from advanced payments; and -monitoring interest earnings that accrue to the subrecipient when advanced payments are made and returning in a timely manner any interest that exceeds federal limits. Finding 2024-713: Dairy Business Innovation Initiatives—Cash Management Dairy Business Innovation Initiatives (Assistance Listing number 10.176) Award Numbers Award Years AM190100XXXG079 2019 AM200100XXXXG001 2020 21DBIWI1006 2021 AM21DBIWI1010 2022 AM22DBIWI1014 2022 23DBIWI1019 2023 Questioned Costs: None Type of Finding: Material Weakness, Material Noncompliance As a result, we qualified our opinion on compliance for the cash management compliance requirement. Response from the University of Wisconsin-Madison: The University of Wisconsin-Madison agrees with the audit finding and recommendations.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Finding Reference Number: 2024-023 NH Department of Energy Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2301NHLIEA, 2401NHLIEA Federal Award Year: 2023, 2024 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2023-014 Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the Low-Income Home Energy Assistance program (LIHEAP), we noted the New Hampshire Department of Energy (the Department) advances payments to subrecipients to ensure that they have sufficient cash on hand in order to pay for benefit payments. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $38,545,693 to subrecipients during the year ended June 30, 2024. During our testwork over cash management, we noted that for the 4 cash advance payment samples selected for testwork, while the Department properly tracks subrecipient's expenditures, the Department does not ensure that the amount of time the cash on hand is minimized. The engagement team noted that for all 4 samples tested, cash is on hand for over 30 days according to each tracking sheet maintained by management. Cause The cause of the condition found was primarily due to insufficient monitoring procedures and internal controls to ensure that subrecipients either utilized advanced funds timely or effectively evaluate the amount of funds the subrecipient would need to have on hand at the time of the advance payment. Effect The effect of the condition found is that the Department was not in compliance with 2 CFR section 200.204(b)(1). Questioned Costs: None. Recommendation We recommend that the Department continue to review its existing internal controls, policies, and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials: Management concurs with the finding above.
Criteria: The Code of Federal Regulations (CFR) Title 2, Part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition: The District's expenditure reports filed for June 30, 2024 included expenditures in the amount of $19,645 paid in July 2024. These amounts were not reported as committed or obligated. Questioned Costs: None. Context: The District received federal reimbursement before expenditures were paid. Effect: The June 30, 2024 expenditure report was filed overstating expenditures by $19,645. Cause: Grant expenditures reported on the June 30, 2024 expenditure report included $19,645 of expenditures that were not paid by the District until the following year. Recommendation: Grant expenditure reports should only include expenditures that have been paid during the grant report expenditure period. Management's response: There is no disagreement with this finding, and management will monitor all future federal reimbursement requests. Committed and obligated expenditure reports will be reported appropriately, and will be paid within 90 days after project completion.