(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.
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.
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.
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.
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.
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.
2024-006: Return of Interest Earned on Advance Payment Cash Receipts Grantor: Department of Health and Human Services (DHHS) Program Title: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Award Name: Region 3 Emerging Special Pathogen Treatment Center at The Johns Hopkins Hospital (JH Biocontainment Unit) Award Number: U3REP220674 Assistance Listing Title: Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Assistance Listing Number: 93.817 Award Year: September 30, 2023 – September 29, 2024 Passthrough Entity: None Criteria Per 2 CFR 200.305(b)(11)-(12), the auditee must maintain advance payments of Federal funds in interestbearing accounts and may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the DHHS Payment Management System (PMS). Condition JHHS received advance payments from DHHS for the HPP award totaling $1,615,384 in October 2023, which were maintained in an interest-bearing account and disbursed over the period through September 2024. During the fiscal year ended 6/30/2024, JHHS earned $51,620 of interest, which was not returned to DHHS. Cause Management was not aware of the requirement to return interest earned on advance payments in excess of $500. Effect Management did not perform a calculation of interest earned and return the interest earned to DHHS at least annually, as required. Questioned Costs There are no questioned costs associated with this finding. Recommendation JHHS should return the interest earned to DHHS as required, and establish a process to ensure that interest on advance payments received from federal agencies is calculated at least annually and returned appropriately if interest earned is in excess of $500. Management’s Views and Corrective Action Plan Refer to Management’s View’s and Corrective Action Plan at the end of the report.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: MD-0044 and 2021 Award Period: March 11, 2021 through December 31, 2024, liquidated by December 31, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Per 2 CFR 200.305(b)8, a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work. Questioned Costs: None Condition/Context: Four of sixty general disbursements tested were related to retainage payable. These expenditures were not paid during the fiscal year and therefore should not be reported on the SEFA. Cause: The Commission did not have proper policies and procedures in place to ensure the SEFA is prepared in accordance with Uniform Grant Guidance. Effect: The Commission could overstate federal expenditures on the SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission establish policies and procedures over internal controls to ensure review and approval of SEFA preparation. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: MD-0044 and 2021 Award Period: March 11, 2021 through December 31, 2024, liquidated by December 31, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Per 2 CFR 200.305(b)8, a payment must not be made to a recipient or subrecipient for amounts that the recipient or subrecipient withholds from contractors to assure satisfactory completion of work. Payment must be made when the recipient or subrecipient disburses the withheld funds to the contractors or to escrow accounts established to ensure satisfactory completion of work. Questioned Costs: None Condition/Context: Four of sixty general disbursements tested were related to retainage payable. These expenditures were not paid during the fiscal year and therefore should not be reported on the SEFA. Cause: The Commission did not have proper policies and procedures in place to ensure the SEFA is prepared in accordance with Uniform Grant Guidance. Effect: The Commission could overstate federal expenditures on the SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission establish policies and procedures over internal controls to ensure review and approval of SEFA preparation. Views of Responsible Officials: Management agrees with the finding.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster: - 12.RD, U.S Department of Defense, Unidentified - 12.351, U.S Department of Defense, Scientific Research - Combating Weapons of Mass Destruction - 20.701, U.S. Department of Transportation, University Transportation Centers Program - 93.847, U.S. Department of Health and Human Sevices, Diabetes, Digestive, and Kidney Diseases Extramural Research - 93.866, U.S. Department of Health and Human Sevices, Aging Research Federal Award Identification Number and Year - - 12.RD: N0002420F8355, 2022 - 12.351: HDTRA1-20-2-0002, 2020 - 20.701: 69A3551847103, 2019 - 93.847: 1 U01 DK127384-01, 2023 - 93.866: 1 U2C AG060408-01, 2024 Pass-through Entity - N/A - all direct funded awards Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. Further, when the reimbursement method is used for payment, organizations must make a 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. Condition - The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30-calendar-day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - Out of 40 payments to subrecipients that were tested, 16 were made after the 30-calendar-day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 39 to 441 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation - The University should implement a control to ensure that payments made to subrecipients are completed within the 30-day requirement. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State is already implementing stronger internal controls to ensure its subrecipients are paid timely.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster: - 12.RD, U.S Department of Defense, Unidentified - 12.351, U.S Department of Defense, Scientific Research - Combating Weapons of Mass Destruction - 20.701, U.S. Department of Transportation, University Transportation Centers Program - 93.847, U.S. Department of Health and Human Sevices, Diabetes, Digestive, and Kidney Diseases Extramural Research - 93.866, U.S. Department of Health and Human Sevices, Aging Research Federal Award Identification Number and Year - - 12.RD: N0002420F8355, 2022 - 12.351: HDTRA1-20-2-0002, 2020 - 20.701: 69A3551847103, 2019 - 93.847: 1 U01 DK127384-01, 2023 - 93.866: 1 U2C AG060408-01, 2024 Pass-through Entity - N/A - all direct funded awards Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. Further, when the reimbursement method is used for payment, organizations must make a 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. Condition - The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30-calendar-day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - Out of 40 payments to subrecipients that were tested, 16 were made after the 30-calendar-day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 39 to 441 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation - The University should implement a control to ensure that payments made to subrecipients are completed within the 30-day requirement. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State is already implementing stronger internal controls to ensure its subrecipients are paid timely.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster: - 12.RD, U.S Department of Defense, Unidentified - 12.351, U.S Department of Defense, Scientific Research - Combating Weapons of Mass Destruction - 20.701, U.S. Department of Transportation, University Transportation Centers Program - 93.847, U.S. Department of Health and Human Sevices, Diabetes, Digestive, and Kidney Diseases Extramural Research - 93.866, U.S. Department of Health and Human Sevices, Aging Research Federal Award Identification Number and Year - - 12.RD: N0002420F8355, 2022 - 12.351: HDTRA1-20-2-0002, 2020 - 20.701: 69A3551847103, 2019 - 93.847: 1 U01 DK127384-01, 2023 - 93.866: 1 U2C AG060408-01, 2024 Pass-through Entity - N/A - all direct funded awards Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. Further, when the reimbursement method is used for payment, organizations must make a 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. Condition - The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30-calendar-day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - Out of 40 payments to subrecipients that were tested, 16 were made after the 30-calendar-day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 39 to 441 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation - The University should implement a control to ensure that payments made to subrecipients are completed within the 30-day requirement. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State is already implementing stronger internal controls to ensure its subrecipients are paid timely.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster: - 12.RD, U.S Department of Defense, Unidentified - 12.351, U.S Department of Defense, Scientific Research - Combating Weapons of Mass Destruction - 20.701, U.S. Department of Transportation, University Transportation Centers Program - 93.847, U.S. Department of Health and Human Sevices, Diabetes, Digestive, and Kidney Diseases Extramural Research - 93.866, U.S. Department of Health and Human Sevices, Aging Research Federal Award Identification Number and Year - - 12.RD: N0002420F8355, 2022 - 12.351: HDTRA1-20-2-0002, 2020 - 20.701: 69A3551847103, 2019 - 93.847: 1 U01 DK127384-01, 2023 - 93.866: 1 U2C AG060408-01, 2024 Pass-through Entity - N/A - all direct funded awards Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. Further, when the reimbursement method is used for payment, organizations must make a 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. Condition - The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30-calendar-day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - Out of 40 payments to subrecipients that were tested, 16 were made after the 30-calendar-day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 39 to 441 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation - The University should implement a control to ensure that payments made to subrecipients are completed within the 30-day requirement. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State is already implementing stronger internal controls to ensure its subrecipients are paid timely.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster: - 12.RD, U.S Department of Defense, Unidentified - 12.351, U.S Department of Defense, Scientific Research - Combating Weapons of Mass Destruction - 20.701, U.S. Department of Transportation, University Transportation Centers Program - 93.847, U.S. Department of Health and Human Sevices, Diabetes, Digestive, and Kidney Diseases Extramural Research - 93.866, U.S. Department of Health and Human Sevices, Aging Research Federal Award Identification Number and Year - - 12.RD: N0002420F8355, 2022 - 12.351: HDTRA1-20-2-0002, 2020 - 20.701: 69A3551847103, 2019 - 93.847: 1 U01 DK127384-01, 2023 - 93.866: 1 U2C AG060408-01, 2024 Pass-through Entity - N/A - all direct funded awards Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the passthrough 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. Further, when the reimbursement method is used for payment, organizations must make a 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. Condition - The University did not have adequate controls in place to ensure invoices to subrecipients were paid timely within the 30-calendar-day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - There were no questioned costs identified. Context - Out of 40 payments to subrecipients that were tested, 16 were made after the 30-calendar-day requirement. In all samples tested, payment was made to the subrecipient; however, the delayed payments ranged from 39 to 441 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University’s controls are not designed to ensure payment for all subrecipients was made in accordance with the 2 CFR 200.305(b)(3). Recommendation - The University should implement a control to ensure that payments made to subrecipients are completed within the 30-day requirement. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State is already implementing stronger internal controls to ensure its subrecipients are paid timely.
Condition and Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program project costs and the proportionate share of allowable indirect costs. Minimum elapsed time for funds transfer is dependent upon the payment system/method used by the non-federal entity. The US Department of Education (ED) uses the G6 grants management platform, which is a module of the Education Central Automated Processing System (EDCAPS). Generally, funds requested from G6 process overnight and the funds are available in the non-federal entity’s account the next business day. The University has procedures in place to ensure that funds are drawn down from G6 only after they have been expended. However, we noted in one (1) instance where an amount appears to have been drawn down in advance. Context: The University made twenty nine (29) drawdowns of federal program funds during the fiscal year. In comparing the dates of the drawdowns with the accumulated program expenditures to each drawdown date, one (1) drawdown on 12/20/2023 exceeded accumulated program expenditures as of that date by $44,538. By 1/12/2024, the University had expended the amount advanced. Effect: The University was not in compliance with federal cash management regulations for a portion of the current fiscal year. Cause: Administrative oversight. Auditor's Recommendation: The University should development a spreadsheet or other tool similar to the one the auditor used to test cash management compliance that compares cumulative program expenditures to drawdowns. This tool should be updated prior to drawing down funds in order to ensure that drawdowns are limited to amounts expended at any point in time.
Condition and criteria: According to 2 CFR section 200.305(b)(1), advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. 2 CFR section 200.305(b)(11) further states that the recipient or subrecipient must generally maintain advance payments of federal funds in interest-bearing accounts. It was noted during the audit that the University received an advance payment of $1,483,500 to be used for student scholarships in a future fiscal year and such advance payment was deposited into a noninterest-bearing account. Context: The funds were advanced to the University in April 2024 and had not been expended as of June 30, 2024. Such funds were still deposited in the noninterest-bearing account as of June 30, 2024. Effect: The University was not in compliance with federal cash management regulations for a portion of the current fiscal year. Cause: University personnel indicate that they were advised by ED that it was permissible to draw down the funds in advance and hold them in a noninterest-bearing account until needed. Auditor’s Recommendation: At a minimum, the University should transfer the advanced funds to an interest-bearing account. Interest earned on federal advance payments in excess of $500 should be remitted annually to the US Department of Health and Human Services using the instructions contained in the enclosures to the original grant award notification. The University should also contact appropriate ED officials to ensure that it is in compliance with 2 CFR section 200.305(b)(1).
Assistance Listing Number: 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: N/A Federal Award Year: 2023/2024 Pass Through Entity: Chicago Cook Workforce Partnership Criteria: In accordance with 2 CFR 200.303, 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: The Organization is either lacking or has nonconforming written policies and procedures for the following administrative functions, required by0 the Uniform Guidance: 1. Financial management - 2 CFR 200.302(b)(6) - spacing 2. Allowable Costs - 2 CFR 200.302(b)(7) 3. Federal payment - 2 CFR 200.305(b)(1) 4. Procurement - 2 CFR 200.318(a) and 2 CFR 200.318(c)(1) 5. Competition - 2 CFR 200.319(d) 6. Methods of procurement to be followed - 2 CFR 200.320 7. Compensation (Personal Services) - 2 CFR 200.430(a)(1) 8. Compensation (Fringe Benefits - Leave) - 2 CFR 200.431(b)(1) 9. Relocation costs of employees - 2 CFR 200.464(a)(2) 10. Travel costs - 2 CFR 200.474 Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our review of the Organization’s policies and procedures, which were found to be not in accordance with Uniform Guidance. Cause: The Organization was not aware of the specific Uniform Guidance requirements for certain written policies and procedures. Effect: The Organization did not have these policies and procedures in place to reasonably ensure that program functions are achieved effectively, efficiently and in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Organization was not in compliance with the administrative requirements set forth in the Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization design procedures and implement internal control procedures to ensure that the Uniform Guidance administrative requirements are met. Views of Responsible Officials and Corrective Action Plan: See corrective action plan attached to financial statements.
Criteria: The federal award program noted above is not subject to the Treasury-State Cash Management Improvement Act agreement and, as such, is subject to 2 CFR 200.305(b), which states: “The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The State of Hawaii, Department of Budget and Finance has determined and communicated in Finance Memorandum 20-02 that their standard for an “administratively feasible time period” was 21 calendar days. Condition: During the testing of the Department’s cash management procedures, it was determined that eight out of sixty payments tested were not distributed within 21 days of the draw down of funds. For the items tested, the time elapsed between draw down and payment ranged from 22 to 44 days. Context: During the fiscal year ended June 30, 2024, the program expended $9,608,301 (excluding food expenditures). Cause: The Department draws down federal funds that will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305 (b). Also, the State’s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department’s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2023-011 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.
Develop Written Policies and Procedures Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Equipment Management Requirements Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e). In addition, the organizations should ensure that existing written procedures are in compliance with: a. General Procurement Standards 2 CFR 200.318 to 200.327 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition MARTA does not have comprehensive written policies and procedures concerning the following key compliance areas which are required by the Uniform Guidance: Equipment and Real Property Management MARTA has an Asset Inventory Policy and Procedures, however, it does not clearly define the policies and procedures that are in place for the use, management and disposition of equipment acquired under a Federal award in accordance with 2 CFR sections 200.313(c) through (e). Cash Management MARTA does not have written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. Procurement, Suspension and Debarment MARTA has a Procurement policy, however, documented procedures are not well-defined regarding the purchase process for different types of procurement, obtaining quotations, bidding, and procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause MARTA’s reliance on informal business practices leads to inconsistencies in its internal controls. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation MARTA should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action MARTA has grown substantially in the last several years. This progress includes identifying areas that we need to update or to develop new processes and documentation. MARTA has an Asset Inventory Policy and Procedures in which the purpose is to ensure that fixed assets are properly accounted for, identified, and tracked. MARTA also has Cash Handling Policy and Procedures which addresses safeguarding public funds and maximizing resources available. This is designed to reduce the risks associated with the collection, receipts storage and reporting of cash transactions and to safeguard and maintain the security and integrity of MARTA's fiscal assets. MARTA is in the process of updating the Procurement Policy. MARTA will review and update these policies and/or create new policies to make sure that they are compliant with the Uniform Guidance. The updated or newly created policies will be brought to the October 2025 Board of Directors meeting for Board review or approval. Personnel responsible: Sandy Benson, General Manager Anticipated completion date: October 2025
Develop Written Policies and Procedures Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Equipment Management Requirements Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e). In addition, the organizations should ensure that existing written procedures are in compliance with: a. General Procurement Standards 2 CFR 200.318 to 200.327 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition MARTA does not have comprehensive written policies and procedures concerning the following key compliance areas which are required by the Uniform Guidance: Equipment and Real Property Management MARTA has an Asset Inventory Policy and Procedures, however, it does not clearly define the policies and procedures that are in place for the use, management and disposition of equipment acquired under a Federal award in accordance with 2 CFR sections 200.313(c) through (e). Cash Management MARTA does not have written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. Procurement, Suspension and Debarment MARTA has a Procurement policy, however, documented procedures are not well-defined regarding the purchase process for different types of procurement, obtaining quotations, bidding, and procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause MARTA’s reliance on informal business practices leads to inconsistencies in its internal controls. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation MARTA should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action MARTA has grown substantially in the last several years. This progress includes identifying areas that we need to update or to develop new processes and documentation. MARTA has an Asset Inventory Policy and Procedures in which the purpose is to ensure that fixed assets are properly accounted for, identified, and tracked. MARTA also has Cash Handling Policy and Procedures which addresses safeguarding public funds and maximizing resources available. This is designed to reduce the risks associated with the collection, receipts storage and reporting of cash transactions and to safeguard and maintain the security and integrity of MARTA's fiscal assets. MARTA is in the process of updating the Procurement Policy. MARTA will review and update these policies and/or create new policies to make sure that they are compliant with the Uniform Guidance. The updated or newly created policies will be brought to the October 2025 Board of Directors meeting for Board review or approval. Personnel responsible: Sandy Benson, General Manager Anticipated completion date: October 2025
Develop Written Policies and Procedures Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Equipment Management Requirements Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e). In addition, the organizations should ensure that existing written procedures are in compliance with: a. General Procurement Standards 2 CFR 200.318 to 200.327 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition MARTA does not have comprehensive written policies and procedures concerning the following key compliance areas which are required by the Uniform Guidance: Equipment and Real Property Management MARTA has an Asset Inventory Policy and Procedures, however, it does not clearly define the policies and procedures that are in place for the use, management and disposition of equipment acquired under a Federal award in accordance with 2 CFR sections 200.313(c) through (e). Cash Management MARTA does not have written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. Procurement, Suspension and Debarment MARTA has a Procurement policy, however, documented procedures are not well-defined regarding the purchase process for different types of procurement, obtaining quotations, bidding, and procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause MARTA’s reliance on informal business practices leads to inconsistencies in its internal controls. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation MARTA should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action MARTA has grown substantially in the last several years. This progress includes identifying areas that we need to update or to develop new processes and documentation. MARTA has an Asset Inventory Policy and Procedures in which the purpose is to ensure that fixed assets are properly accounted for, identified, and tracked. MARTA also has Cash Handling Policy and Procedures which addresses safeguarding public funds and maximizing resources available. This is designed to reduce the risks associated with the collection, receipts storage and reporting of cash transactions and to safeguard and maintain the security and integrity of MARTA's fiscal assets. MARTA is in the process of updating the Procurement Policy. MARTA will review and update these policies and/or create new policies to make sure that they are compliant with the Uniform Guidance. The updated or newly created policies will be brought to the October 2025 Board of Directors meeting for Board review or approval. Personnel responsible: Sandy Benson, General Manager Anticipated completion date: October 2025
Federal Program Information: Research and Development Cluster (various ALN #’s) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): M. Subrecipient Monitoring - per 2 CFR Part 200.305(b), for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. Condition: The University’s procedures failed to minimize the time elapsing between the transfer of federal funds to the subrecipient and the disbursement of such funds for program purposes by the subrecipient. Cause: Insufficient internal controls and administrative oversight with respect to subrecipient invoice approval. Effect or Potential Effect: The University was not in compliance with the cash management requirements of a pass-through entity. Questioned Costs: None. Context: For 4 of 21 subrecipient invoices selected for testing, the University did not review and pay the subrecipient in a timely manner. Identification as a Repeat Finding: This is a repeat of prior year finding 2023-015. Recommendation: We recommend that the University enhance its internal controls and procedures to ensure timely review and payment of subrecipient invoices. Views of Responsible Officials: The process to review subrecipient invoices will be improved by requiring the review of supporting documents to ensure expenses are allowable by the Sponsored Program Office (SPO) post award team. This team will thoroughly review supporting documents to ensure expenses are allowable, allocable, reasonable and recorded in the proper period according to university policies and grant terms. Invoices will be reviewed by SPO and will serve as the key control point before transactions are forwarded to accounting to post to sponsored awards. Subrecipient invoices will be paid by Accounts Payable only after approval by SPO and GCA. The Director of Compliance will conduct spot checks on all sponsored transactional activity, especially for high-risk grants to provide an additional layer of oversight. The new review process and training for these responsibilities will be implemented by spring 2025 as part of the broader campus-wide workflow training and staffing up of the new SPO Post-Award office.