Finding Text
Ineffective Controls Over the Cash Management Requirement
Federal Agency: Department of Health and Human Service
Federal Program: Health Center Program
Assistance Listing Number: 93:224/93.527
Type of Finding: Significant Deficiency
Condition
Community Health Concern, Inc. (“CHC”) did not minimize the times between drawdowns and disbursements
of Federal funds in accordance with Federal regulations. There were three cash drawdowns made by
management that were at least two months (60 days) in advance of actual expenditures or immediate
requirement need for payment.
Possible Asserted Criteria:
In accordance with 2 CFR 200.305 (b), for non-Federal entities other than states, payment methods must
minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through
entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds
transfer, or issuance or redemption of checks, warrants, or payment by other means.
Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to
be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the
purpose of the approved program or project.
Possible Asserted Cause:
Management made two (2) early drawdowns to have funds available fearing a government shutdown. An
additional early drawdown was made to meet a project deadline.
Potential Asserted Effect of Condition:
The Federal government may:
• Require the funds to be paid back immediately.
• Require the use of a more stringent cash drawdown method for the program.
• Potential interest liability may be required.
Questioned Costs:
$967,117.
Recommendation:
We recommend that CHC improve its procedures to ensure that Federal cash is requested based on
immediate cash needs and within the correct period. Additionally, management should consult with its
Project Officer for helpful guidance and/or actions to take during cases of looming uncertainties such as
government shutdowns, missing project deadlines, etc.
Management’s Views:
Management’s response is included inthe “Management’s Views and Corrective Action Plan” included at the end of
this report after “Section IV – Status of Financial Statements Findings of Prior Audits.”