Finding Text
Criteria
In accordance with 2 CFR 200.305(b), entities receiving federal funds are responsible for ensuring payment methods 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.
Condition and Context
The Organization engaged the services of an information technology firm for the initial development work (Phase 1) to create a tool to assist in outreach to employers in Ohio that are in the broadband sector. This initial development work was completed in September 2023 at a cost of $100,000. The Organization requested reimbursement of this expense in November 2023 as part of the award’s final close-out procedures. Given that the Organization was negotiating terms with this vendor for Phase 2 of this effort, the Organization did not issue a payment to the vendor for the $100,000 that had been received. Rather, the Organization determined it would be appropriate to withhold payment to the vendor until the Phase 2 negotiations were completed or terminated.
Cause
The ongoing work related to this project was to be completed under a different federal contract. Thus, the Organization determined that it would be in the best interest of the overall project to hold payment for the completed Phase 1 work until a comprehensive agreement for Phase 2 could be reached. The vendor was amenable to this arrangement. The contract negotiations have taken longer than anticipated. As a result, payment has been delayed.
Effect
The Organization’s treatment of this $100,000 reimbursement was not in compliance with the requirements of the cash management provisions of 2 CFR 200.305(b).
Repeat Finding
No.
Recommendation
We recommend that the Organization review its processes to ensure all reimbursements of federal funds are remitted in a timely manner to vendors.
Views of Responsible Officials and Planned Corrective Actions
See attached corrective action plan.
Questioned Costs
None.