Finding 1075674 (2023-001)

Finding 2023-001 Significant deficiency in internal controls over compliance and instance of noncompliance related to cash management. Federal Agency: United States Department of Health and Human Services Program Titles: Unaccompanied Children Program Assistance Listing Number: 93.676 Pass-Through Entity: Direct award Award Numbers: 90ZU0555-01-01 Award Periods: April 1, 2023 through March 31, 2024 Criteria Compliance requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.305 Federal Payment, require that a non‐Federal entity must use a payment method that minimizes 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. When a non-federal entity must be paid in advance, the non-Federal entity must limit cash advance 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. Condition/Context During the year ended December 31, 2023, out of a sample of five cash draws, one selection represented a cash draw in excess of the immediate cash needs of the Organization. The Organization originally calculated the cash draw based upon the number of participants served in the program instead of the amount of allowable costs incurred for the program. Management of the Organization identified the overdraw and refunded $1,027,988 to the grantor within a month of the initial draw, which represents the amount drawn in excess of expenditures incurred. Cause The Organization did not have internal controls in place to ensure that the cash drawn was limited to the minimum amount needed for immediate cash needs of the program. Effect The Organization withdrew $1,027,988 in excess of immediate cash needs for the program and refunded the balance to the grantor after the error was identified within a month of the excess draw. Questioned Costs Not applicable. Repeat Finding Not a repeat finding. Recommendation We recommend the Organization implement internal controls to ensure that cash draws represent 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. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.