Finding Text
MW2020-008 FEDERAL DRAWDOWNS IN ADVANCE OF EXPENDITURES (REPEAT FINDING)
(PREVIOUSLY REPORTED AS MW2019-009)
Condition
Subsequent to the year ended December 31, 2019, CUAHSI drew down approximately
$1,300,000 from National Science Foundation (“NSF”) based on information that there was
going to be a government shutdown. Federal funds are required to be to be drawn down on a
reimbursement basis and not in advance of the expenditures. The funds were not returned to NSF
after it became clear that there would not be a government shutdown.
Criteria
CFR § 200.305 Cash management: This section of the CFR outlines the requirements for the
management of cash drawdowns and disbursements of federal funds. Federal funds should be
disbursed in a timely manner for allowable costs that have been incurred.
Cause
CUAHSI had insufficient funds available to “float” operating expenses.
Effect
Drawing down funds in advance of incurring eligible expenses could lead to non-compliance
with federal regulations, such as those outlined in 2 CFR § 200.305. This may result in the need
to repay the funds, potential financial penalties, or disqualification from future federal funding.Recommendation
The auditor recommends that CUAHSI develops and implements controls over policies
consistent with 2 CFR 200.35.
Current Year Status
This condition still exists for the year ended December 31, 2020. During the completion of the
audit, the auditor noted that during 2020, CUAHSI had advance drawdowns totaling $3,610,240
from the NSF. Of this amount, CUAHSI incurred $2,521,926 in eligible expenses for the year
ended December 31, 2020. This resulted in $1,088,314 in federal advances as of year-end. The
draw downs in excess of revenue recognized during the year ended December 31, 2020 is
reported as part of deferred revenue in the accompanying Statement of Financial Position.
View of Responsible Official and Planned Corrective Action
See accompanying Corrective Action Plan.