Finding Text
Criteria: Cost-reimbursement contracts under the federal acquisition regulation require that the non-federal entity request reimbursement for (a) only allocable, allowable, and reasonable contract costs that have already been paid or (b) if the non-federal entity is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid. Ordinary course of business would be in accordance with the terms and conditions of a subcontract or invoice and ordinarily within 30 days of the request to the federal government for reimbursement.
Condition: We selected a sample of expenditures requested for reimbursement. In our testing of the sample, we noted expenditures between $500 and $777,671 (average expenditure of $260,867) that were incurred and requested for reimbursement; however, the payment for the expenditure was not made until 37-103 days after reimbursement (average delay in payment of 66 days).
Cause: The Foundation waited for reimbursement funds to be received to pay the expenditure for cash flow purposes.
Effect or potential effect: Since the federal award is a cost-reimbursement contract, the request for reimbursement was not in compliance with the cash management requirements of the federal award.
Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2022-003.
Recommendation: We recommend that management limit the time between requests to the federal government for reimbursement and payment of the expense to 30 days or less.
Views of responsible officers: Management acknowledges this finding and will address remediation in the accompanying management’s corrective action plan in appendix A.