Finding 1095693 (2024-003)

2024-003: Material Weakness in Internal Control / Material Noncompliance – Cash Management (repeat comment) Federal Program: Employment Services Cluster (ALN 17.207/17.801) Criteria: 2 CFR 200.305(b) states, in part: “For Non-Federal entities 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…” 2 CFR 200.305(b)(2)(ii) states, in part: “Non-Federal entities must be authorized to submit requests for advance payments and reimbursements….”. 2 CFR 200.302(b)(6) states, in part: “the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR 200.305 – Federal Payment”. Condition: 1) The Consortium requested funds in advance of when the related disbursements were made, 2) the basis for the advances (requests) were not supported by appropriate documentation, and 3) authorization for requesting funds in advance was not obtained. Context: The total amount of funds overdrawn as of year-end totaled $173,888. Cause: Management oversight. Effect: Funds were requested and received in advance of when the related payments were disbursed without obtaining authorization for advance payments, and without properly documenting the basis for the requested funds. Consequently, the Consortium did not 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. Recommendation: The Consortium should carefully review their policies and procedures and make the necessary changes to assure that cash draws are based on expenditures already incurred and they are supported by transactions recorded in the books and records of the Consortium. Views of Responsible Officials: We agree with the finding.