Finding Text
FA 2023-003 Improve Controls over Cash Management
Compliance Requirement: Cash Management
Internal Control Impact: Material Weakness
Compliance Impact: Material Noncompliance
Federal Awarding Agency: U.S. Department of Education
Pass-Through Entity: Georgia Department of Education
AL Numbers and Titles: 84.010 - Title I Grants to Local Educational Agencies
Federal Award Numbers: S010A210010-21A (Year: 2022), SO10A220010 (Year: 2023)
Questioned Costs: None Identified
Repeat of Prior Year Findings: FA 2022-003, FA 2021-001, FA 2020-001, FA 2019-001,
FA 2018-001, FA 2017-002, FA 2016-001, FA 2015-002,
FA 2014-003
Description:
The School District made cash drawdowns in excess of immediate cash needs for the Title I Grants to Local Educational Agencies program.
Background Information:
The School District may request Title I Grants to Local Educational Agencies program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $426,546 in Title I funds from GaDOE during the fiscal year under review.
Criteria:
As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls.
Provisions included in the Uniform Guidance Section 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures.
Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits.
lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Condition:
A review of all cash drawdowns and disbursements related to the Title I program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the Title I program for 273 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process.
Cause:
In discussing this issue with the School District, they indicated that the lack of review of Federal grants resulted in excess cash drawdown request.
Effect:
The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures.
Recommendation:
The School District should establish procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed.
Views of Responsible Officials:
We concur with this finding.