Finding Text
Finding 2024-004: Unallowable Costs / Cash Management (Material Weakness)
Information on the Federal Programs: Assistance Listing Number 98.001
Criteria: According to Uniform Guidance (2 CFR 200.305(b)), Federal funds must be managed in a
way that minimizes the time elapsing between the transfer of funds and the Organization’s
disbursement of those funds for program purposes. Additionally, internal controls over cash
management should ensure that all drawdowns are approved by designated personnel to prevent
improper or premature use of Federal funds. Furthermore, per 2 CFR 200.414(c), indirect costs may
only be charged to a Federal program if an approved indirect cost rate or a direct cost allocation
methodology is in place and if the Federal award allows for indirect cost recovery.
Condition: During our review of Federal grant drawdowns, it was noted that several drawdowns were
processed without obtaining the required internal approvals as outlined in Astraea's cash
management policies and procedures.
We also noted that several draws included indirect costs, despite the Federal award agreement
explicitly prohibiting indirect cost recovery. While these costs were later removed and ultimately not
charged to the Federal program, their inclusion initially led to an overdraw of funds exceeding the
program’s actual needs. Furthermore, Astraea is carrying a large refundable advance balance.
Cause: Astraea’s cash management procedures were not consistently followed, leading to missed
approvals for certain drawdowns and delays in fund disbursement. Additionally, the lack of approval
led to errors in charging indirect costs to the program.Effect: Drawdowns without proper internal approval increase the risk of non-compliance with Federal
cash management requirements and could result in unauthorized or inaccurate fund usage.
Additionally, charging unallowable indirect costs to the program resulted in noncompliance with
Federal regulations. Furthermore, the delay in disbursing Federal funds increases the risk of
noncompliance with cash management requirements, potentially resulting in interest liability.
Questioned Costs: None noted.
Identification as a Repeat Finding, if Applicable: Finding 2023-005
Recommendation: Astraea should reinforce cash management controls by ensuring all Federal
drawdowns obtain the appropriate internal approvals before processing. This can be achieved by
implementing a checklist or automated workflow to verify compliance with approval requirements.
Astraea should also strengthen internal controls over cost allocation to prevent unallowable indirect
charges. Additionally, we recommend Astraea implement procedures to ensure that Federal funds
are disbursed promptly in accordance with 2 CFR 200.305 to avoid undue delays.