Finding Text
Finding 2024-001 Lack of Internal Controls over Cash Management
Federal Agency: U.S. Department of the Treasury
Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF)
Assistance Listing Numbers: 21.027
Award Number: SLFRP3171/4774
Award Years: 2021
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs.
Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $8,470,564 at September 30, 2024. The unearned revenues were $8,727,660 which resulted in a shortfall of $257,096. The unearned revenue for the CSLFRF Program (ARPA Special Revenue Fund) was $269,930.
Cause: Lack of internal controls over cash management.
Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village.
Questioned Costs: $257,096, which is the shortfall between cash and cash equivalent balance and the unearned revenue balance.
Repeat Finding: This is a repeat of Finding 2023-001, and since this is a repeat finding we believe this to be a systemic issue.
Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments.