Finding Text
Finding 2024-004 – Cash Collateralization (Repeat Finding 2023-003)
Criteria:
Uniform Guidance 2 CFR, Part §200.305(b)(7) requires advance payments of Federal funds to be deposited and maintained in insured accounts whenever possible.
Condition:
During our review of the Coalition’s cash, it was noted that as of September 30, 2024, they have not collateralized cash balances in excess of the amounts insured by the Federal Despot Insurance Corporation. Cash balances of $7,596,383 were uninsured at September 30, 2024. Unearned revenue was reported at approximately $4,434,584 which includes advance payments of Federal funds.
Questioned Costs:
None
Cause:
The Coalition has not entered into a cash collateralization agreement with their financial institution.
Effect:
The Coalition is not in compliance with Uniform Guidance 2 CFR, Part §200.305(b)(7) as not all cash balances received in advance from the funding agency were adequately insured or collateralized and were exposed to custodial credit risk in the event of a bank failure.
Recommendation:
We recommend the Coalition enter into a cash collateralization agreement with their financial institution to ensure that all amounts related to grant agreements and awards received in advance are not exposed to custodial credit risk in the event of a bank failure.
Views of Responsible Officials:
See the corrective action plan that accompanies the schedule of findings and questioned costs.