Finding Text
Criteria: In accordance with the Uniform Guidance (2 CFR §200.305), when entities are funded on a reimbursement basis, they must disburse funds for program purposes prior to requesting reimbursement. The grant for IBBG allowed a 3 day grace period where the Organization could request funds in advance if they spend them within 3 days. Condition: During our testing of cash management, we noted that the Organization requested and received reimbursement of federal funds prior to expending the related program costs. In a certain instance the entity also requested funds in advance and did not spend them within the 3 day window. Cause: The Organization did not have adequate procedures in place to ensure reimbursement requests were timed in accordance with federal cash management requirements. Effect: Requesting federal funds in advance of need results in noncompliance with cash management requirements and creates a risk of the Organization holding federal funds for unallowable purposes, or earning interest that would need to be remitted to the Federal government. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its cash management procedures to ensure that reimbursement requests are made only after expenditures have been incurred, and that advance requests, if any, are timed so that funds are disbursed within the required three-day window. Organization Response: Management agrees with this finding.