Finding Text
2024-001 – Material Weakness in Internal Control over Cash Management Identification of federal programs: United States Department of the Interior (DOI): #15.608 Fish and Aquatic Conservation - Aquatic Invasive Species: F21AC02420, F23AC01420, and F23AP01474 #15.685 National Fish Passage: F23AC02320 Criteria: Part 3 Compliance Supplement Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: The Organization received advanced payments of grant funding and did not minimize the time elapsing between the transfer of funds and disbursement by the Organization. Advanced funding outstanding as of December 31, 2024 was as follows: #15.608: -F21AC02420 = $161,728 -F23AC01420 = $137,398 -F23AP01474 = $93,662 #15.685: -F23AC02320 = $54,037 Additionally, on the F23AC02320 annual financial report, the funding is improperly reported as liquidated cash disbursements and not cash on hand. Though it had been obligated, it had not yet been disbursed. Cause: The Organization’s written policies and procedures do not address all of the cash management requirements of Uniform Guidance. Previously, the Organization’s grants were operated on a reimbursement basis. At the end of the fiscal year under audit, due to the significant size and nature of the grants, and due to general economic uncertainty and internal risk assessments performed, the Organization determined that it was in their best interest to draw down grant funds in advance so that funding would be available for significant purchases during upcoming construction stages of the grants. Effect or potential effect: The Organization is not in compliance with the cash management requirements of the Uniform Guidance. Questioned Costs: None. Context: -#15.608: Three out of five grants had significant advanced funds outstanding at the end of the year, that were not subsequently disbursed soon after year end. -#15.685: One out of one grant had significant advanced funds outstanding at the end of the year, that were not subsequently disbursed soon after year end. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that the Organization reviews and revises their policies and procedures to ensure that they align with the cash management requirements of Uniform Guidance. We also recommend that as part of the Organization’s internal control structure over compliance with cash management requirements, to establish planning and monitoring procedures or checklists to ensure that timing is minimized between receipt from the U.S. Treasury or pass-through entity, and disbursement to the vendor. Additionally, we recommend that the Organization implements policy and procedures to ensure that earned interest is appropriately monitored and handled in accordance with the requirements of Uniform Guidance. Views of Responsible Officials: See Corrective Action Plan.