Finding Text
Compliance Requirement Cash Management and Reporting Type of Finding Material Weakness in Internal Control over Compliance Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs None Criteria - Federal rules require grant recipients to request reimbursement from the federal government soon after paying expenses, rather than holding costs for long periods. They also require financial reports to be accurate, up to date, and complete. To meet these standards, timely reporting must be supported by timely reimbursement requests so that the reports truly reflect the District’s financial activity. Condition - Although the District submitted the required SF-425 Federal Financial Reports on a timely basis, it did not submit requests for reimbursement timely. Repeatedly, reimbursements were requested nine to twelve months after expenditures were incurred, creating cash flow inefficiencies and increasing risk of misreporting. The total value of these requests were $661,577 Cause - The District failed to establish and implement adequate procedures to ensure reimbursement requests were submitted in coordination with actual cash outflows. This control weakness reflects insufficient oversight of cash management practices and resulted in noncompliance with federal requirements for timely reimbursement.Effect - Delayed reimbursement requests reduce cash management efficiency and create potential inconsistencies between reporting and drawdown activity. Recommendation - The District must establish and enforce policies mandating that reimbursement requests be submitted promptly after vendor payments are made. The District must reconcile reimbursement activity with SF-425 reporting to ensure that expenditures are accurately, timely, and consistently reflected in financial reports submitted to FEMA, in compliance with 2 CFR 200.305 and 2 CFR 200.328