Finding Text
2024-001 – Cash Management Federal Agency: U.S. Department of Education Federal Program: Arts in Education Federal Assistance Listing Number: 84.351A Pass-through Entity: Not applicable. Award Identification Number: S351A210115 Year: 2023 and 2024 Criteria: 2 CFR 200.305 requires recipients and subrecipients to minimize the time elapsing between receipt of federal funds and disbursement, ensuring advance payments are limited to the minimum needed and timed to actual, immediate cash requirements for program or project costs. Additionally, 2 CFR 200.303 requires non-Federal entities to maintain effective internal controls over Federal awards to ensure compliance with Federal laws, regulations, and award terms. Condition: During our audit, we noted instances whereby the basis for the funds drawn down from the G6 system were unsupported. Context: This issue appears to be recurring, as several drawdowns over multiple months exceeded actual expenses and were not identified through the Organization’s internal controls. During the audit period, 100% of drawdowns were tested, with cumulative drawdowns exceeding actual expenses by $260,490 out of $1,118,922 total drawdowns at year-end. Cause: Internal controls were not in place to ensure an accurate basis for drawdowns. Effect: The failure to maintain supporting documentation for draw requests could result in drawing funds in excess of actual expenses incurred. Questioned Costs: Known questioned costs are $260,490, calculated as the excess of cumulative federal drawdowns over allowable program expenses as of June 30, 2024. Repeat Finding: Yes Recommendation: We recommend that the Organization implement procedures to ensure that federal drawdowns are based on allowable program expenditures and are supported by general ledger reports of expenses incurred on the Federal program. Staff responsible for drawdowns should receive training on federal cash management requirements. Views of Responsible Officials: See Corrective Action Plan.