Finding Text
Finding 2025-001: Cash Management Federal Agency-U.S. Department of Health and Human Services ALN: 93.297 and 93.217 Criteria: 2 CFR 200.305(b) states for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Condition: The Council receives federal money to provide teen pregnancy prevention and family planning services. In order to carry out those services, the Council enters into sub-awards with providers throughout its service territory. Providers submit their invoices to the Council monthly, and the Council submits a request for payment to the grantor for reimbursement. The audit revealed that the non-federal entity did not consistently minimize the time between the transfer of federal funds from the U.S. Treasury and the disbursement of those funds for program purposes. Questioned Costs: None. Context: The Council provided services under grants received directly from the U.S. Department of Health and Human Services. In order to provide the services, sub-awards are made with providers within the Council’s service territory. Providers were to be paid based off the invoices submitted to the Council. The Council submits a request for payment to the U.S. Department of Health and Human Services and once the funds are received, the Council is to pay its providers in a timely manner. Cause: The finance department initiated drawdowns based on projected expenditures rather than actual, immediate disbursement needs, leading to early receipt and holding of funds. Effect: Holding federal funds for extended periods may result in noncompliance with federal cash management regulations, potential interest liabilities, and reduced efficiency in program execution. Repeat Finding: This is a repeat finding. Recommendation: We recommend updates in the payment process to ensure that all providers are paid timely after receipt of grant funds. Management Response: We acknowledge the finding and take full responsibility for ensuring compliance with federal cash management requirements. The delay in provider payments during the audit period was primarily due to a temporary halt in government disbursements, which created uncertainty and the potential for funding gaps. To prevent recurrence, we have implemented the following corrective actions: • Payment Process Update: Provider disbursements are now prioritized immediately upon receipt of federal funds. • Compliance Calendar: A centralized calendar with automated reminders ensures timely processing of all payments. • Contingency Planning: A reserve allocation for provider payments has been established to mitigate risks associated with government-related payment interruptions.