FAC Explorer

Finding 1169605 (2024-008)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2024
Accepted
2026-01-19
Audit: 382583
Organization: Guam Department of Education (GU)
Auditor: ERNST & YOUNG LLP

AI Summary

  • Core Issue: GDOE failed to pay vendors on the same day or within 24 hours of receiving funds, affecting 42 transactions totaling $112,652.
  • Impacted Requirements: Noncompliance with U.S. Department of Education cash management criteria due to inadequate internal controls and lack of awareness of TPFA responsibilities.
  • Recommended Follow-Up: GDOE should implement robust internal control policies to ensure timely vendor payments and compliance with cash management requirements.

Finding Text

Finding No.: 2024-008 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grant to the Outlying Area Area: Cash Management Questioned Costs: $112,652 Criteria: FY2024 U.S. Department of Education Special Conditions, states that since GDOE is managing its Department funds independently without Third-Party Fiduciary Agent (TPFA) oversight, GDOE must continue to fulfill the responsibilities that were previously performed by the TPFA. Responsibilities performed by TPFA per FY2023 U.S. Department of Education Special Conditions, Responsibilities and Requirements of the TPFA, states that “the Agent must pay vendors for the delivered goods or services and must, to the extent possible, disburse funds to the vendors on the same day the funds are deposited.” Condition: For forty-two (or 13%) of three hundred seventeen items, aggregating $8,989,530 of $28,876,832 in total cash draws, vendor was not paid either on the same day or within 24 hours after fund has been received, as follows: Item # Federal Award # Cash Draw Log # Check # Bank Clearance Date (Receipt of Fund) Check Date (Payment to Vendor) Questioned Cost 1 S403A220002 DOEAM093 711239 06/10/2024 06/12/2024 $ 31,137 2 S403A220002 DOEAM092 711238 06/10/2024 06/12/2024 6,832 3 S403A220002 DOEAM092 711238 06/10/2024 06/12/2024 6,832 4 S403A220002 DOEAM089 171717 06/10/2024 06/12/2024 3,468 5 S403A220002 DOEAM089 171717 06/10/2024 06/12/2024 3,468 6 S403A220002 DOEAM089 171717 06/10/2024 06/12/2024 3,468 7 S403A220002 DOEAM089 171717 06/10/2024 06/12/2024 3,468 8 S403A220002 DOEAM089 171719 06/10/2024 06/12/2024 1,258 9 S403A220002 DOEAM089 711234 06/10/2024 06/12/2024 1,080 10 S403A220002 DOEAM089 711231 06/10/2024 06/12/2024 899 11 S403A220002 DOEAM089 711234 06/10/2024 06/12/2024 705 12 S403A220002 DOEAM089 711233 06/10/2024 06/12/2024 525 13 S403A220002 DOEAM089 711234 06/10/2024 06/12/2024 480 14 S403A220002 DOEAM089 711234 06/10/2024 06/12/2024 330 15 S403A220002 DOEAM089 171718 06/10/2024 06/12/2024 324 16 S403A220002 DOEAM089 711234 06/10/2024 06/12/2024 255 17 S403A220002 DOEAM093 171721 06/10/2024 06/12/2024 185 18 S403A220002 DOEAM093 171721 06/10/2024 06/12/2024 41 19 S403A220002 DOEAM156 712181 10/01/2024 10/03/2024 24,520 Finding No.: 2024-008, continued Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grant to the Outlying Area Area: Cash Management Questioned Costs: $112,652 Condition, continued: Item # Federal Award # Cash Draw Log # Check # Bank Clearance Date (Receipt of Fund) Check Date (Payment to Vendor) Questioned Cost 20 S403A220002 / S403A230002 DOEAM156 172632 10/01/2024 10/03/2024 7,535 21 S403A220002 / S403A230002 DOEAM156 172633 10/01/2024 10/03/2024 2,790 22 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 2,160 23 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 1,440 24 S403A220002 / S403A230002 DOEAM156 172632 10/01/2024 10/03/2024 1,370 25 S403A220002 / S403A230002 DOEAM156 172632 10/01/2024 10/03/2024 1,370 26 S403A220002 / S403A230002 DOEAM156 712181 10/01/2024 10/03/2024 1,280 27 S403A220002 / S403A230002 DOEAM156 172632 10/01/2024 10/03/2024 1,270 28 S403A220002 / S403A230002 DOEAM156 712181 10/01/2024 10/03/2024 1,159 29 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 792 30 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 630 31 S403A220002 / S403A230002 DOEAM156 712167 10/01/2024 10/03/2024 523 32 S403A220002 / S403A230002 DOEAM156 712182 10/01/2024 10/03/2024 159 33 S403A220002 / S403A230002 DOEAM156 712174 10/01/2024 10/03/2024 140 34 S403A220002 / S403A230002 DOEAM156 172631 10/01/2024 10/03/2024 139 35 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 120 36 S403A220002 / S403A230002 DOEAM156 712183 10/01/2024 10/03/2024 105 37 S403A220002 / S403A230002 DOEAM156 712170 10/01/2024 10/03/2024 96 38 S403A220002 / S403A230002 DOEAM156 172634 10/01/2024 10/03/2024 96 39 S403A220002 / S403A230002 DOEAM156 712180 10/01/2024 10/03/2024 62 40 S403A220002 / S403A230002 DOEAM156 712178 10/01/2024 10/03/2024 60 41 S403A220002 / S403A230002 DOEAM156 712169 10/01/2024 10/03/2024 54 42 S403A220002 / S403A230002 DOEAM156 712175 10/01/2024 10/03/2024 27 $112,652 Cause: GDOE lacks established internal control policies and procedures to disburse funds received from US Department of Education to the vendors on the same day the funds are deposited. The current Standard Operating Procedures (SOPs) do not effectively incorporate transitioned roles and responsibilities of the Third Party Fiduciary Agent (TPFA) for accountability to the specific conditions set by the US Department of Education, wherein management was not aware of this requirement. Finding No.: 2024-008, continued Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grant to the Outlying Area Area: Cash Management Questioned Costs: $112,652 Effect: GDOE is in noncompliance with applicable cash management requirements. The reportable questioned cost is $112,652. Recommendation: GDOE should establish internal control policies and procedures over compliance with applicable cash management requirements, specifically, disbursing funds to the vendors on the same day the funds are deposited.

Corrective Action Plan

Views of Auditee and Corrective Actions: GDOE partially agrees with the condition identified; however, GDOE does not agree with the stated cause that the Financial Affairs Division lacks established internal control policies and procedures to disburse funds received from the U.S. Department of Education on the same day the funds are deposited. The 24-hour payment to vendor requirement was a responsibility for the Third-Party Fiduciary Agent (TPFA). That specific condition was removed with the removal of the TPFA. The reference is no longer valid in the post TPFA environment. USEd’s Risk Management Services Division acknowledged and stated it would update the specific conditions to reflect the correct process. Notwithstanding this, GDOE is committed to processing vendor payments, when possible, within 24 hours, understanding the timing differences are influenced by operational and banking processing factors, including confirmation of fund receipt, internal review requirements, and payment processing timelines. Plan of action and completion date: GDOE acknowledges the importance of timely vendor payments and compliance with applicable cash management requirements. In response, the Financial Affairs Division is reviewing and updating standard operating procedures to more clearly incorporate the transitioned TPFA responsibilities, define roles and timelines, and strengthen monitoring controls under the current operating structure. GDOE remains committed to improving cash management processes to enhance compliance and consistency in future periods. We will now make vendor payments as soon as we see that the funds are “pending” in our bank accounts and not wait for those funds to be fully approved and deposited into our accounts. Plan to monitor and responsible officials: The DFAS and the Comptroller will ensure all payments are processed in a timely manner.

Categories

Internal Control / Segregation of Duties Cash Management

Other Findings in this Audit

  • 1169595 2024-003
    Material Weakness Repeat
  • 1169596 2024-003
    Material Weakness Repeat
  • 1169597 2024-004
    Material Weakness Repeat
  • 1169598 2024-004
    Material Weakness Repeat
  • 1169599 2024-005
    Material Weakness Repeat
  • 1169600 2024-005
    Material Weakness Repeat
  • 1169601 2024-006
    Material Weakness Repeat
  • 1169602 2024-006
    Material Weakness Repeat
  • 1169603 2024-007
    Material Weakness Repeat
  • 1169604 2024-007
    Material Weakness Repeat
  • 1169606 2024-009
    Material Weakness Repeat
  • 1169607 2024-010
    Material Weakness Repeat
  • 1169608 2024-010
    Material Weakness Repeat
  • 1169609 2024-011
    Material Weakness Repeat
  • 1169610 2024-011
    Material Weakness Repeat
  • 1169611 2024-012
    Material Weakness Repeat
  • 1169612 2024-012
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.425 EDUCATION STABILIZATION FUND $105.41M
84.403 CONSOLIDATED GRANT TO THE OUTLYING AREAS $30.00M
84.181 SPECIAL EDUCATION-GRANTS FOR INFANTS AND FAMILIES $1.66M
10.558 CHILD AND ADULT CARE FOOD PROGRAM $648,102
84.027 SPECIAL EDUCATION GRANTS TO STATES $561,018
10.560 STATE ADMINISTRATIVE EXPENSES FOR CHILD NUTRITION $383,408
93.600 HEAD START $356,080
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM $331,968
93.092 AFFORDABLE CARE ACT (ACA) PERSONAL RESPONSIBILITY EDUCATION PROGRAM $232,589
12.U01 ARMY JROTC $220,601
12.U02 AIR FORCE JROTC $190,116
84.371 COMPREHENSIVE LITERACY DEVELOPMENT $173,631
84.372 STATEWIDE LONGITUDINAL DATA SYSTEMS $167,485
84.323 SPECIAL EDUCATION - STATE PERSONNEL DEVELOPMENT $157,292
10.541 CHILD NUTRITION-TECHNOLOGY INNOVATION GRANT $148,409
10.555 NATIONAL SCHOOL LUNCH PROGRAM $125,219
10.579 CHILD NUTRITION DISCRETIONARY GRANTS LIMITED AVAILABILITY $79,076
12.U03 MARINE JROTC $42,462
10.574 TEAM NUTRITION GRANTS $26,237
15.875 ECONOMIC, SOCIAL, AND POLITICAL DEVELOPMENT OF THE TERRITORIES $19,840
10.645 FARM TO SCHOOL STATE FORMULA GRANT $14,242
10.568 EMERGENCY FOOD ASSISTANCE PROGRAM (ADMINISTRATIVE COSTS) $3,986