Finding Text
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2024-001: Cash Management (Material Weakness) Federal Programs: ALN 19.019 Criteria: According to 2 CFR 200.305, recipients must draw Federal funds only in amounts necessary to meet immediate cash needs for program expenditures. Funds should be disbursed as soon as possible, generally within three business days of receipt. Condition: During our testing of cash management compliance, we noted that ICMEC drew down a total of $233,494 on Federal funds in advance of need. The remaining funds were used for other ICMEC programmatic work. Cause: ICMEC did not have adequate procedures to align Federal drawdown requests with immediate program disbursement requirements. Drawdowns were based on budgeted monthly cash needs rather than actual expenditures. Effect or Potential Effect: Drawing funds in advance of need results in excess Federal cash being held by ICMEC, which is not permitted under Federal regulations. This increases the risk of misuse of Federal funds and may result in ICMEC owing interest to the Federal Government. Questioned Costs: $233,494 Context: Our audit procedures consisted of testwork completed on individual cash receipts and draw downs requests and evaluating the refundable advance analysis prepared by ICMEC as of December 31, 2024. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend ICMEC establish and implement procedures to ensure drawdown requests are limited to actual, immediate cash needs, with monitoring to confirm that Federal funds are disbursed within three business days of receipt.