Finding Text
Finding 2023-006: Cash Management – Significant Deficiency Information on the federal program: Federal program is Crime Victim Assistance from the U.S. Department of Justice passed through the Criminal Justice Information Authority. Criteria: Under 2 CFR 200.305, non-federal entities must minimize the time between drawing federal funds and disbursing those funds for grant-related expenditures. For cost-reimbursement grants, entities should only request reimbursement for costs that have already been incurred. Condition: The Organization drew down federal funds before incurring the related expenditures. Draw request amounts were based on estimated costs instead of actual, supported expenditures. Management indicated this occurred due to an oversight that resulted in estimated draw requests being submitted. Cause: The Organization did not have adequate procedures in place to ensure draw requests were based solely on actual expenditures incurred under the grant. Effect: Drawing funds prior to incurring allowable costs is noncompliant with federal cash management requirements and may result in the federal government or the pass-through entity requiring repayment of improperly drawn funds. Additionally, early draws increase the risk that federal funds may be used for non-allowable or unsupported purposes. Questioned Costs: None. Context: During our testing of drawdown activity, we identified instances in which the Organization submitted draw requests based on estimated expenditures rather than actual incurred costs. The sampled drawdown was requested before the underlying expenditures occurred, indicating that the Organization’s draw procedures allowed submissions that were not tied to actual costs at the time of the request. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management implement procedures to ensure that all draw requests are based strictly on incurred, supported expenditures. Draw requests should reflect the actual expenditures for the reporting period, and an individual should be assigned responsibility for monitoring the timing and accuracy of draw submissions. Views of responsible officials and planned corrective actions: Subsequent to this grant commencing, the Organization hired a new grant and partnership specialist. This specialist reviews all draws to ensure that the draw is for reimbursement for actual expenditure and not estimated expenditure. Reports and draws are also reviewed by the vice president of finance.