Finding Text
Finding 2024-004 – All Federal Programs – Material Weakness Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance - Cash Management Federal Agency: National Science Foundation Federal Program Name: Research and Development Cluster - NSF Technology, Innovation and Partnerships CO-WY Climate Resilience Engine Assistance Listing Number: 47.084 Federal Award Identification Number: 2315760 Award Period: March 1, 2024 – February 28, 2026 Criteria or specific requirement: Per the Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement for program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: During the audit of federal program compliance, it was identified that the entity did not have a consistent process for tracking, calculating, reviewing and approving federal draw downs. Specifically, cash management procedures did not consistently ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned costs: None noted for major program as of December 31, 2024 as drawdowns occurred after year end, $65,000 for other program. Context: We noted through our testing of drawdowns and related expenses that the amount of the draw downs made after year end were in excess of what was required for costs incurred through December 31, 2024, however there were no advance amount held as of December 31, 2024. Management trued up the draws during 2025 and 2026. Cause: The entity lacked effective internal controls to reconcile actual drawdowns with expenditures incurred. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed the entity to potential interest liabilities. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat finding: No Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expenses and the use of a consistent template to determine the amount of the drawdown that includes: 1) pre-drawdown verification of expense documentation reviewed by knowledgeable staff 2) monthly reconciliations of drawdown activity to actual expenditures, 3) training for staff involved in federal fund management on Uniform Guidance requirements. Views of responsible officials: There is no disagreement with the audit finding. See Corrective Action Plan.