Finding Text
2025-006: EXCESS INTEREST EARNINGS NOT RETURNED Program: 84.299 Indian Education – Special Programs for Indian Children 84.184 School Safety National Activities Criteria: Uniform Guidance requires non-federal entities to remit annually any interest earned on federal advance payments in excess of $500 to the U.S. Department of Health and Human Services Payment Management System (PMS). Condition: The ESU earned an estimated $3,280 in interest on 84.299 Indian Education – Special Programs for Indian Children funds and $5,137 in interest on 84.184 School Safety National Activities funds during the year. Amounts in excess of $500 were not remitted to the PMS, as required. Repeat Finding: No Questioned Costs: Questioned costs total approximately $7,917, representing interest earned on federal advance payments in excess of the $500 amount permitted to be retained annually under Uniform Guidance. Of this amount, approximately $2,780 relates to ALN 84.299 (Indian Education – Special Programs for Indian Children), calculated as $3,280 of interest earned less the $500 allowable retention. The remaining $4,637 relates to ALN 84.184 (School Safety National Activities) calculated as $5,137 of interest earned less the $500 allowable retention. These amounts represent federal funds that should have been remitted through PMS. Context: During our testing of cash management procedures for major programs, we reviewed the calculation and treatment of interest earned on federal advance payments. The ESU maintains federal funds in interest-bearing accounts; however, procedures were not in place to calculate and remit excess interest annually. Based on available records and allocation methodology, management estimated total interest earned during the year attributable to ALNs 84.299 and 84.184 as $3,280 and $5,137, respectively. No remittance of excess interest to PMS had been made as of year-end. Cause: The ESU did not have procedures in place to monitor interest earned on federal funds and ensure excess amounts were returned timely. Potential Effect: Failure to remit excess interest earnings results in noncompliance with federal cash management requirements and may require repayment and corrective action. Recommendation: We recommend that the ESU establish procedures to track interest earned on federal funds and remit amounts in excess of $500 annually in accordance with Uniform Guidance. Response: Management will review procedures related to monitoring interest earned on federal funds and consider whether additional steps may be helpful to track amounts relative to allowable limits under Uniform Guidance. Management notes that the excess interest identified was returned in accordance with federal requirements.