Finding Text
Finding 2025-004 - U.S. Department of Education (ED), TRIO Programs (material weakness) Information on the Federal Programs –TRIO Upward Bound, FAL No. 84.047A, June 30, 2025 and TRIO Student Support Services, FAL No. 84.042A, June 30, 2025 Criteria – Federal regulations require recipients of federal awards to minimize the time elapsing between the transfer of funds from the U.S. Department of Education and the disbursement of those funds. Specifically, 2 CFR §200.305(b) requires non-federal entities to maintain effective cash management procedures to ensure that federal funds are drawn only to meet immediate cash needs for program expenditures. Condition – The institution maintained excess federal cash balances for multiple federal programs at year-end, as follows: TRIO Upward Bound: $95,989 TRIO Student Support Services: $211,218 Federal funds were drawn down in advance of actual program expenditures and were not disbursed within a reasonable period, resulting in excess cash balances that exceeded immediate program needs. Cause – The excess cash balances resulted from inadequate cash management procedures, including: a) lack of timely reconciliation between federal drawdowns and actual expenditures; b) drawdown practices not aligned with immediate cash needs; c) insufficient monitoring and oversight of grant cash balances and d) failure to adjust drawdown amounts based on current spending patterns. Effect – As a result of these deficiencies: a) federal cash was not managed in accordance with 2 CFR §200.305; b) the College was exposed to potential disallowances and increased federal oversight; c) there is an increased risk of questioned costs and repayment of excess funds and d) continued noncompliance may jeopardize future federal funding. Auditor’s Perspective – From the auditor’s perspective, the magnitude of excess cash, particularly within the TRIO program, combined with the repeat nature of the finding, indicates a material weakness in internal control over compliance. Effective cash management controls are fundamental to federal grant compliance, and failure to correct this issue increases the risk of misuse or mismanagement of federal funds. Questioned Costs – $307,207. However, the excess cash balances represent noncompliance with federal cash management requirements and may be subject to further review or repayment if not promptly resolved. Repeat Finding – Yes. This finding was reported in a prior audit and corrective actions were not sufficient to prevent recurrence. Auditor’s Recommendation – We recommend that management: a) Establish and implement formal cash management procedures to ensure federal funds are drawn only to meet immediate cash needs; b) perform regular and timely reconciliations between drawdowns and actual expenditures for each federal program; c) strengthen oversight and monitoring of grant cash balances at both the program and central finance levels; d) provide training to staff responsible for federal drawdowns on federal cash management requirements and e) periodically review spending trends and adjust drawdown practices accordingly. Management should also develop and implement a corrective action plan to address the repeat nature of this finding and ensure sustained compliance with federal regulations. View of Responsible Officials – The College is aware of the past breakdown in Internal controls under the previous Administration and is working closely with the directors to ensure that we do not have any repeat findings in this area. The main tasks that are being performed are hiring of additional staff, constant communication, and timely reconciliation.