FAC Explorer

Finding 1211042 (2025-003)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2025
Accepted
2026-04-30
Audit: 400320
Organization: Hui No Ke Ola Pono, Inc. (HI)
Auditor: CARBONARO CPAS & MANAGEMENT GROUP

AI Summary

  • Core Issue: The Organization drew down over $1.3 million in federal funds too early, exceeding the three-day limit before expenses were incurred.
  • Impacted Requirements: This practice violates federal regulations requiring timely disbursement of funds to avoid excess cash on hand.
  • Recommended Follow-Up: Strengthen cash management by limiting drawdowns to amounts needed within three business days of expenses to ensure compliance.

Finding Text

2025-003 – Cash Management, United States Department of Health and Human Services, Native Hawaiian Health Care Systems 93.932 Criteria: Under federal regulation (Uniform Guidance, 2 CFR §200.305), grantees are required to minimize the time between the drawdown of federal funds and the disbursement of those funds. To ensure proper cash management, recipients may draw funds up to three (3) business days in advance of incurring expenses. The timing of drawdowns must be as close as administratively feasible to immediate cash requirements. Funds held longer than three business days are generally considered excessive. Additionally, interest earned in excess of $500 annually on advanced funds must be remitted to the HRSA Payment Management System. Condition: During testing of federal expenditures for Uniform Guidance compliance on major programs, it was noted that the Organization withdrew over $1,300,000 in February 2025 to cover estimated expenses for the remainder of the fiscal year. The funds were fully expended on allowable program costs by fiscal year-end. Cause: Due to concerns regarding potential disruptions to access the Federal Payment Management System (e.g., government shutdown or policy changes), the Organization drew down a significant amount of funds in advance to ensure sufficient operating resources for the remainder of the fiscal year. Potential Effect: Drawing funds significantly in advance of allowable expenditures may result in excess cash on hand, which could negatively impact cash management practices and increase the risk of noncompliance with federal regulations, including potential misuse of federal funds. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its cash management practices by limiting federal fund drawdowns to amounts needed within three (3) business days of allowable expenditures, in accordance with federal requirements. Repeat Finding: No. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling drawdowns on federal funds based on timely allowable expenses incurred. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Corrective Action Plan

2025-003-Significant Advance Drawdown on Federal Fund for Six Months, United States Department of Health and Human Services, Native Hawaiian Health Care Systems 93.932, On January 20, 2025, we received the first Executive Order from President Trump, placing a hold on federal funding. We were advised that the PMS (Payment Management System) would be down and drawdowns would not be available until further notice. From January 20th, 2025, we tried to complete a drawdown, and the PMS system was not available. On January 28, 2025, finally accessing the PMS system, we estimated our January expenses and completed a drawdown for $200,000. At the time, we needed the HRSA funding to cover January costs already spent. Due to the uncertainty of the HRSA funding availability, and when the PMS system would be available, we estimated another drawdown the following day, to cover at least 2 more months of HRSA expenses. The other Native Hawaiian Health Systems could not access the PMS system, which prompted us to complete another drawdown to cover HRSA expenses for the remainder of the fiscal year. We were able to expend all HRSA funding that was drawn down by fiscal year ending July 31, 2025.

Categories

Cash Management

Other Findings in this Audit

  • 1211032 2025-001
    Material Weakness Repeat
  • 1211033 2025-001
    Material Weakness Repeat
  • 1211034 2025-001
    Material Weakness Repeat
  • 1211035 2025-001
    Material Weakness Repeat
  • 1211036 2025-001
    Material Weakness Repeat
  • 1211037 2025-002
    Material Weakness Repeat
  • 1211038 2025-002
    Material Weakness Repeat
  • 1211039 2025-002
    Material Weakness Repeat
  • 1211040 2025-002
    Material Weakness Repeat
  • 1211041 2025-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.259 NATIVE HAWAIIAN CAREER AND TECHNICAL EDUCATION $397,070
93.932 NATIVE HAWAIIAN HEALTH CARE SYSTEMS $345,445
93.866 AGING RESEARCH $61,089
93.211 TELEHEALTH PROGRAMS $45,000