Finding Text
Finding Number: 2025-003 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Pass-Through Entity: n/a Grant Number: F24AC01768-00 Award Project Period: July 1, 2024 through July 1, 2029 Control Deficiency Type: Material weakness Instance of Noncompliance: Yes Compliance Requirement: Cash Management Repeat Finding: No Criteria: Under 2 CFR 200.305(b), advance payments must be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the non Federal entity. Federal funds should not be drawn significantly in advance of when program costs will be incurred. When the non-Federal entity must be paid in advance in should maintain written procedures that minimize the time elapsing between the transfer of funds and disbursement. Further, non-federal entities must maintain advance payments in an interest-bearing account. Condition: The Council drew down a portion of the federal award amount in advance of immediate cash needs. The draw occurred in March 2025 after management determined that a potential federal funding freeze could significantly delay the project if funds were not immediately accessible. The Council typically limits drawdowns to requests for reimbursement; however, management elected to deviate from this practice due to the perceived risk. In addition, the Council does not currently have a written cash management policy compliant with 2 CFR 200, which contributed to the inconsistency. The funds were fully expended on allowable program costs over a nine-month period. The funds were not kept in an interest-bearing account in accordance with 2 CFR 200.305(b). Cause: Management was aware of cash management requirements but made a deliberate decision to draw down the funds in advance due to concerns about a potential funding freeze and the risk of project delays. Effect: Although the funds were ultimately spent on allowable program costs, drawing funds earlier than necessary resulted in noncompliance with federal cash management requirements regarding both the timing of the draws and the requirement to hold advance funds in an interest-bearing account, which may have failed to earn interest that would otherwise be payable to the federal government. Questioned Costs: None. Audit Recommendation: The Council should develop and implement written cash management policies that clearly define allowable timing of drawdowns. When unusual circumstances arise, the Council should obtain authorization from the federal awarding agency before deviating from standard practices. Draws in advance of immediate cash requirements should be kept in an interest-bearing account, and the interest should be remitted to the federal government. Management’s Response: The Rogue River Watershed Council will develop a cash management policy in compliance with 2 CFR 200 (or amend our Fiscal Management Policy to include required cash management policies and procedures). The policy/ amendment will focus on short-term cash flow needs and the need to minimize time between the transfer and disbursement of federal funds, which will guide the organization’s use of federal funding.