Finding Text
2025-004: Cash management - excess cash - ALN 93.568 Condition: The Organization maintained excess cash balances throughout the fiscal year. Monthly balances ranged from approximately $39,000 to $296,000, with consistently elevated balances observed during multiple months. These balances indicate that federal funds were drawn down in advance of immediate cash needs. Criteria: In accordance with 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the federal awarding agency and the disbursement of those funds. Cash management practices should ensure that drawdowns are limited to amounts needed for immediate disbursement of program costs. Cause: The condition appears to be the result of inadequate alignment between cash drawdowns and actual disbursement needs, as well as a lack of ongoing monitoring of program cash balances to ensure compliance with federal cash management requirements. Questioned Costs: N/A Effect: Maintaining excess federal funds on hand increases the risk of noncompliance with federal regulations and may result in the Agency being subject to interest liability on advanced funds. Additionally, it reflects weakened internal controls over cash management and increases the risk of inefficient use of federal resources. Recommendation: We recommend that the Agency strengthen its cash management procedures to ensure compliance with federal requirements by aligning cash drawdowns more closely with immediate disbursement needs. This should include developing and utilizing short-term cash forecasts to support draw requests, performing regular monitoring and review of program cash balances, and maintaining documentation that clearly demonstrates the timing and necessity of each draw. Additionally, management should ensure that personnel responsible for cash management are adequately trained on federal cash management requirements to prevent excess cash from being held going forward. Views of Responsible Officials: Management agrees with this finding and their response is included in the corrective action plan.