Finding 1222632 (2025-002)

02 Cash Management - Significant Deficiency Federal agency: Department of State Assistance Listing Number: 19.015 Program: Cultural, Technical and Educational Centers Criteria: Per 2 CFR §200.305(b), recipients must minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient regardless of whether the payment is made by electronic funds transfer or by other means. Per 2 CFR §200.305(b)(1), advance payments to the recipient must be limited to the minimum amounts needed and should be timed with the actual, immediate cash requirements of the recipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: During our audit, we noted one (1) instance in which a draw of $5,570,800 was requested and executed, which represented the remaining balance of the grant award near fiscal year end. The drawdown was made in anticipation of a potential federal government shutdown. Management was aware that the drawdown would exceed the Center’s immediate cash requirements, however the Center was concerned that access to federal funds could be delayed or unavailable during the shutdown period, potentially impacting program operations and reimbursement of allowable costs. Cause: The Center drew down the remaining funds in anticipation of a potential government shutdown and to mitigate the risk of delayed or unavailable access to federal funding during the shutdown period. Additionally, the Center did not have a formal protocol in place for addressing situations in which regulatory requirements may conflict with operational risks from events such as a potential government shutdown.Effect: Federal funds were received in advance of the Center’s immediate cash needs, which is inconsistent with the timing requirements of 2 CFR §200.305(b). Although the funds were drawn based on guidance from the awarding agency and in anticipation of a potential government shutdown, the timing of the advance did not minimize the time between receipt and disbursement. $ -- Identification as a Repeat Finding, if applicable: Not applicable. Recommendation: The Center should ensure its cash management policies and procedures fully adhere to 2 CFR §200.305. Specifically, the Center should formalize protocol for addressing situations in which operational risks, such as a potential government shutdown, may conflict with Uniform Guidance requirements or other applicable federal regulations. In such circumstances, the Center should continue to comply with Uniform Guidance requirements unless formal regulatory exception from the awarding agency is obtained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and the recommendation. See Part IV Corrective Action Plan.