Finding Text
Federal Agency: Major Program – U.S. Department of Health and Human Services. Other Program –U.S. Department of Justice Federal Program Name: Major Program – HIV Prevention Activities: Non-Governmental Organization Based. Other Program – Grants for Outreach and Services to Underserved Populations Assistance Listing Number: Major Program – 93.939. Other Program – 16.889 Federal Award Identification Number: Major Program – NU65PS923746. Other Program – 15JOVW-22-GG-00404-UNDE Award Period: Major Program – July 1, 2024 through June 30, 2025. Other Program – October 1, 2024 through September 30, 2025. Type of Finding: • Material Weakness in Internal Control over Compliance and Compliance – Cash Management. Criteria or Specific Requirement: Per the Uniform Guidance (2 CFR §200.305), non-federal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement for program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: During the audit of federal program compliance, it was identified that the entity drew down federal funds in excess of the amounts incurred for allowable expenses. Specifically, cash management procedures did not ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned Costs: Major Program – $339,859. Other Program – $110,783. Context: We noted through our testing of drawdowns and related expenses that as of June 30, 2025 Mazzoni Center had drawn down $339,859 more funds than it had expended on the contract for Assistance Listing No. 93.939 HIV Prevention Activities. It was also identified that $110,783 of funds were drawn down in excess of funds expended for Assistance Listing No. 16.889 Grants for Outreach and Services to Underserved Populations which was not deemed to be a major program. The individual drawing down funds from the federal agencies did not draw down funds based on the expenses incurred each month. Cause: The entity lacked effective internal controls to reconcile actual drawdowns with expenditures incurred. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed the entity to potential interest liabilities and reputational risk. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat Finding: Yes Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expenses. This should include: • Pre-drawdown verification of expense documentation. • Monthly reconciliations of drawdown activity to actual expenditures. • Training for staff involved in federal fund management on Uniform Guidance requirements. Views of Responsible Officials: There is no disagreement with the audit finding. See Corrective Action Plan.