Finding Text
Finding 2025-005: Significant Deficiency – Cash Management Program: Clean School Bus Program; Climate Pollution Reduction Grants Assistance Listing Number: 66.045; 66.046 Federal Agency: U.S. Environmental Protection Agency Federal Award Identification Number: 03D07424; 03D30125 Federal Award Year: June 30, 2025 Criteria: The Uniform Guidance requires that recipients and subrecipients minimize the time elapsing between the transfer of federal funds and the disbursement of those funds. Advance payments must be limited to the minimum amounts needed and timed as close as administratively feasible to actual, immediate cash requirements for program costs. Recipients must also maintain written procedures to minimize the time between drawdown and disbursement. Condition: The Club drew down federal funds in advance of actual cash needs. For two cash draws tested for each program, the federal funds were not disbursed to vendors within 5 business days of the funds being drawn down. Questioned Costs: None noted. Context: Two federal draws occurred during the fiscal year for each program. The sample is not considered statistically valid. Effect: Federal funds were drawn in advance of immediate cash needs, resulting in excess federal cash on hand and noncompliance with cash management regulations. This increases the risk that federal funds could be used inefficiently, interest liabilities could be incurred on excess cash balances and federal funding may not be managed in accordance with grant requirements. Cause: The full grant funding was drawn down in advance of related expenditures due to funding uncertainty under the guidance of the Environmental Protection Agency (EPA). Later in the fiscal year, the unspent portion of the funds were returned to the EPA when the funding certainty returned. In addition, one draw down was deposited into a different Club bank account than the account was expected so the Club was not aware that it had received the funding. Recommendation: It is recommended that the Club strengthen controls over federal cash draws to ensure draws are based on actual and immediate cash needs. Management should maintain supporting documentation showing how each draw amount was calculated and should draw down funds as close as administratively feasible to the disbursement of those funds. Management’s Response: The Club is working with the EBCI Grant’s office to increase communication and coordinate the drawdowns so funds are received and processed for payment within the given grant timelines.