Finding Text
Cash Management ALN 10:854: Rural Economic Development Loan and Grant Criteria: For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. The recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs (2 CFR 200.305(b)). Condition: The Cooperative does not have written procedures that discuss minimizing the time between the transfer of funds and disbursement. Context: The funds were received by the Cooperative on February 18, 2025, and transferred to the subrecipient on February 25, 2025. The subrecipient disbursed the funds and paid the invoice for the program purposes on April 24, 2025. Effect: The Cooperative is not following federal regulations regarding written procedures for cash management. Questioned Costs: None. Cause: This is the first year the Cooperative received these loan funds, and written procedures were not in place prior to receiving the funds. Auditor Recommendation: We recommend the Cooperative create procedures addressing the requirements in 2 CFR 200.305(b). Fergus Electric Cooperative Response: Fergus worked in conjunction and regularly communicated with the local Montana USDA REDL/G office to understand program requirements, provide requested information, and meet federal guidelines. Loan agreement RD 4280-5, (Dated 10/31/2024) refers to 7 CFR part 4280, Subpart A, as (“Regulations”). Fergus was unaware that 2 CFR 200 regulations are associated with 7 CFR part 4280, Subpart A. Fergus regretfully acknowledges that we were not informed or aware of obligations to meet the regulatory requirements within 2 CFR 200. Fergus has adopted and implemented a policy, Federal Funding Compliance, to establish formal procedures and ensure ongoing compliance with applicable federal regulations, including 7 CFR 4280, Subpart A and 2 CFR 200.