Finding Text
Criteria: 2 CFR section 200.305 stipulates that the entity receiving the federal funds must ensure that the time elapsing between the transfer of federal funds to the recipient and the disbursement of such funds for program purposes by the recipient is minimized. Additionally, this section requires that the City may not retain interest earned on federal funds deposited into a bank account exceeding $500. Condition: Staff charged with supervision of the federal program failed to timely remit payment to the vendor. Additionally, failure to timely remit payments resulted in accumulation of interest earned of approximately $7,486, none of which was properly remitted to the appropriate party. Cause: Lack of internal controls governing the process between approval of loan draws to deposit in City bank account to payment of vendor created two noncompliance items for the major program. Effect: Vendor invoices related to a federally funded program were not paid timely, and interest was improperly earned and held by the City. Additionally, the commingling of federal loan draws with general operating monies of the City appears to have made it difficult to ascertain whether the vendors had been paid appropriately. Recommendation: It is recommended that supervisors of federally funded projects receive training on the proper method to manage cash receipts and disbursements before executing a project. Additionally, it is advisable that a policy manual is created specifically for the City’s policies and procedures related to managing a federally funded project as part of the training process. Response: The City agrees with this finding, and a process will be implemented for the creation of a written manual and updated training for staff involved in project management.