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Finding 2021-013: Cash Management – Lack of Management Oversight over Drawdown Requests – Material Weakness in Internal Control Over Compliance ALN 93.224 – Consolidated Health Centers; Grant Numbers H8GCS48610 and H8OCS00687; Grant Period: August 1, 2020 – July 31, 2021 CRITERIA Recipients of federal grants are required by federal regulations (Uniform Guidance, 2 CFR Part 200) to maintain documentation demonstrating that cash receipts correspond to drawdowns based on actual, allowable costs incurred. Drawdowns for Federal awards should be properly supported with relevant forms and reports to substantiate the costs incurred and evidence management review and approval. CONDITION AND CONTEXT For the year ended July 31, 2021, QCHC recorded cash receipts related to their federal awards totaling $3,535,567. However, QCHC was unable to provide evidence that these amounts represent drawdowns from the federal grants. The only available documentation substantiates the receipt of cash, without linking it to eligible grant expenditures. CAUSE There was significant turnover in the Finance department and the records to support grant drawdowns were not maintained. EFFECT OR POTENTIAL EFFECT We were unable to determine whether the cash received and recorded in total for the year were based on allowable costs incurred. As a result, there is a risk that federal funds may have been received in advance of, or in excess of, allowable expenditures. This could lead to noncompliance with federal regulations and potential misstatement of federal expenditures and the accuracy of the Schedule of Expenditures of Federal Awards. QUESTIONED COST $3,535,567. REPEAT FINDING No RECOMMENDATION We recommend that management establish procedures to ensure that documents supporting all drawdown requests are properly retained. Such requests should also be reviewed and approved prior to the request being made, with this approval documented and retained. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See the attached response and corrective action plan.