Finding Text
Information on the federal program – Assistance Listing Number 93.224/93.527; Health Center Program Cluster; Department of Health and Human Services Criteria or specific requirement – Per 2 CFR §200.305, non-federal entities must minimize the time between the transfer of federal funds from the U.S. Treasury and the disbursement of those funds for program purposes. Advance payments must be limited to the minimum amounts needed and timed to be in accordance with the entity’s actual, immediate cash requirements. Condition – During our testing of cash management, we were unable to obtain supporting documentation for one of the draws selected for testing to verify that the time between the transfer and disbursement of funds was minimized. Further, we noted the Organization does not have a formal policy for federal cash drawdowns. Cause – The Organization did not have a formal policy or sufficient internal controls in place surrounding cash management and the draw process. Effect or potential effect – Drawing funds in advance of immediate cash needs could result in noncompliance with federal requirements. Questioned costs – None Context – Out of a population of 11 draws, a sample of 2 draws were selected for testing, and 1 draw was not supportable by underlying documentation. The sample was not statistically valid. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – We recommend the Organization implement formal policies and procedures to ensure that federal funds are drawn only to meet immediate cash needs (generally within a few days of disbursement). Views of responsible officials and planned corrective actions – Management has implemented enhanced cash management and grant monitoring procedures, including strengthened review of draw requests, improved documentation requirements, and closer reconciliation of grant expenditures to amounts drawn. In addition, the Organization is undertaking process improvements to streamline grant accounting and reporting activities, improve the timeliness of expense recognition, and enhance overall oversight of federal awards. Management expects these actions will strengthen compliance with federal cash management requirements and reduce the risk of future occurrences.