Finding Text
Finding Type: Material Weakness in Internal Control over Major Programs Assistance Listing #: 84.116Z Fund for the Improvement of Postsecondary Education Award Year: July 1, 2024, through June 30, 2025 Criteria: Under 2 CFR 200.305(b)(1), non-Federal entities must minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement by the non-Federal entity for direct program or project costs. Furthermore, 2 CFR 200.305(b)(8) requires that non-Federal entities maintain advance payments of Federal awards in interest-bearing accounts. Entities may retain up to $500 per year for administrative expenses, but any additional interest earned must be remitted annually to the Department of Health and Human Services Payment Management System. SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2025-003 Cash Management (Continued) Condition: During our testing of Cash Management, we noted that the University requested and received federal funds in advance of its immediate cash needs. The University drew down a total of $1,928,536 during the audit period; however, approximately $1,000,000 of these funds remained undisbursed at various points throughout the year, with federal cash sitting idle for periods ranging from 3 days to over 150 days. Additionally, the University failed to maintain these advance payments in an interest-bearing account. As a result, no interest was calculated, and no interest was remitted to the federal government Cause: Internal controls over Cash Management were not properly designed or operating effectively. Management utilized a spreadsheet that calculated drawdown requests based on broad expenditure estimates rather than limiting requests to the immediate cash needs of the grant. Furthermore, management was unaware of the federal requirement to hold advance payments in an interest-bearing account. Effect or Potential Effect: The University maintained excess federal cash on hand, which constitutes noncompliance with the timing requirements of the Uniform Guidance. By holding these excess funds in a non-interest-bearing account, the federal government was deprived of the time value of money (interest earnings). Questioned Costs: None reported. We calculated the imputed lost interest resulting from the excess cash balances to be approximately $16,800. Because this amount is below the statutory reporting threshold of $25,000, no questioned costs are formally reported.