Finding Text
2025-001 – Significant Deficiency in Internal Control over Cash Management and Noncompliance Identification of federal programs: United States Department of Commerce (DOC) ALN 11.463 - Habitat Conservation Grant Awards NA25NMFX463C0022, NA24NMFX463C0009 Criteria: Part 3 Compliance Supplement Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: The Organization received advanced payments of grant funding and did not minimize the time elapsing between the transfer of funds and disbursement by the Organization. Approximately $3.33 million ($3,328,150) of advanced federal funds remained undisbursed at December 31, 2025 for ALN 11.463. Cause: The Organization's written cash management policies and procedures did not adequately address Uniform Guidance requirements related to advance funding. In addition, management did not implement monitoring controls to ensure drawdowns were limited to immediate cash needs and disbursed within a timeframe consistent with 2 CFR 200.305. Effect or potential effect: Failure to minimize the time between receipt and disbursement of federal funds increases the risk that federal cash is held in excess of immediate program needs and may result in noncompliance with 2 CFR 200.305. Approximately $3.3 million of advanced federal funds remained undisbursed at December 31, 2025. Questioned Costs: None. Context: During fiscal year 2025, management drew federal funds in advance of immediate cash needs due to the economic uncertainties during that time. The matter was identified during audit procedures in September 2025, following identification of this issue, management implemented revised cash management procedures and returned excess federal funds in 2026 that were not required for immediate program needs. Identification of Repeat Finding: 2024-001 Recommendations: We recommend that the Organization continue implementation of revised cash management procedures and establish monitoring controls to ensure future drawdowns are limited to immediate cash needs and comply with 2 CFR 200.305. Views of Responsible Officials: Management agrees with this finding. See Corrective Action Plan.