Finding Text
Criteria – The Uniform Guidance, 2 CFR 200.305, requires non-federal entities to minimize the time elapsing between the transfer of federal funds and their disbursement for allowable program costs. The Organization is also required to maintain effective internal controls and adequate documentation to supporting federal cash drawdowns and demonstrate that amounts requested are consistent with immediate cash requirements for allowable expenditures. Condition and Description – During our testing of federal cash management, we noted that the Organization did not consistently maintain documentation demonstrating that federal drawdowns were based on immediate cash requirements for allowable program expenditures. Specifically, in January 2025, the Organization made two federal drawdowns totaling approximately $2.8 million, representing approximately 48% of the $5.8 million of federal funds drawn during the year, while HRSA-related payroll and direct program expenditures incurred through January 31, 2025, were approximately $125,000. Accordingly, federal funds were drawn materially in advance of the Organization's immediate cash needs. Although cumulative federal drawdowns for the year did not exceed eligible program expenditures, the timing of the January drawdowns was not consistent with federal cash management requirements to minimize the time between the receipt and disbursement of federal funds. Cause/Effect – The Organization did not have sufficiently effective procedures to reconcile federal drawdown requests to current program expenditures and immediate cash requirements before requesting funds. As a result, federal funds were drawn in advance of related expenditures, increasing the risk of noncompliance with federal cash management requirements and potential repayment of interest or other amounts to the federal government.