FAC Explorer

Finding 1240032 (2022-006)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2026-10-06
Audit: 414656
Organization: Akiachak Native Community (AK)
Auditor: ALTMAN ROGERS & CO

AI Summary

  • Core Issue: There is a significant lack of internal control over cash management, leading to noncompliance with federal cash management requirements.
  • Impacted Requirements: The Community failed to adhere to 2 CFR 200.305, resulting in a cash shortfall of $1,649,230 due to improper use of funds across different programs.
  • Recommended Follow-Up: Implement regular monitoring of grant budgets and drawdowns to prevent inter-program borrowing and ensure compliance with cash management rules.

Finding Text

Finding 2022-006 Lack of Internal Control Over Cash Management Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of the Treasury, respectively Federal Programs: Tribal Self-Governance and Determination Cluster (TSGDC) and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively CFDA Numbers: 93.441 (TSGDC) and 21.027 (CSLFRF), respectively Award Number: 0243-12-0006 (TSGDC) and SLFRP2520/4754 (CSLFRF), respectively Award Year: 2020, 2021, 2022 (TSGDC) and 2021 (CSLFRF), respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management, as contained in 2 CFR 200.305, states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Community’s cash balances at December 31, 2022 were $4,263,944 and total unearned revenue was $5,913,174, leading to a cash shortfall of $1,649,230. This resulted from the temporary borrowing of federal funds to pay expenses in the General Fund and other federal award programs. Unearned revenues as of December 31, 2022 were $3,252,269 and $1,670,568 related to the Coronavirus State and Local Fiscal Recovery Funds program and Tribal Self-Governance and Determination Cluster program, respectively. Cause: Lack of internal controls over cash management. Effect: The Community was not in compliance with 2 CFR 200.305 related to cash management requirements. Cash restricted for the programs was used to fund other programs of the Community. Questioned costs: $1,649,230, which is the shortfall between cash balances and unearned revenue balances. Repeat finding: This is a repeat of Finding 2021-006; therefore, we believe this to be a systemic issue. Recommendation: We recommend the Community monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash. Management Response: Management agrees with this finding, see Corrective Action Plan.

Corrective Action Plan

Finding 2022-006 Lack of Internal Control Over Cash Management Name of Contact Person: Noelle George, Tribal Administrator Corrective Action Plan: Excessive administrative costs over many years led to a deficit in the General Fund. The deficit can be reduced by a combination of unrestricted revenue sources including net gaming proceeds and indirect cost recovery. A budget will be developed for the General Fund and periodic comparisons to actual revenues and expenditures will be made. Proposed Completion Date: December 31, 2026.

Categories

Cash Management Material Weakness

Other Findings in this Audit

  • 1240021 2022-005
    Material Weakness Repeat
  • 1240022 2022-006
    Material Weakness Repeat
  • 1240023 2022-007
    Material Weakness Repeat
  • 1240024 2022-008
    Material Weakness Repeat
  • 1240025 2022-009
    Material Weakness Repeat
  • 1240026 2022-005
    Material Weakness Repeat
  • 1240027 2022-006
    Material Weakness Repeat
  • 1240028 2022-007
    Material Weakness Repeat
  • 1240029 2022-008
    Material Weakness Repeat
  • 1240030 2022-009
    Material Weakness Repeat
  • 1240031 2022-005
    Material Weakness Repeat
  • 1240033 2022-007
    Material Weakness Repeat
  • 1240034 2022-008
    Material Weakness Repeat
  • 1240035 2022-009
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $2.66M
15.021 CONSOLIDATED TRIBAL GOVERNMENT $575,212
81.087 RENEWABLE ENERGY RESEARCH AND DEVELOPMENT $499,051
20.205 HIGHWAY PLANNING AND CONSTRUCTION $224,603
66.926 INDIAN ENVIRONMENTAL GENERAL ASSISTANCE PROGRAM (GAP) $208,732
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $143,077
16.710 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS $70,144
15.029 TRIBAL COURTS $68,286
14.867 INDIAN HOUSING BLOCK GRANTS $65,537
16.841 VOCA TRIBAL VICTIM SERVICES SET-ASIDE PROGRAM $55,251
93.575 CHILD CARE AND DEVELOPMENT BLOCK GRANT $48,302
17.265 NATIVE AMERICAN EMPLOYMENT AND TRAINING $10,000
93.441 INDIAN SELF-DETERMINATION $2,121