Finding Text
Finding 2021-006 Lack of Internal Control Over Cash Management Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds ALN Numbers: 21.027 Award Number: SLFRP2520/4754 Award Year: 2020 and 2021, 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, 2021 were $7,921,377 and total unearned revenue was $10,052,324, leading to a cash shortfall of $2,130,947. This resulted from the temporary borrowing of federal funds to pay expenses in the General Fund and other federal award programs. Unearned revenue as of December 31, 2021 was $5,910,042 in the Coronavirus State and Local Fiscal Recovery Fund, which is reported as the ARPA Special Revenue Fund in the financial statements. 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: $2,130,947, which is the shortfall between cash balances and unearned revenue balances. Repeat finding: This is a repeat of Finding 2020-007; 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.