Finding Text
U.S. Department of Health and Human Services Assistance Listing Number 93.224 Health Center Program Cluster Program Year 2025-2026 Criteria or Specific Requirement – Per 2 CFR §200.305(b) and (b)(1) and §200.302(b)(6), non-federal entities must maintain or demonstrate the willingness to maintain both written procedures that minimize the time elapsing between the transfers of funds and disbursement by the recipient. Advance payments must be limited to the minimum amounts needed and timed to be in accordance with the entity’s actual, immediate cash requirements. Condition – During testing of cash management requirements, we selected a federal cash draw of $150,000 made on April 15, 2025. The draw was supported by payroll expenditures for the periods April 1, 2025 through April 15, 2025 and April 16, 2025 through April 30, 2025, which were not disbursed until April 30, 2025 and May 15, 2025, respectively. As a result, federal funds were drawn approximately 15 and 30 days prior to the related payroll disbursements, indicating the draw may not have been limited to the Organization's immediate cash needs as required. Additionally, the Organization was unable to provide sufficient documentation demonstrating the basis for the draw request and compliance with federal cash management requirements. Cause – The Organization did not have adequate procedures and review controls in place to ensure Federal cash draws were supported by eligible expenditures and requested only for actual, immediate cash needs. In addition, supporting documentation for cash draw requests was not consistently maintained and reviewed. Effect or Potential Effect – Without adequate documentation and controls over the timing of federal cash drawdowns, the Organization may be unable to demonstrate that funds were drawn only for actual, immediate cash requirements and disbursed as close as administratively feasible to receipt. This could result in excess federal cash on hand, liability for interest earned on advance funds, required repayment of unsupported or prematurely drawn amounts, and other federal corrective action. Questioned Costs – None Context – A sample of four federal cash draws were tested from a population of 37 draws. The sampling methodology used is not and is not intended to be statistically valid. The exception identified related to one of the draws selected for testing. Identification as a Repeat Finding – No Recommendation – We recommend the Organization implement formal policies and procedures requiring federal funds to be drawn only for actual, immediate cash needs and as close as administratively feasible to the related disbursements. The procedures should also require personnel to verify that expenses supporting each draw are allowable, properly documented, and recorded in the correct accounting and federal award period. Draw requests should be reconciled to the underlying expenditures and independently reviewed and approved before submission. Views of Responsible Officials and Planned Corrective Actions – The Organization concurs with the finding and is developing and implementing formal cash management policies and procedures to ensure federal draw requests are supported by allowable expenditures, requested only for immediate cash needs, and properly documented. Management will require reconciliation of draw requests to supporting expenditures, implement independent review and approval procedures, and monitor compliance with the new controls.