Finding 2024-013 Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.224 - Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Federal Award No.: Various Area: Cash Management Questioned Costs: $221,521 Criteria: Under 2 CFR 200.302(b)(3), (6), and (7), a non-federal entity must maintain records that identify the source and application of federal funds, establish effective control over and accountability for all funds, and support compliance with federal requirements through written procedures. In addition, 2 CFR 200.305(b) requires the non-federal entity to minimize the time between the transfer of federal funds and their disbursement and, when reimbursement is used, to request payment only after costs have been incurred. Accordingly, each drawdown should be supported by contemporaneous expenditure records and a reconciliation demonstrating the amount of eligible, unreimbursed program expenditures. Condition: 1. For 1 of 2 cash-management transactions tested, the State could not provide documentation supporting the calculation or amount of a $435,026 federal cash drawdown requested on June 5, 2024, under award 4 H8FCS41736-01-03 (the award). Specifically, the documentation provided for JV240324 did not include a contemporaneous expenditure report or reconciliation identifying (a) eligible award expenditures incurred through the drawdown date, (b) amounts previously reimbursed, and (c) the remaining unreimbursed expenditures available to support the drawdown. Our review of other available documentation disclosed the following: • On August 24, 2022, and April 27, 2023, the State drew down $110,269 and $74,899, respectively, totaling $185,168. Available documentation indicated that these drawdowns reimbursed expenditures incurred from program inception through March 31, 2023. • For the period from October 1, 2022, through August 31, 2024, available records identified approximately $745,597 of federal expenditures charged to the award. • On June 12, 2023, September 26, 2023, and June 5, 2024, the State drew down $148,366, $198,558, and $435,026, respectively, totaling $781,950. Based on the available records, the State had $560,429 of potentially eligible unreimbursed expenditures after the April 27, 2023, drawdown ($745,597 of reported expenditures less $185,168 of prior documented drawdowns). However, the subsequent drawdowns totaled $781,950. Therefore, the available documentation did not support $221,521 of the June 5, 2024, drawdown ($781,950 less $560,429). We question $221,521 because the State did not demonstrate that this portion of the drawdown reimbursed eligible, unreimbursed award expenditures. 2. In addition, the State did not consistently implement its established procedures for monitoring program cash needs and making drawdowns on a regular schedule. During fiscal year 2024, the State made only two drawdowns: one requested on June 5, 2024, and received on June 7, 2024, and another requested on August 2, 2024, and received on August 6, 2024.Cause: The State did not consistently enforce its cash-management procedures and did not maintain a complete, contemporaneous audit trail supporting each drawdown. Specifically, responsibility for preparing, reviewing, and retaining expenditure reports and cumulative reimbursement reconciliations was not effectively implemented. Effect: The State could not demonstrate that $221,521 of the June 5, 2024, drawdown was supported by eligible, unreimbursed award expenditures. As a result, federal funds may have been drawn in excess of immediate program needs, and the unsupported amount is questioned. Recommendation: The State should: 1. Strengthen and enforce its cash-management procedures. For each drawdown, the State should prepare, review, and retain a reconciliation that identifies cumulative eligible expenditures, prior reimbursements, adjustments or reconciling items, and the resulting balance of unreimbursed expenditures by federal award. The reconciliation and supporting expenditure reports should be reviewed and approved before the drawdown request is submitted. 2. Monitor program cash needs and submit reimbursement requests on a regular, timely schedule consistent with its written procedures. Management should review the $221,521 questioned amount and provide additional support to the federal awarding agency if available. Identification as a Repeat Finding: 2023-008 Views of Responsible Officials: The State's response and corrective action plan addressing this finding are included in the accompanying corrective action plan.