Finding Text
2 CFR Section 200.305(b) states in part that for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity. In addition to basic cash management principles, grant award notification terms and conditions state that in accordance with 2 CFR 200.305(b), which applies to the Higher Education Emergency Relief Fund (HEERF) program, grantees must minimize the time between drawing down funds from G5 and applying those funds to support the awards activities. Consistent with this requirement, grantees must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 must be returned to the Federal government. Therefore, the Department requires grantees to only draw down the minimum amount of grant funds necessary, where they are able to be applied immediately, within 3 days, for the grant purposes, and to establish a distribution plan prior to drawing down grant funds. Also, 2 CFR Section 200.305(b) states interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Testing over the HEERF grant identified that $479,328 was drawn down on December 18, 2020, and still not fully expended as of June 30, 2022. At June 30, 2022, the balance in the fund was $75,068. Estimated interest earned on these funds during the fiscal that were not fully expended was $1224, therefore $724 should have been remitted to the Department of Health and Human Services. This is due to the Center not reviewing the guidance above to ensure advance monies are timely spent and interest earned on advance monies were properly remitted. Failure to minimize the time between drawing down funds and applying those funds to award activities and remittance of interest could result in improper spending and federal questioned costs, which could result in a loss of funding. The Center should maintain and follow written procedures that minimize the time lapsing between transfer of funds and their disbursement. Interest earned should be monitored and timely remitted when in excess of the allowable amount able to be retained. Financial management systems should meet the standards for fund control and accountability.