Finding Text
FINDING 2022-2 ? CWSRF Cash Management MATERIAL WEAKNESS IMMATERIAL NONCOMPLIANCE Program Name: Clean Water State Revolving Fund Loan Assistance Listing Number: 66.458 Project #: CS370398-03 Criteria: The District was on the advanced payment method of paying for goods and services for the current CWSRF project. This method requires that expenditures be disbursed within 3 business days of loan funds being received and deposited. It allowed the District to requisition the funds, deposit them into the District?s account and then pay for qualifying expenses, without having to use the District?s funds. Condition: As part of our audit, we reviewed current year requisitions #1 thru #5. The total of these requisitions and related payments equaled $2,430,036. Our audit indicated that requisition number 5, and parts of requisition numbers 1, 3, and 4 in the amount of $2,043,284 were deposited and spent in accordance with the 3-day rule. The remaining requisitions totaling $386,752 were found to have not been disbursed within three banking days of receipt and thus violated the 3-day rule. Questioned Costs: None ? A review of all supporting invoices indicated that all of the expenditures were eligible under the current project. Context: In our test of 5 requisitions, we found the following time frames for receipt and disbursement: "See Schedule of Findings and Questioned Costs for chart/table" in place of the chart or table within the text. Effect: Financial and fiscal best management practices were not followed, and state funds were left sitting idle for too long of a period. Cause: The District was unaware of the 3-day rule. Letters from the Department of Environmental Quality advise that ?The applicant will expend all of the requisitioned funds for the purpose of paying the costs of the project within three (3) banking days following the receipt of funds from the State. This was the only notification the District was given regarding the 3-day rule and therefore they overlooked it and not realize they were to disburse funds within 3 days. Contractual obligations to contractors/vendors were met. No penalties were assessed to the District. Recommendation: The District should make it a point for future projects to put a system in place to monitor when funds are received and trigger related disbursements to be made timely, within the 3-day rule, so that District funds will not have to be used to cover project expenditures. Views of Responsible Officials and Planned Corrective Action: The view of District officials is to process submittals on a timely basis upon receipt. For the CWSRF project, the District effectively managed the project. Project implementation was performed timely. Funds disbursed by the Department of Environmental Quality were paid promptly. The identified violations of the described three (3) banking day rule were minimal and did not impede performance or completion of activities. The District is now aware of the three (3) day rule and will disburse funds within this time limit going forward. The District has now implemented this corrective action.