Finding Text
FA 2022-001 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund COVID-19 ? 84.425U ? American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $195,559 Description: The School District made cash drawdowns in excess of the immediate cash needs of the Elementary and Secondary School Emergency Relief Fund program. Background Information: The School District may request Elementary and Secondary School Emergency Relief (ESSER) Fund program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 ? Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the ESSER program funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $4,407,030 in ESSER program funds from GaDOE for the fiscal year under review. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance Section 200.305(b) state that for ?For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from? the pass-through entity and the disbursement by the non-Federal entity.? In addition, the Uniform Guidance Section 200.302(b)(6) requires that the entity develop written cash management procedures. Condition: Upon testing ESSER program revenues and expenditures recorded on the financial statements, potential deficiencies in the cash management process were identified. Therefore, a review of all cash drawdowns and disbursements related to the ESSER program was performed to determine if any excessive drawdowns were made during the year under review. Excessive drawdown requests totaling $195,559 were identified. Cause: Drawdowns in excess of expenditures were caused by an error made by School District personnel when requesting ESSER funds. These excessive drawdowns were primarily the result of the School District requesting reimbursement for expenditures that had not been incurred by year end. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District?s receipt of these funds. This may include requirement by GaDOE to submit invoices prior to being reimbursed for ESSER program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the ESSER program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.