Finding Text
Finding No. 2023-001 Cash Management – Drawdowns of funds
Federal Program
ALN 66.458 - Capitalization Grants for Clean Water State Revolving Funds
Name of Federal Agency
U.S Environmental Protection Agency
Pass-through Entity
Puerto Rico Department of Natural and Environmental Resources (DNER)
Category
Compliance/Significant Deficiency on Internal Control
Compliance Requirements
Cash Management – Drawdowns of funds
Criteria
2 CFR Section 200.305 (b) establishes the following: 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 whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means.
The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Pursuant to § 35.3135(d) The State must agree to expend all funds in the SRF in an expenditious and timely
manner.
Condition found
In two (2) of five (5) drawdowns selected for testing, we found that the disbursements were not transferred to
the recipient in a timely manner as follows:
Grant award # Date Federal portion Total
Date deposited in
Revolving Fund bank
account
Date paid to
subrecipient
Days
elapsed
C-72-051-03 10/11/2022 $ 2,723,093.00 $ 2,723,093.00 10/12/2022 10/19/2022 7
C-72-051-03 12/15/2022 1,200,151.81 1,200,151.81 12/16/2022 12/30/2022 14
Cause
The delays in the transfer of funds were caused by administrative delays and lack of personnel assigned to carry
out these tasks in a timely manner.
Effect
Advanced funds remained idle at the rotatory fund trust account for an extended amount of time. This also may
result in administrative sanctions by the grantor.
Questioned Cost
None.
Context
Two (2) of five (5) drawdowns selected for testing were not transferred to the recipient in a timely manner.
Identification of a repeat finding
This is a not repeat finding from the immediate previous audit. Views of responsible officials and planned corrective actions
The management of the Revolving Fund agrees with this finding. Please refer to the corrective action plan section on pages 49-50.
Recommendation
We recommend management of the Revolving Funds to establish written procedures and proper monitoring that ensure the compliance with the requirements for cash management.