Finding 516470 (2020-008)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
-
Year
2020
Accepted
2024-12-20

AI Summary

  • Core Issue: CUAHSI improperly drew down $1.3 million in federal funds in advance of actual expenditures, violating reimbursement requirements.
  • Impacted Requirements: This practice breaches CFR § 200.305, which mandates that federal funds be disbursed only for incurred costs.
  • Recommended Follow-up: CUAHSI should establish and enforce controls to ensure compliance with federal cash management policies to prevent future violations.

Finding Text

MW2020-008 FEDERAL DRAWDOWNS IN ADVANCE OF EXPENDITURES (REPEAT FINDING) (PREVIOUSLY REPORTED AS MW2019-009) Condition Subsequent to the year ended December 31, 2019, CUAHSI drew down approximately $1,300,000 from National Science Foundation (“NSF”) based on information that there was going to be a government shutdown. Federal funds are required to be to be drawn down on a reimbursement basis and not in advance of the expenditures. The funds were not returned to NSF after it became clear that there would not be a government shutdown. Criteria CFR § 200.305 Cash management: This section of the CFR outlines the requirements for the management of cash drawdowns and disbursements of federal funds. Federal funds should be disbursed in a timely manner for allowable costs that have been incurred. Cause CUAHSI had insufficient funds available to “float” operating expenses. Effect Drawing down funds in advance of incurring eligible expenses could lead to non-compliance with federal regulations, such as those outlined in 2 CFR § 200.305. This may result in the need to repay the funds, potential financial penalties, or disqualification from future federal funding.Recommendation The auditor recommends that CUAHSI develops and implements controls over policies consistent with 2 CFR 200.35. Current Year Status This condition still exists for the year ended December 31, 2020. During the completion of the audit, the auditor noted that during 2020, CUAHSI had advance drawdowns totaling $3,610,240 from the NSF. Of this amount, CUAHSI incurred $2,521,926 in eligible expenses for the year ended December 31, 2020. This resulted in $1,088,314 in federal advances as of year-end. The draw downs in excess of revenue recognized during the year ended December 31, 2020 is reported as part of deferred revenue in the accompanying Statement of Financial Position. View of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan.

Corrective Action Plan

Statement of Concurrence or Nonconcurrence: CUAHSI agrees with the finding and recommendation. CUAHSI Corrective Action: Action by CUAHSI impacting audit year 2020: All advance draws in 2020 were properly recorded as deferred revenue in the accounting books, see Statement of Financial Position. Corrective actions to processes and responsibilities impacting subsequent years: CUAHSI consider this finding resolved. As covered in the corrective action to MW2020-006, CUAHSI implemented the drawdown procedure as documented in company policy which includes twotiered preparation and review and requires review and approval by the Prime funder for working capital advances. CUAHSI stopped the non-compliance in 2023 by halting all draws against NSF awards in late March 2023 (when this non-compliance became known to the current Executive Director) until June 15th, 2023, at which time CUAHSI completed a draw from an NSF aligned with the current policies. The certified SF-270 and draw documentation was reviewed and approved by NSF. Name of Contact Person: 􀁸 Jordan S Read, Executive Director 􀁸 Telephone: (339)933-4660 􀁸 Email: jread@cuahsi.org Projected Completion Date: NA; is complete

Categories

Cash Management

Other Findings in this Audit

  • 516467 2020-005
    Material Weakness Repeat
  • 516468 2020-006
    Material Weakness Repeat
  • 516469 2020-007
    Material Weakness Repeat
  • 516471 2020-009
    Material Weakness Repeat
  • 1092909 2020-005
    Material Weakness Repeat
  • 1092910 2020-006
    Material Weakness Repeat
  • 1092911 2020-007
    Material Weakness Repeat
  • 1092912 2020-008
    Material Weakness Repeat
  • 1092913 2020-009
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
47.050 Geosciences $2.31M
47.080 Office of Cyberinfrastructure $127,911
47.070 Computer and Information Science and Engineering $70,695
47.083 Integrative Activities $14,635
47.079 Office of International Science and Engineering $3,306
10.652 Forestry Research $2,401