Finding Text
FINDING 2022-003 – Cash Draw Downs and Internal Control over Cash Management
MATERIAL WEAKNESS, MATERIAL NONCOMPLIANCE
Identification of the Federal Program:
U.S. Department of Health and Human Services
93.224/93.527 Health Center Program Cluster
Criteria:
In accordance with 2 CFR Section 200.305, non-federal entities must minimize the time elapsing
between the transfer of funds from the federal agency or pass-through entity and disbursement by
the Center for program costs and proportionate share of allowable indirect costs. Additionally, 2 CFR
Section 200.302(b)(c) requires non-federal entities to establish written procedures to implement the
requirements 2 CFR Section 200.305. The Federal Acquisition Regulation clause at 48 CFR Section
52.2160-7(b)(1) requires that the non-federal entity request reimbursement for only allocable,
allowable, and reasonable contract costs that have already been paid or incurred.
Condition:
During our testing of draw requests, we noted certain draw requests were made prior to the related
costs being incurred. Although the funds were ultimately expended on items approved by the federal
award, they were not expended in a timely manner.
Cause:
The Center did not maintain detailed listings of eligible costs incurred at the time of the draw request
to support the amount requested in the Payment Management System. Additionally, the Center did
not maintain documentation of such review or approval that such costs were incurred prior to the draw
request, or the amount requested was in accordance with 2 CFR Section 200.305. Effect or Potential Effect:
Requests for draws per the Payment Management System may not have minimized the time elapsing
between payment by the federal agency or pass-through entity and disbursement by the Center and
the amounts drawn down may be inaccurate.
Questioned Costs:
None
Context:
We selected a sample of draw requests submitted through the Payment Management System during
the year ended September 30, 2022. The Center was unable to provide evidence of timely review
and approval of two requests out of 44, totaling $352,340.
Repeat Finding:
No
Recommendation:
We recommend the Center establish formal internal controls and documentation of its performance
relating to the determination of cash drawn downs and review and approval of drawn downs by
appropriate personnel who are knowledgeable of such requirements.
View of Responsible Officials:
See accompanying Corrective Action Plan.