Finding Text
Department of Health and Human Services
Federal Assistance Listing #93.912
Rural Health Care Services Outreach, Rural Health Network Development and Small Health
Care Provider Quality Improvement
Cash Management
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award.
Condition: During our testing, it was noted that the cash draw requests were done on a prospective basis despite the program requiring that cash draw requests must be for expenditures already incurred or that would be paid within three days.
Cause: The Clinic did not have an internal control system designed to ensure that expenditures had been incurred or would be paid within three days of requesting a cash draw on this program. In addition, the Clinic did not have an adequate internal control policy to require the documentation of the cash draw requests’ review and approval.
Effect: The lack of adequate policies governing review and approval over the cash draw requests increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: None reported
Context: Four out of four cash draws totaling $625,000 were tested.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Clinic enhance internal control policies to cash draw requests are reviewed and approved by someone who is familiar with the program requirements and all of that information is retained to ensure that all cash draw requests are correct, meet the requirements of the federal program, and are properly recorded.
View of Responsible Officials: Management agrees with the finding.