FAC Explorer

Finding 567108 (2024-001)

Material Weakness Repeat Finding
Requirement
C
Questioned Costs
$1
Year
2024
Accepted
2025-06-26
Audit: 359989
Organization: Arctic Village Tribal Council (AK)
Auditor: Altman Rogers & CO

AI Summary

  • Core Issue: There are inadequate internal controls over cash management, leading to misuse of funds across different programs.
  • Impacted Requirements: This violates 2 CFR 200.305, which mandates that advanced cash payments must only be used for specific grant programs.
  • Recommended Follow-Up: The Village should closely monitor grant budgets and cash drawdowns to prevent inter-program lending and ensure unearned revenue does not exceed available cash.

Finding Text

Finding 2024-001 Lack of Internal Controls over Cash Management Federal Agency: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Numbers: 21.027 Award Number: SLFRP3171/4774 Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $8,470,564 at September 30, 2024. The unearned revenues were $8,727,660 which resulted in a shortfall of $257,096. The unearned revenue for the CSLFRF Program (ARPA Special Revenue Fund) was $269,930. Cause: Lack of internal controls over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village. Questioned Costs: $257,096, which is the shortfall between cash and cash equivalent balance and the unearned revenue balance. Repeat Finding: This is a repeat of Finding 2023-001, and since this is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments.

Corrective Action Plan

Finding 2024-001 Lack of Internal Controls Over Cash Management Name of Contact Person: Galen Gilbert, First Chief Corrective Action Plan: In the prior fiscal year, Arctic Village Council (AVC) experienced delays in drawing down HUD funds due to staff transitions and turnover. While reimbursement was ultimately received, the funds were not deposited until after fiscal year-end, contributing to the reported cash management issue. To strengthen internal controls and avoid future delays, AVC will continue to follow its monthly reconciliation process to ensure that all grant expenditures are accurately aligned with drawdown activity and supported by eligible costs. In addition, AVC will explore establishing a line of credit (LOC) in FY2025 to help bridge timing gaps between expenditures and reimbursement cycles. This LOC would provide short-term liquidity support and help reduce reliance on general fund balances while awaiting federal reimbursements. Proposed Completion Date: September 30, 2025

Categories

Questioned Costs Cash Management Material Weakness

Other Findings in this Audit

  • 1143550 2024-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $2.71M
16.841 Voca Tribal Victim Services Set-Aside Program $281,453
21.032 Local Assistance and Tribal Consistency Fund $271,693
15.029 Tribal Courts $180,428
15.020 Aid to Tribal Governments $166,629
14.867 Indian Housing Block Grants $160,909
15.024 Indian Self-Determination Contract Support $146,597
66.926 Indian Environmental General Assistance Program (gap) $100,762
21.029 Coronavirus Capital Projects Fund $60,952
15.021 Consolidated Tribal Government $57,847
15.144 Indian Child Welfare Act Title II Grants $35,947
20.205 Highway Planning and Construction $18,751
93.587 Promote the Survival and Continuing Vitality of Native American Languages $14,173
15.114 Indian Education Higher Education Grant $11,750
15.113 Indian Social Services Welfare Assistance $4,450
15.108 Indian Employment Assistance $2,349
15.030 Indian Law Enforcement $630