Finding Text
Criteria
Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for
Non-Profit Organizations, Section 200.305 (b1) states “Advance payments to a recipient or subrecipient
must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of
the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and
amount of advance payments must be as close is administratively feasible to the actual disbursements by the
recipient or subrecipient for direct program or project costs and the proportionate share of any allowable
indirect costs.”
Additionally, as noted in the terms of the grant agreements, “requests for payment must be submitted on
Standard Form 270 (SF-270) Request for Advance or Reimbursement, and must be submitted no more than
monthly.”
Condition
We noted several instances throughout the audit where management had drawn advances on federal
awards which exceeded actual federal award expenditures in the same period.
Also, while the Organization did submit requests for funds using the SF-270, each SF-270 was
submitted as requesting reimbursement, when several were actually requesting advances.
Cause of Condition
The Organization’s internal controls are not properly designed to be in line with Federal guidelines,
particularly, CFR 200.305. Additionally, the Organization lacked proper internal controls to review and
approve each SF-270.
Repeat Finding
No.
Effect of Condition
The Organization was not in compliance with cash management compliance requirements as stated in 2
CFR 200.305.
Recommendation
We recommend management implement processes and procedures to adhere to Federal guidelines and
only draw funds immediately needed.
We also recommend management implement processes and procedures to review each SF-270 form and
verify whether the request is an advancement or reimbursement request. We recommend management
document the expenditures associated with each reimbursement request, when applicable.