Finding Text
Cash Management for the Institutional Portion of the COVID-19 Education Stabilization Fund
Type of Finding - Noncompliance with Cash Management compliance requirements and material weakness in internal control over compliance
Program: COVID-19 Education Stabilization Fund
Assistance Listing Number: Institutional Aid Portion 84.425F
Federal Agency: U.S. Department of Education
Criteria - 2 CFR section 200.305 requires recipients of Federal funds to minimize the time between drawing down funds from G5 and paying incurred obligations. The Certification and Agreement and/or the Supplemental Agreement published by the U.S. Department of Education pertaining to the Public and Nonprofit Institution Grant Funds identifies that funds not disbursed within three days of being drawn down may be subject to heightened scrutiny by the U.S. Department of Education, the institution’s auditors, and/or the Department’s Office of the Inspector General.
Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct material noncompliance in a timely manner.
Condition - During testing of the cash management compliance requirements, it was noted that Sterling College was not compliant with cash management requirements. During the year ending June 30, 2023, the College drew Institutional Aid funds multiple times through the G5 system and did not disburse the funds within three calendar days of the drawdown.
The College drew $80,035 on August 26, 2022. $47,835 of the amount that was drawn was not disbursed until September 1, 2022. The College drew $20,662 on November 2, 2022 which was not disbursed until January 18, 2023.
Cause - A material weakness in internal control over compliance exists relating to cash management. Personnel responsible for maintaining compliance with cash management did not have sufficient education on the cash management requirements. In addition, there was no review over compliance with cash management requirements to monitor compliance.
Effect - The College was not compliant with Federal requirements of the COVID-19 Education Stabilization Fund.
Questioned Costs - There were no unspent funds as of June 30, 2023.
Context - During the year ended June 30, 2023, the College drew a total of $257,405 in COVID-19 Education Stabilization Funds from the G5 system. $68,497 of the amount drawn during the year ended June 30, 2023 was not disbursed timely.
Identification as a Repeat Finding - The College had similar findings for the year ended June 30, 2022 identified as findings 2022-001 and 2022-002.
Recommendation - We recommend the College provide education to those responsible for compliance with the requirements and have an individual independent of the drawdown process review drawdown requests prior to execution to ensure the drawdowns will be expended in the appropriate time frame.
Views of Responsible Official - Management concurs with the finding and is in the process of reviewing policies and procedures to comply with the requirements.