Finding Text
Finding #: 2022-002 Cash Management – Noncompliance (not material to compliance requirement)
Identification of Federal Program and Award
Program title: U.S. Department of Health and Human Services (DHHS): Public Health Services Act, Title III, Section 330 (Health Center Cluster)
CFDA #: 93.224/93.527 Award #: C8E44790 Program Year: 2022
Criteria
Pursuant to 2 CFR section 200.305(b), Non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-Federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, a non-Federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-Federal entity, as well as a financial management system that meets the specified standards for fund control and accountability.
Condition
During our testing of cash management, we noted an instance of noncompliance relating to the health center’s effort to minimize the time between drawing and disbursing federal funds. 1 out of 6 drawdowns was identified as a portion of unearned revenue. Upon further inspection, auditor identified a total of $74,580 in deferred revenue that was not disbursed timely (time elapsed between the transfer of funds and disbursement exceeded the three-day rule).
Cause
Health center personnel were not following cash management policies and procedures (“DHHS Draw Down Procedure #2.530”) that comply with 2 CFR section 200.305(b).
Effect
Possibility of interest payments due, and of draw down restriction being placed on Payment Management System (PMS) account or denial of future funding.
Questioned Costs
$74,580
Perspective Information
We tested a statistically valid sample of 6 out of 17 total cash drawdowns and determined that the audit finding represented an isolated instance.
Repeat Finding
This finding is not a repeated finding.
Recommendation
We recommend that management review DHHS draw down policies and procedures in place to ensure CAMcare is in compliance with the compliance requirements of 2 CFR section 200.305(b).
Views of Responsible Officials
Management recognizes the noncompliance; on November 29, 2023, CAMcare’s CEO, Jillian Hudspeth, and CFO, Christopher Bernardi, agreed with this finding, and explained that CAMcare’s original budget for the C8E grant was to expand operations at the Clementon location. However, after the initial site plans and architectural
drawings were completed and paid for, the costs of materials and labor had increased significantly due to supply chain issues. Management made the decision to cancel the project and pivot to different areas of need. Because the project was cancelled, HRSA disallowed the site plan and architecture costs. CAMcare’s CFO and grant manager at the time were given verbal approval to reduce a future drawdown by the amount that had been disallowed.