Finding Text
Information on the federal program:
Federal Agency: Department of Labor
Pass-Through Entity: Indiana Department of Workforce Development
Federal Program: WIOA
Assistance Listing Number: 17.258, 17.259, 17.278
Compliance Requirement: Cash Management
Audit Findings: Significant Deficiency, Noncompliance
Criteria: According to Title 2 U.S. Code of Federal Regulations (“CFR”) Part 200, paragraph 305, non-federal entities are required to minimize the time that elapses between the transfer of funds from the federal funding source and the disbursement of those funds by the non-federal entity for the program’s intended purposes.
Condition: EmployIndy made draws on the WIOA grant prior to incurring expenditures related to those draws.
Cause: The condition was caused by an oversight by management that resulted in estimate draws being submitted.
Effect: As a result of these matters, EmployIndy made draws prior to incurring expenses. The WIOA grant is a cost reimbursement grant and therefore, the costs should be incurred prior to requesting draws on the grant.
Questioned costs: There are no questioned costs.
Context: As part of our SEFA tie out procedures, we noted a deferred revenue balance for the WIOA grants of approximately $437,000. Management noted that estimate draws are submitted to DWD prior to expenses being incurred. Management did not have a timely and effective process in place to ensure draws reconcile to expenditures. Upon further analysis, management determined that approximately $137,000 of the deferred revenue balance should be recorded as revenue for fiscal year 2022. At June 30, 2022, EmployIndy recorded deferred revenue of $300,000 for the WIOA grant indicating that expenses were not incurred for the cash that had been drawn.
Identification as a repeat finding, if applicable: This is not a repeat finding.
Recommendation: We recommend that management designate a specific individual to be responsible for monitoring grant activity and only submit draw requests when expenses have been incurred. The amount of the draw should reflect the actual expenditures incurred for the period.
Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.