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Finding 2022-003: Information on the Federal Program: 84.425F ? Higher Education Emergency Relief Fund ? institutional Portion, 84.425E ? Higher Education Emergency Relief Fund ? Student Portion Compliance Requirement: Cash Management Type of Finding: Material Weakness Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statutes, regulations, and the terms and conditions of the award. Additionally, under HEERF award, grantees are under an obligation to minimize the time between drawing down funds from G5 and paying obligations incurred by the grantee (liquidation). If a HEERF grantee is using HEERF grant funds to make financial aid grants to students, the Department may evaluate for compliance with the rule grantees who have not drawn down the funds from G5 and not paid the obligations (the financial aid grants to students) to the students within fifteen calendar days. The Supplemental Agreement published by the U.S. Department of Education pertaining to Supplemental Grant Funds identifies that funds not disbursed within 3 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 cash management compliance requirements, it was noted that Jacksonville College had drawn down the entirety of the HEERF awards in 2021 and recorded $1,302,078 in grant revenues. A portion of the funds drawn in 2021 were used to pay off a loan with SBTC. In 2022, the College had expended the majority of the funds but continues to report a deferred liability of $42,887 related to prematurely drawn-down HEERF funds. Context: Jacksonville College did not review compliance requirements related to drawing down of grant funds and over-drew funds related to the HEERF grant. Questioned Costs: $42,887 remaining in Deferred Income. 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. 38 Effect or Potential Effect: The College was not in compliance with Federal requirements of the COVID-19 Education Stabilization Fund. Repeat Finding: Not a repeat finding. Recommendation: We recommend that the College put into place controls that require review of grant requirements prior to drawing down funds. Views of Responsible Official: The College?s current Administration, put in place during the end of 2021, is committed to improving processes by identifying and amending them in the future to improve internal controls of the College. This includes formulation of policies and procedures based on best practices of the industry. We have taken the necessary steps to ensure that this is corrected moving forward and more detail can be found in the Corrective Action Plan at the end of this report.