Finding Text
Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the US 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, whether the payment is made by electronic funds transfer, or issuance of checks, warrants, or payments by other means (2 CFR section 200.305(b)). In addition, to the extent available, the non-federal entity must disburse funds available from program income before requesting additional federal cash draws (2 CFR section 200.305(b)(5)). Condition: As a result of our audit procedures, we noted that the Organization has cash draws in excess of the total program disbursements during the year ended June 30, 2022. In addition, we noted that the Organization requested additional cash draws prior to disbursing available funds for this program. Cause: Policies and procedures were not in place to ensure that the time elapsing between the transfer of federal funds to the Organization and the disbursement of such funds for program purposes was minimized. In addition, policies and procedures were not in place to ensure that additional cash draws were not requested prior to disbursing all available funds for program related purposes. Effect: The Organization could be required to return the excess funds to the grantor along with any associated earned interest, until such time as the money is legitimately needed to pay for grant activities. Recommendation: We recommend that written policies and procedures be established to implement the requirements of 2 CFR section 200.305 to prevent further cash draws from being requested prior to disbursement of all available program funds and to prevent draws in excess of what is needed to meet the immediate needs of the program.