Finding Text
Criteria 2 CFR Part 200.305 The non-Federal entity may be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity. There is also a need to maintain a financial management system that meets the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition Higher Education Institutional Aid From a sample of twenty-five disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified five instances in which the time elapsed exceeded what we understand is a reasonable time. For these five instances, the time elapsed ranged between eight days and two-hundred and twenty-three days since the transfer of funds. Higher Education Emergency Relief Fund From a sample of one hundred and one disbursements selected to test the time elapsing between the transfer of funds from the US Department of Education and the University's disbursement, we identified thirty instances in which the time elapsed exceeded what we understand is a reasonable time. For these thirty instances, the time elapsed ranged between seven days and two-hundred and eighty-five days since the transfer of funds was received. Cause The University requested the funds for the complete contract instead of requesting the funds when invoices were received. Although the University has written cash management procedures, they lack clear procedures to ascertain the timely disbursements of project liabilities after federal funds have been drawn down. Effect or Potential Effect If a non-Federal entity fails to comply with Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions, such as requiring payments as reimbursements rather than as advances. Questioned Cost None Identification as a Repeated Finding Refer to Item No. 2021-003 in the Summary of Prior Year Audit Findings. Recommendation We recommend the University follow its cash management policies under Section 7.2 Drawdown of its External Funds Administration Policy and Procedures Manual by limiting their requests for the invoices received for payment and ascertaining payments are released one or two business days after the funds have been drawn. The University could process all disbursements before drawing down the federal funds; hence, once funds appear in the bank account, it is a matter of stamping the envelopes and mailing the checks. Views of Responsible Officials Refer to Unaudited Corrective Action Plan.