Finding Text
Finding 2022-001 - Controls Over Cash Management (Significant Deficiency) 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 and Context: As a part of our testing over cash management of funds received from the federal funding source, we examined information showing the dates on which five program-related disbursement of federal funds were received by the Corporation, and we compared those dates to the dates when the Corporation remitted the amounts for the purposes of covering payroll expenses and paying its various contractors. We noted one draw for $1,184,367 that was received from the federal funding source with no payments made to the contractors for which the funds had been appropriated. This resulted in a period of 16 days between receipt of the federal funds and the corresponding payments to the contractors. We also noted one of the five draws tested were for an incorrect amount. The Corporation submitted a draw for $29,997 in error. The overdrawn funds were repaid to the federal funding source. The Corporation prepared a schedule of draws made during 2022 and it was noted that the Corporation drew or repaid an incorrect amount in four months of the year, of which some were corrected in the next period. Effect: As a result of these matters, the Corporation essentially borrowed money from the federal government and delayed payment to vendors. Cause: The condition was caused by an oversight by management that resulted in invoices not being processed for payment until well after the cash had been drawn by the Corporation and resulted in draws to processed for an incorrect amount. Questioned Costs: From our sample tests, the Corporation overdrew $29,997 for the month of May 2022. Recommendation: We recommend that management designate a specific individual to be responsible for monitoring the receipt of federal funds on a daily basis. This person should be tasked with ensuring that funds that have been transferred from the federal funding source are disbursed to the intended contractors within a short period following receipt of these funds and ensuring that the correct draw amounts are submitted. We also recommend that management prepare a schedule of all claims to determine whether there are additional amounts that have been overclaimed. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.