Finding 943362 (2023-002)

Finding 2023-002: Capital Fund Grant Cash Management Capital Funds – 14.872 Material Weakness/Noncompliance – Cash Management Criteria: The Agency is not allowed to pay for capital fund transactions until funds are vouchered and disbursed from LOCCS. Further, the funds must then be disbursed within 3 business days (3-day Treasury Rule) of the funds being deposited into the Agency’s bank account from LOCCS. Condition: They Agency had $481,645.23 of capital fund expenses during the year of which $118,732 were used for operations. Of the remaining $362,913 of expense, we tested $345,612.74 for compliance which included 27 transactions. Of the 27 transactions, we only noted 1 transaction for $107,301.78 where the funds were advanced and expended in accordance with the rules above. Cause: The Agency had adequate balances in its checking account where it was able to pay for the items without advancing the funds. Further, the responsibility for advancing the funds was the responsibility of one individual without proper oversight and due to time constraints, advancing funds in LOCCS was not prioritized. Effect or Potential Effect: The Agency did not comply with the cash management requirements. Recommendation: The Agency should establish procedures where capital funds are advanced when expenditures are to be made. The Agency should establish a system where the Executive Director can monitor the advances and related expenditure of the grant funds are occurring within the required timeframe. View of the Responsible Officials of the Auditee: The auditee's management agrees with the.