Finding Text
Finding 2019-007 Lack of Internal Control Over Cash Management
Federal Agencies: U.S. Department of the Interior and U.S. Department of Health and Human Services
Federal Programs: Consolidated Tribal Government (CTG) and Indian Self-Determination (ISD), respectively
CFDA Numbers: 15.021 and 93.441, respectively
Award Numbers: A16AV00375 and A19AV00503 (CTG), and 243-12-0006 (ISD), respectively
Award Years: 2016 and 2019 (CTG), and 2019 and 2020 (ISD)
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: The requirement for cash management, as contained in 2 CFR 200.305, states advanced cash payments must be used only for applicable grant programs.
Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Community’s cash balances at December 31, 2019 were $48,998 and total unearned revenue was $1,661,466, leading to a cash shortfall of $1,612,468. This resulted from the temporary borrowing of federal funds to pay expenses in the General Fund and other federal award programs. Deferred revenue as of December 31, 2019 in the CTG Program was $91,645 and $885,809 in the ISD Program.
Cause: Lack of internal controls over cash management.
Effect: The Community was not in compliance with 2 CFR 200.305 related to cash management requirements. Deposits were used to fund other programs of the Community.
Questioned costs: $1,612,468, which is the shortfall between cash balances and unearned revenue balances.
Repeat finding: This is a repeat of Finding 2018-006; therefore, we believe this to be a systemic issue.
Recommendation: We recommend the Community monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash.
Management Response: Management agrees with this finding, see Corrective Action Plan.