Finding 964787 (2023-003)

Questioned Costs $- Finding No. 2023‐003: Cash Management (Control Deficiency) Period of Performance (Control Deficiency) Federal Agency: U.S. National Endowment for the Humanities Assistance Listing Number and Title: 45.310 – Grants to State Condition During our audit, we noted the following instances of noncompliance: Cash Management We selected 8 federal cash receipts and identified 9 instances totaling approximately $1,594,000 in which the time elapsing between the receipt of federal funds and the disbursement of amounts within the aggregate cash receipt to an individual vendor was greater than 30 days. Period of Performance We selected 40 disbursements for testing and identified 2 instances totaling approximately $40,000 in which expenditures were made outside of the award period. Criteria Cash Management U.S. Department of the Treasury Regulations 31 Code of Federal Regulations (“CFR”) Section 205.33 requires the Department to minimize the time between the receipt of federal funds from the federal government and the Department’s disbursement of the funds for federal program purposes. Therefore, the timing and amount of funds being requested and received must be as close as administratively feasible to the Department’s actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs. Period of Performance Title 2 Section 200.344 of the CFR requires final accounting and settlement within 90 days after the end of the federal fiscal year, or upon termination or closeout of an award, whichever is earlier. Cause We were informed by program personnel that due to supply chain issues, invoices were not received in a timely manner which led to the untimely disbursement and expenditure of federal funds. Effect Cash Management The delay in disbursing advances of federal funds prevents the use of those funds for more urgent purposes by the federal government and represents an instance of noncompliance with the requirements of Title 2 U.S. CFR Part 200. Period of Performance The delay in expenditures prevents the granting agency from timely assessing the status and activities of the program and represents an instance of noncompliance with the requirements of Title 2 U.S. CFR Part 200. Context Cash Management A sample of 8 federal cash receipts totaling approximately $2,410,000 were selected for audit from a population of 20 federal cash receipts totaling approximately $3,647,000. Our test found 9 instances in which the Department’s disbursement of the funds within the aggregate cash receipt to an individual vendor was not completed in a timely manner. Our sample was a statistically valid sample. Period of Performance A sample of 40 disbursements totaling approximately $3,547,000 were selected for audit from a population of approximately $3,664,000. Our test found two instances in which expenditures were made outside of the award period. Our sample was a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Department perform the following to ensure compliance: Cash Management Upon receipt of federal funds, ensure that the subsequent disbursement of such funds occurs in a timely manner. Period of Performance Ensure expenditures of federal funds are made within the grant award period. Cause and View of Responsible Officials During fiscal year 2023, multiple vendors experienced supply chain issues that resulted in untimely deliverables. As a result of these delays, the Department could not disburse funds in a timely manner.