Finding Text
Finding 2023-014 – C. Cash Management
Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859)
Criteria or Specific Requirement - 2 CFR §200.305(b)(1) indicates that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with 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 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.
Condition – The University was unable to reconcile amounts drawn with amounts expended; the total amount drawn exceeded the amount expended for the fiscal year.
Certain program funds were also moved out the bank account used for federal draws and comingled with nonfederal dollars in the University’s operating bank account which resulted in a portion of the funds being used for non-program purposes. Upon identifying this issue, the University subsequent repaid the funds back, however this did not occur in a timely fashion.
Cause - Administrative oversight and insufficient internal control.
Effect or Potential Effect – Noncompliance with cash management requirements.
Questioned Costs – None.
Context – For 4 of 6 drawdowns selected for testing, the University was unable to reconcile the amounts drawn with the amounts expended to evidence that the funds were used in a timely manner.
Indication of Repeat Finding - No similar findings noted in the prior year.
Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that documentation supporting its draws is retained and that time elapsed between transfer and disbursement of federal funds is minimized. We also recommend that the University enhances its internal controls to ensure funds are not comingled with non-program funds to prevent program funds from being used for non-program purposes.
Views of Responsible Officials – The University acknowledges that the internal controls surrounding the cash management of the Federal Research and Development Programs was not in compliance for federal standards. The University is in the process of enhancing the internal controls and cash management procedures to prevent this from happening in the future. Going forward all federal grant funds that are allocated for the Challenger Learning Center will go directly into the appropriate bank account and will be drawn down and spent in the correct time frame. When operating expenses are incurred for the Challenger Learning Center the payment will be processed from the University’s general checking and the federal grant funds will reimburse the University that day. The same is also true for the payroll expenses incurred by the Challenger Learning Center. Wages will be paid out of the university’s general checking account and then reimbursed to the university from the bank account that hold the federal grant funds.