Section III – Findings and Questioned Costs – Major Federal Programs (Continued)
Federal Agency: Department of Education
Federal Program Name: Education Stabilization Fund
Assistance Listing Number: 84.425
Federal Award Identification Number and Year: P425J200025 - 2024
Award Period: July 1, 2023 – June 30, 2024
Type of Finding:
Criteria or specific requirement: 2 CFR §200.305 – Federal Payment: Requires that payment methods minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient. Advance payments must be limited to the minimum amounts needed and timed to meet actual, immediate cash requirements for program costs.
HEERF Program Guidance: Institutions must not draw down funds in excess of immediate needs and should avoid accumulating excess cash on hand. Interest earned on excess cash over $250 per year must be remitted to the federal government.
Condition: The University drew down Higher Education Emergency Relief Fund (HEERF) funds before incurring the related program expenditures. Federal regulations require that these drawdowns align with actual, immediate cash requirements to prevent excess federal cash on hand. Holding funds for extended periods before spending them can result in noncompliance.
Context: During our testing of cash receipts, it was noted that the University was drawing down funds prior to incurring the related program expenditures.
Cause: The University's cash management process did not adequately align drawdown timing with actual disbursement needs. The drawdown was initiated based on anticipated expenses rather than immediate cash requirements.
Effect: Drawing down funds prior to incurring expenditure creates risk of noncompliance with federal cash management regulations and may result in interest liability for excess cash held.
Repeat Finding: No