Northeast Colorado Board of Cooperative Educational Services

CASH MANAGEMENT ACTVITIES Criteria: Non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-Federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: The BOCES submitted three reimbursement requests for its Colorado Department of Education ESSER III ARP 9.5%, RURAL COACTION grant that were not properly supported by the underlying expenses. It appears in two of the instances the draws for the August through October 2023 expenditures and the draw for the November 2023 expenditures included a $1,667 payment that was subsequently charged to a different program. In the third instance, the amount requested differed from the June and 2023 accrued expenditures by $313. We were not able to isolate the cause of the difference. In total there was $3,647 of expenditures that had been reimbursed that were not charged to the grant. The BOCES did recognize that these amounts had been requested in error by year end and recorded an unearned revenue of $3,647 at year end and accordingly are not considered a questioned cost. This was not considered a material non-compliance with the grant requirements. In addition, the BOCES requested a reimbursement of $48,962 for the 23-24 fiscal year from the Colorado Department of Education. When this payment was received by the BOCES from the Department, it was noted as being for the 22-23 fiscal year and was recorded by the BOCES as a receivable and unearned revenue at year end. Context: This finding was noted during the testing of Cash Management procedures related to the BOES Educational Stabilization Funds grant receipts. All other tested grant receipts were based on previously incurred grant expenditures in compliance with the Cash Management requirements and this does not appear to be a recurring issue or a material weakness in controls and was not noted in prior years for the BOCES’ other Federal grants. Effect: The BOCES had requested $3,647 of grant funding that had either not been earned or obligated at the time of the request or was subsequently charged to a different BOCES program. Cause: It appears that the BOCES may have reclassified expenditures from one program to another subsequent to the corresponding draw request. This error may have occurred if the BOCES was generating reimbursement requests based on current month activity rather than relying on year to date report relative to year to date draw requests Recommendation: The BOCES must ensure that internal control procedures are in place to verify that all grant funding requests meet Cash Management requirements. In the BOCES case, this is normally a process whereby reimbursements are requested subsequent to the expenditure of grant funds, The BOCES should establish internal controls whereby the grant manager determines the amount to be requested and this is subsequently verified by finance staff to ensure that total requests do not exceed incurred or obligated expenditures. Management Response: The BOCES will assure internal control procedures are in place to verify that all grant funding requests meet Cash Management requirements. Reimbursements will be requested subsequent to the expenditure of grant funds. The BOCES will establish internal controls whereby the grant manager determines the amount to be requested and this will be subsequently verified by finance staff to ensure that total requests do not exceed incurred or obligated expenditures. A review of the internal control procedures with all grant management and finance staff will assure that this is not a reoccurring issue.