Kettering University

CFDA Number, Federal Agency, and Program Name - 84.425E, U.S. Department of Education, COVID-19 - Higher Education Emergency Relief Fund (HEERF) Federal Award Identification Number and Year - P425E201414 Pass through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - The Uniform Guidance and the HEERF grant award notification signed by the University for this grant, by reference to the Uniform Guidance, state that the University must minimize the time elapsing between the transfer of funds from the United States Treasury to the University and the disbursement of those funds. The Uniform Guidance applies to any and all types of federal awards (2 CFR Section 200.305(b)). Condition - The time between the University?s initial transfer of funds from the United States Treasury and disbursement was not minimized as stated in the general cash management section of Uniform Guidance. As of June 30, 2020, a period of 65 days had elapsed since the date of the initial transfer, with the University having $467,532, or 64.2 percent, of the HEERF student grant funding still available and not yet disbursed. Questioned Costs - None Context - The University drew down $728,517 for student grants on April 27, 2020, of which $260,985 was disbursed as of June 30, 2020, resulting in $467,532 undisbursed at the end of the University's academic year. The University disbursed additional funds of $288,445 through October 4, 2020 and another $102,108 through January 26, 2021 to assist students in the academic terms following its year end. Cause and Effect - The University did not process these funds in accordance with cash management rules under the Uniform Guidance, applicable to these funds with respect to minimizing the time elapsed between the date of the initial transfer and the disbursement of the majority of the HEERF student grant funds. The University did not refund the funds still available on June 30, 2020 to the federal government. Recommendation - We recommend the University review its cash management policy and practices to be in compliance with the requirements of the cash management rules under the Uniform Guidance to minimize the time elapsing between the transfer of funds for all types of its awards. Views of Responsible Officials and Corrective Action Plan - The University was operating with the understanding that disbursing the HEERF student grant funds in a reasonable period of time relative to the grant period of one year and in the context of the University?s academic calendar was allowed and would meet the criteria of minimizing the period between initial transfer and disbursement of funds. More precise guidance on this topic was not issued by the U.S. Department of Education until November 2020, several months after the end of the fiscal year 2019-2020. Even then, the guidance given was in the context of institutions being "encouraged" to minimize this period of time between transfer and disbursement and to refund any remaining available funds if not immediately needed for disbursements. After making disbursements of emergency assistance awards to students for the winter academic term that began on January 11, 2021, the University refunded on January 27, 2021 all remaining HEERF student grant funds to the federal government in the amount of $76,979. Going forward, the University will adjust its practices to make certain that any transfers of funds remaining under the CARES Act or new funds under CRRSSA will be done such that time between transfers and disbursements will be minimized to a few days in keeping with more detailed guidance from the U.S. Department of Education regarding CRRSSA funds.

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