Review of Interest Earned on Advances of Federal Funds by the University of Hawaii July 1, 1997 through June 30, 2000

This report presents the results of our audit of the cash management procedures used by the University of Hawaii (UH) to determine the interest earned on advances of Federal funds.  The objective of our audit was to determine whether the UH's cash management polices and procedures were in accordance with Office of Management and Budget (OMB) Circular A-110.  We found that the UH did not have the procedures required by OMB Circular A-110 to effectively determine its interest earned on advances of Federal funds.   Although we identified areas where the UH needs to improve its cash management, our analysis indicated that the UH did not have significant positive cash balances and, therefore, there was no material impact of the UH improperly calculating interest earned during our audit period.  We recommended that the UH establish written procedures on the timing and amount of advance requests and calculate interest earnings on advances of Federal funds based on daily positive cash balances.  The UH concurred with our recommendations.