"Review of the Cash Management Procedures Used By The University of Puerto Rico

EXECUTIVE SUMMARY:

This report provides the results of our review of the cash management procedures used by the University of Puerto Rico - Medical Sciences Campus (University) to control the funds advanced to federally funded projects.  The overall objective of our review as to determine whether the University's cash management policies and procedures were in accordance with Office of Management and Budget (OMB) Circular A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.  This required the University to: (i) minimize the time elapsing between the transfer of funds and their disbursement; (ii) maintain advances of federal funds in interest-bearing accounts, (iii) remit any interest earned on the advances, and (iv) meet certain other financial management standards.

Our review included approximately $43 million in federal funds received by the University during the period July 1, 1997 through June 30, 2000.  Of this amount, our review determined that approximately $40.1 million has been drawn down using the reimbursement methodology, and only $3.2 million had been drawn down under the advance payments methodology.  The reimbursement methodology is designed to draw federal funds only after the disbursements have been made.  In effect, the University incurs the expense and then seeks reimbursement from the Federal Government.  The advance payments method permits the University to have federal funds wired to the University as close as administratively feasible to meet actual disbursement of funds for sponsored program purposes.