DHS urged to step up oversight of cash advances on grants
Proper monitoring would help ensure that appropriate interest is paid, GAO says.
The Homeland Security Department needs to beef up oversight of cash advances provided to some first responder grant recipients, according to a recent Government Accountability Office report.
"DHS currently lacks the policies and procedures to track and report on specific cases of cash advance funding," and must begin "critical" oversight, concluded the report (GAO-07-68), issued in late December. Stronger oversight is necessary in part to make sure interest due on the cash advances is recorded and paid on time, GAO stated.
Lawmakers gave DHS the option to provide cash advances to some grant recipients beginning in fiscal 2005, after local government officials called for more flexibility in the grants award process. Certain first responder grantees can now get advance funding "and hold such funds for extended periods of time prior to payment," the report said.
Under an exemption to the 1990 Cash Management Improvement Act, the advances are not subject to the Treasury Department's oversight, the report said.
GAO said the department may need to limit advances: "Providing cash advance funding on a case-by-case basis could enable DHS to focus its oversight efforts on those specific state grantees and local government and other subgrantees that demonstrate a need for such funding."
Regardless, the department needs to "provide proper oversight" of its cash advances, the report stated.
GAO offered seven recommendations for accomplishing this, including that DHS identify issues that slow the distribution of grant money; determine the related impact on grantees, develop policies to better handle cash advance funding and remove obstacles that prevent some grantees from receiving their checks.
The report also suggested that department officials consider "the extent to which state grantees advance funds to local government and other subgrantees and the interest liabilities that should accrue… as a result."
DHS officials told GAO the department would consider the recommendations and "provide a detailed response to appropriate congressional committees."
DHS press officials did not respond to requests for comment, and congressional sources were not available.