Audit 20769

Condition Certain required monitoring measures, such as verifying a subrecipient is audited as required by the Uniform Guidance, did not happen. There was also no documentation that the initial risk assessment had been updated to determine if the Society?s initial risk assessment had changed. Criteria The Uniform Guidance requires federal award recipients to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. The federal award recipients should evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for determining the appropriate subrecipient monitoring and such risk assessment should be re-evaluated on an annual basis. The federal award recipients should also verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth by the Uniform Guidance. The recipient should determine that the subaward was included on the subrecipeint?s SEFA. In addition, Section 200.213 of the Uniform Guidance states that non-federal entities are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Context Certain required monitoring measures, such as verifying a subrecipient is audited as required by the Uniform Guidance, did not happen. There was also no documentation that the initial risk assessment had been updated to determine if the Society?s initial risk assessment had changed. The Society has only one subrecipient and we noted that the Society did not perform suspension and debarment verification before awarding federal awards to its subrecipients. Our sample was not statistically valid. Cause The cause of this finding is related to the awareness of the Society?s explicit requirements around subrecipient monitoring activities. Specifically, the ongoing risk assessment and monitoring requirements were not included in the Society?s fiscal policy and procedure manual. The Society was also unaware of the suspension and debarment check requirement for subrecipients under the Uniform Guidance. Effect Lack of ongoing risk assessment and improper monitoring may result in insufficient supervision of subrecipient(s) necessary to satisfy the responsibilities prescribed by the standards. The Society was not in compliance with the suspension and debarment compliance requirement. Questioned Costs None. Recommendation We recommend that the Society develop a comprehensive subrecipient checklist to ensure that all required procedures are performed annually to comply with the prescribed requirements. In addition, the Society?s staff should develop procedures to ensure that suspension and debarment verifications are performed on subrecipients when initially awarded and on an annual basis to update the risk assessment. This verification should also be updated annually and the search results should be maintained in the vendor file as evidence of the procedures. Repeat Finding No. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Condition Certain required monitoring measures, such as verifying a subrecipient is audited as required by the Uniform Guidance, did not happen. There was also no documentation that the initial risk assessment had been updated to determine if the Society?s initial risk assessment had changed. Criteria The Uniform Guidance requires federal award recipients to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. The federal award recipients should evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for determining the appropriate subrecipient monitoring and such risk assessment should be re-evaluated on an annual basis. The federal award recipients should also verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth by the Uniform Guidance. The recipient should determine that the subaward was included on the subrecipeint?s SEFA. In addition, Section 200.213 of the Uniform Guidance states that non-federal entities are subject to non-procurement debarment and suspension regulations. These regulations restrict awards, subawards and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Context Certain required monitoring measures, such as verifying a subrecipient is audited as required by the Uniform Guidance, did not happen. There was also no documentation that the initial risk assessment had been updated to determine if the Society?s initial risk assessment had changed. The Society has only one subrecipient and we noted that the Society did not perform suspension and debarment verification before awarding federal awards to its subrecipients. Our sample was not statistically valid. Cause The cause of this finding is related to the awareness of the Society?s explicit requirements around subrecipient monitoring activities. Specifically, the ongoing risk assessment and monitoring requirements were not included in the Society?s fiscal policy and procedure manual. The Society was also unaware of the suspension and debarment check requirement for subrecipients under the Uniform Guidance. Effect Lack of ongoing risk assessment and improper monitoring may result in insufficient supervision of subrecipient(s) necessary to satisfy the responsibilities prescribed by the standards. The Society was not in compliance with the suspension and debarment compliance requirement. Questioned Costs None. Recommendation We recommend that the Society develop a comprehensive subrecipient checklist to ensure that all required procedures are performed annually to comply with the prescribed requirements. In addition, the Society?s staff should develop procedures to ensure that suspension and debarment verifications are performed on subrecipients when initially awarded and on an annual basis to update the risk assessment. This verification should also be updated annually and the search results should be maintained in the vendor file as evidence of the procedures. Repeat Finding No. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.