Audit 26520

2022-001 COVID-19 21.027 Coronavirus State & Local Fiscal Recovery Funds Program Subrecipient Monitoring Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Also, the auditee must comply with the requirements for pass-through entities as identified in Title 2 U.S. Code of Federal Regulations ? 200.331, such as clearly identify the award to the subrecipient, including the assistance listing number; monitor the activities of the subrecipient; and verify the subrecipient is audited, as required. Condition and Perspective Information: The Organization passed federal Coronavirus State & Local Fiscal Recovery Funds program funding to subrecipients, including other nonprofit organizations. During our testing, we noted that the Organization?s subrecipient agreements did not clearly identify the award?s federal funding information, including assistance listing number. In addition, the subrecipient did not monitor the activities of the subrecipient as required in the contract by reviewing supporting documentation for billing invoices prior to releasing payments to the subrecipient. A copy of the subrecipient agreement was obtained for the Organization?s subcontractor of the federal grant program. All subcontractor invoices were tested as part of the test of disbursements. Cause: The Organization informed us that failing to include the federal award information in the agreement was an oversight. Their understanding was that the subrecipient knew that the funding originated from the federal funds. Due to the transition of the Controller position at the beginning of the contract, the new controller was not aware of the requirement to review the supporting documentation prior to payment and based on the long-term working relationship with the subrecipient, believed that they understood the requirements and would be able to provide appropriate supporting documentation if requested by the grantee. Effect: The Organization was not meeting federal requirements pertaining to subrecipient monitoring. Without performing monitoring procedures, the Organization cannot be assured that its subrecipients are in compliance with federal requirements. Questioned Costs: None. Repeated Finding: No. Recommendation: We recommend the Organization take the necessary steps to ensure that all agreements with subrecipients include all of the required federal funding information. In addition, the Organization should review all subrecipient agreements to ensure that requirements placed on the subrecipient are being monitored. Views of responsible officials and Planned Corrective Actions: The Organization agrees with the finding. The Organization will ensure that the appropriate federal award information is included in all subrecipient agreements. The Organization has taken steps to immediately request supporting documentation for all invoices that have been paid and will take steps to ensure that payments for future invoices are not released until the required supporting documentation has been received and reviewed. In addition, the Organization will review all current and future subrecipient agreements to ensure that they understand all monitoring procedures that are required are understood and being performed.

2022-001 COVID-19 21.027 Coronavirus State & Local Fiscal Recovery Funds Program Subrecipient Monitoring Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Also, the auditee must comply with the requirements for pass-through entities as identified in Title 2 U.S. Code of Federal Regulations ? 200.331, such as clearly identify the award to the subrecipient, including the assistance listing number; monitor the activities of the subrecipient; and verify the subrecipient is audited, as required. Condition and Perspective Information: The Organization passed federal Coronavirus State & Local Fiscal Recovery Funds program funding to subrecipients, including other nonprofit organizations. During our testing, we noted that the Organization?s subrecipient agreements did not clearly identify the award?s federal funding information, including assistance listing number. In addition, the subrecipient did not monitor the activities of the subrecipient as required in the contract by reviewing supporting documentation for billing invoices prior to releasing payments to the subrecipient. A copy of the subrecipient agreement was obtained for the Organization?s subcontractor of the federal grant program. All subcontractor invoices were tested as part of the test of disbursements. Cause: The Organization informed us that failing to include the federal award information in the agreement was an oversight. Their understanding was that the subrecipient knew that the funding originated from the federal funds. Due to the transition of the Controller position at the beginning of the contract, the new controller was not aware of the requirement to review the supporting documentation prior to payment and based on the long-term working relationship with the subrecipient, believed that they understood the requirements and would be able to provide appropriate supporting documentation if requested by the grantee. Effect: The Organization was not meeting federal requirements pertaining to subrecipient monitoring. Without performing monitoring procedures, the Organization cannot be assured that its subrecipients are in compliance with federal requirements. Questioned Costs: None. Repeated Finding: No. Recommendation: We recommend the Organization take the necessary steps to ensure that all agreements with subrecipients include all of the required federal funding information. In addition, the Organization should review all subrecipient agreements to ensure that requirements placed on the subrecipient are being monitored. Views of responsible officials and Planned Corrective Actions: The Organization agrees with the finding. The Organization will ensure that the appropriate federal award information is included in all subrecipient agreements. The Organization has taken steps to immediately request supporting documentation for all invoices that have been paid and will take steps to ensure that payments for future invoices are not released until the required supporting documentation has been received and reviewed. In addition, the Organization will review all current and future subrecipient agreements to ensure that they understand all monitoring procedures that are required are understood and being performed.