2023-001 CASH MANAGEMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. As required by 2 CFR 200.305(b), grant recipients may only draw funds for the minimum amounts needed for actual and immediate cash requirements to pay employees, contractors, subrecipients or to satisfy other obligations for allowable costs under the grant agreement. Disbursements within five (5) business days of the drawdown are deemed to comply with this requirement.
Condition: On December 19, 2022 the grantee drew down their entire award of $909,800, but only $300,000 was for reimbursable expenses. The remaining $609,800 was an advance which is not permitted under the award terms or Uniform Guidance. The erroneous advance was identified by the grantor and returned by the Council on December 29, 2022.
Cause: Council management misunderstood the award terms and the allowability of advances.
Effect: Draws of funds in excess of amounts needed for actual and immediate cash requirements can result in the return of funds.
Questioned Costs: None.
Perspective: During our testing, we did not note any other instances in which funds were drawn on an advance basis, in excess of costs already incurred by the Council. The Council misunderstood guidance from the grantor, which led to the draw down of funds in advance of current needs.
Recommendation: Management should obtain clarification in writing from the grantor on guidance outside of the established procedures to prevent future misunderstandings.
2023-002 PROCUREMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. As stated in FAR Section 5.203, Publicizing and Response Time, the Council is required to allow for at least a 30-day response time for the receipt of bids or proposals from the date of issuance of the solicitation.
Condition: The grantor identified payments made to a subrecipient for which the solicitation was held open for less than 30 days, prompting the grantor to ask the Council to replace those expenditures with other grant-eligible expenditures.
Cause: Management was not aware of this requirement.
Effect: The Council reclassified $48,120 of expenditures to be funded by other revenue sources and recorded $48,120 of deferred revenue that will be recognized in fiscal year 2024 when payments are made to the new subrecipient.
Questioned Costs: None.
Perspective: In our sample of procurements tested, we did not identify any other instances of non-compliance.
Recommendation: Management should review all procurements for compliance with award terms, Uniform Guidance, and Federal Acquisition Regulations prior to submitting issuing the purchase order or subrecipient contract.
2023-003 SUSPENSION AND DEBARMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Pursuant to 2 CFR section 180.300, the Council may not contract with or make subawards to parties that are identified as being suspended or debarred by the Federal Government. The Council must verify the parties’ eligibility to receive payment from a program funded by a Federal grant prior to entering a covered transaction (as defined in 2 CFR section 180.220).
Condition: The Council did not have a process in place to verify that subrecipients and vendors for covered transactions were not suspended or debarred.
Cause: Management was not aware of this procurement requirement.
Effect: The Council could inadvertently enter a covered transaction with a suspended or debarred party, resulting in the disallowance of payments made to that party as eligible costs under the Federal program.
Questioned Costs: None.
Perspective: Many of the subawards made by the Council were to other local governments or universities, which are entities unlikely to be suspended or debarred. As part of our compliance testing, we tested a sample of subrecipients and vendors for suspension and debarment, noting no exceptions.
Recommendation: We recommend the Council implement controls to ensure the Council does not enter a subaward or other covered transaction with a party that is suspended, debarred or otherwise excluded from participating in federal awards. We suggest the Council include a clause in the subrecipient contracts stating the contractor is not suspended or debarred. This clause would need to be included in any modifications to the contracts that provide for additional funding. For other covered transactions, the Council should document their verification of the vendor’s status on the System for Award Management (SAM) Exclusions website.
2023-003 SUSPENSION AND DEBARMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Pursuant to 2 CFR section 180.300, the Council may not contract with or make subawards to parties that are identified as being suspended or debarred by the Federal Government. The Council must verify the parties’ eligibility to receive payment from a program funded by a Federal grant prior to entering a covered transaction (as defined in 2 CFR section 180.220).
Condition: The Council did not have a process in place to verify that subrecipients and vendors for covered transactions were not suspended or debarred.
Cause: Management was not aware of this procurement requirement.
Effect: The Council could inadvertently enter a covered transaction with a suspended or debarred party, resulting in the disallowance of payments made to that party as eligible costs under the Federal program.
Questioned Costs: None.
Perspective: Many of the subawards made by the Council were to other local governments or universities, which are entities unlikely to be suspended or debarred. As part of our compliance testing, we tested a sample of subrecipients and vendors for suspension and debarment, noting no exceptions.
Recommendation: We recommend the Council implement controls to ensure the Council does not enter a subaward or other covered transaction with a party that is suspended, debarred or otherwise excluded from participating in federal awards. We suggest the Council include a clause in the subrecipient contracts stating the contractor is not suspended or debarred. This clause would need to be included in any modifications to the contracts that provide for additional funding. For other covered transactions, the Council should document their verification of the vendor’s status on the System for Award Management (SAM) Exclusions website.
2023-004 SUBRECIPIENT MONITORING
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. The use of subrecipients in achieving the goals of the federal award requires the establishment of controls over the monitoring of subrecipients pursuant to 2 CFR section 200.331 and 200.332. This includes the requirement for the subaward contract to include information such as the federal award identification (Assistance Listing Number (ALN) and name of the federal program), all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award and any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Condition: Subrecipient awards did not consistently include the required language including the ALN and the pass-through of Federal award requirements. Additionally, the Council did not have controls in place to obtain and review subrecipient single audit reports as a means to ensure the subrecipients are taking timely and appropriate action on deficiencies, if any, pertaining to the Federal award.
Cause: In some cases, the Council used the contract template for a subaward for a state financial assistance program rather than for a Federal award and, as a result, required information and language was missing from the contract. Further, the Council did not update its procedures over subrecipient monitoring to include follow-up of any deficiencies pertaining to the subrecipients’ use of the Federal funding detected through audits, on-site reviews or other means.
Effect: Without the required language in the subrecipient contracts, subrecipients may not have the information necessary for them to establish appropriate controls over compliance required by the Federal award and to appropriately identify the Federal award and related expenditures on their Schedule of Expenditures of Federal Awards, if applicable. Additionally, without the monitoring of the results of audits and on-site reviews, the Council may not have sufficient information to evaluate the risks of noncompliance associated with a subrecipient.
Questioned Costs: None.
Perspective: The Council did perform monitoring activities related to the use of funds by subrecipients; however, not all controls required for subrecipient monitoring to comply with 2 CFR section 200.331 and 200.332 were fully implemented for the fiscal year under audit. Required language was not included in two of the eight subrecipient awards tested. For one of these two contracts, the contract was originally funded with local share and applied to the Federal award only after the grantor modified the award to allow the Council to apply pre-award expenditures to the grant program.
Recommendation: The Council should review existing subrecipient agreements and amend any contracts that may be missing the required Uniform Guidance language. Management should ensure that future contracts use the template appropriate for the funding source (Federal, state or non-grant funded). To ensure compliance with the requirements for subrecipient monitoring, the Council should establish processes to (1) review and reports required by the subrecipient contract; (2) document the Council’s follow-up on action taken by the subrecipient on any deficiencies detected through audits, on-site reviews or other means; and (3) issue a management decision for audit findings pertaining to the Federal award provided to the subrecipient.
2023-004 SUBRECIPIENT MONITORING
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. The use of subrecipients in achieving the goals of the federal award requires the establishment of controls over the monitoring of subrecipients pursuant to 2 CFR section 200.331 and 200.332. This includes the requirement for the subaward contract to include information such as the federal award identification (Assistance Listing Number (ALN) and name of the federal program), all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award and any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Condition: Subrecipient awards did not consistently include the required language including the ALN and the pass-through of Federal award requirements. Additionally, the Council did not have controls in place to obtain and review subrecipient single audit reports as a means to ensure the subrecipients are taking timely and appropriate action on deficiencies, if any, pertaining to the Federal award.
Cause: In some cases, the Council used the contract template for a subaward for a state financial assistance program rather than for a Federal award and, as a result, required information and language was missing from the contract. Further, the Council did not update its procedures over subrecipient monitoring to include follow-up of any deficiencies pertaining to the subrecipients’ use of the Federal funding detected through audits, on-site reviews or other means.
Effect: Without the required language in the subrecipient contracts, subrecipients may not have the information necessary for them to establish appropriate controls over compliance required by the Federal award and to appropriately identify the Federal award and related expenditures on their Schedule of Expenditures of Federal Awards, if applicable. Additionally, without the monitoring of the results of audits and on-site reviews, the Council may not have sufficient information to evaluate the risks of noncompliance associated with a subrecipient.
Questioned Costs: None.
Perspective: The Council did perform monitoring activities related to the use of funds by subrecipients; however, not all controls required for subrecipient monitoring to comply with 2 CFR section 200.331 and 200.332 were fully implemented for the fiscal year under audit. Required language was not included in two of the eight subrecipient awards tested. For one of these two contracts, the contract was originally funded with local share and applied to the Federal award only after the grantor modified the award to allow the Council to apply pre-award expenditures to the grant program.
Recommendation: The Council should review existing subrecipient agreements and amend any contracts that may be missing the required Uniform Guidance language. Management should ensure that future contracts use the template appropriate for the funding source (Federal, state or non-grant funded). To ensure compliance with the requirements for subrecipient monitoring, the Council should establish processes to (1) review and reports required by the subrecipient contract; (2) document the Council’s follow-up on action taken by the subrecipient on any deficiencies detected through audits, on-site reviews or other means; and (3) issue a management decision for audit findings pertaining to the Federal award provided to the subrecipient.
2023-001 CASH MANAGEMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. As required by 2 CFR 200.305(b), grant recipients may only draw funds for the minimum amounts needed for actual and immediate cash requirements to pay employees, contractors, subrecipients or to satisfy other obligations for allowable costs under the grant agreement. Disbursements within five (5) business days of the drawdown are deemed to comply with this requirement.
Condition: On December 19, 2022 the grantee drew down their entire award of $909,800, but only $300,000 was for reimbursable expenses. The remaining $609,800 was an advance which is not permitted under the award terms or Uniform Guidance. The erroneous advance was identified by the grantor and returned by the Council on December 29, 2022.
Cause: Council management misunderstood the award terms and the allowability of advances.
Effect: Draws of funds in excess of amounts needed for actual and immediate cash requirements can result in the return of funds.
Questioned Costs: None.
Perspective: During our testing, we did not note any other instances in which funds were drawn on an advance basis, in excess of costs already incurred by the Council. The Council misunderstood guidance from the grantor, which led to the draw down of funds in advance of current needs.
Recommendation: Management should obtain clarification in writing from the grantor on guidance outside of the established procedures to prevent future misunderstandings.
2023-002 PROCUREMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. As stated in FAR Section 5.203, Publicizing and Response Time, the Council is required to allow for at least a 30-day response time for the receipt of bids or proposals from the date of issuance of the solicitation.
Condition: The grantor identified payments made to a subrecipient for which the solicitation was held open for less than 30 days, prompting the grantor to ask the Council to replace those expenditures with other grant-eligible expenditures.
Cause: Management was not aware of this requirement.
Effect: The Council reclassified $48,120 of expenditures to be funded by other revenue sources and recorded $48,120 of deferred revenue that will be recognized in fiscal year 2024 when payments are made to the new subrecipient.
Questioned Costs: None.
Perspective: In our sample of procurements tested, we did not identify any other instances of non-compliance.
Recommendation: Management should review all procurements for compliance with award terms, Uniform Guidance, and Federal Acquisition Regulations prior to submitting issuing the purchase order or subrecipient contract.
2023-003 SUSPENSION AND DEBARMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Pursuant to 2 CFR section 180.300, the Council may not contract with or make subawards to parties that are identified as being suspended or debarred by the Federal Government. The Council must verify the parties’ eligibility to receive payment from a program funded by a Federal grant prior to entering a covered transaction (as defined in 2 CFR section 180.220).
Condition: The Council did not have a process in place to verify that subrecipients and vendors for covered transactions were not suspended or debarred.
Cause: Management was not aware of this procurement requirement.
Effect: The Council could inadvertently enter a covered transaction with a suspended or debarred party, resulting in the disallowance of payments made to that party as eligible costs under the Federal program.
Questioned Costs: None.
Perspective: Many of the subawards made by the Council were to other local governments or universities, which are entities unlikely to be suspended or debarred. As part of our compliance testing, we tested a sample of subrecipients and vendors for suspension and debarment, noting no exceptions.
Recommendation: We recommend the Council implement controls to ensure the Council does not enter a subaward or other covered transaction with a party that is suspended, debarred or otherwise excluded from participating in federal awards. We suggest the Council include a clause in the subrecipient contracts stating the contractor is not suspended or debarred. This clause would need to be included in any modifications to the contracts that provide for additional funding. For other covered transactions, the Council should document their verification of the vendor’s status on the System for Award Management (SAM) Exclusions website.
2023-003 SUSPENSION AND DEBARMENT
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Pursuant to 2 CFR section 180.300, the Council may not contract with or make subawards to parties that are identified as being suspended or debarred by the Federal Government. The Council must verify the parties’ eligibility to receive payment from a program funded by a Federal grant prior to entering a covered transaction (as defined in 2 CFR section 180.220).
Condition: The Council did not have a process in place to verify that subrecipients and vendors for covered transactions were not suspended or debarred.
Cause: Management was not aware of this procurement requirement.
Effect: The Council could inadvertently enter a covered transaction with a suspended or debarred party, resulting in the disallowance of payments made to that party as eligible costs under the Federal program.
Questioned Costs: None.
Perspective: Many of the subawards made by the Council were to other local governments or universities, which are entities unlikely to be suspended or debarred. As part of our compliance testing, we tested a sample of subrecipients and vendors for suspension and debarment, noting no exceptions.
Recommendation: We recommend the Council implement controls to ensure the Council does not enter a subaward or other covered transaction with a party that is suspended, debarred or otherwise excluded from participating in federal awards. We suggest the Council include a clause in the subrecipient contracts stating the contractor is not suspended or debarred. This clause would need to be included in any modifications to the contracts that provide for additional funding. For other covered transactions, the Council should document their verification of the vendor’s status on the System for Award Management (SAM) Exclusions website.
2023-004 SUBRECIPIENT MONITORING
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. The use of subrecipients in achieving the goals of the federal award requires the establishment of controls over the monitoring of subrecipients pursuant to 2 CFR section 200.331 and 200.332. This includes the requirement for the subaward contract to include information such as the federal award identification (Assistance Listing Number (ALN) and name of the federal program), all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award and any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Condition: Subrecipient awards did not consistently include the required language including the ALN and the pass-through of Federal award requirements. Additionally, the Council did not have controls in place to obtain and review subrecipient single audit reports as a means to ensure the subrecipients are taking timely and appropriate action on deficiencies, if any, pertaining to the Federal award.
Cause: In some cases, the Council used the contract template for a subaward for a state financial assistance program rather than for a Federal award and, as a result, required information and language was missing from the contract. Further, the Council did not update its procedures over subrecipient monitoring to include follow-up of any deficiencies pertaining to the subrecipients’ use of the Federal funding detected through audits, on-site reviews or other means.
Effect: Without the required language in the subrecipient contracts, subrecipients may not have the information necessary for them to establish appropriate controls over compliance required by the Federal award and to appropriately identify the Federal award and related expenditures on their Schedule of Expenditures of Federal Awards, if applicable. Additionally, without the monitoring of the results of audits and on-site reviews, the Council may not have sufficient information to evaluate the risks of noncompliance associated with a subrecipient.
Questioned Costs: None.
Perspective: The Council did perform monitoring activities related to the use of funds by subrecipients; however, not all controls required for subrecipient monitoring to comply with 2 CFR section 200.331 and 200.332 were fully implemented for the fiscal year under audit. Required language was not included in two of the eight subrecipient awards tested. For one of these two contracts, the contract was originally funded with local share and applied to the Federal award only after the grantor modified the award to allow the Council to apply pre-award expenditures to the grant program.
Recommendation: The Council should review existing subrecipient agreements and amend any contracts that may be missing the required Uniform Guidance language. Management should ensure that future contracts use the template appropriate for the funding source (Federal, state or non-grant funded). To ensure compliance with the requirements for subrecipient monitoring, the Council should establish processes to (1) review and reports required by the subrecipient contract; (2) document the Council’s follow-up on action taken by the subrecipient on any deficiencies detected through audits, on-site reviews or other means; and (3) issue a management decision for audit findings pertaining to the Federal award provided to the subrecipient.
2023-004 SUBRECIPIENT MONITORING
U.S. Department of Environmental Protection
ALN 66.456 – National Estuary Program
Federal Award ID Number: 4T-02D39922 and CE-00D90119
2023 Funding
Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. The use of subrecipients in achieving the goals of the federal award requires the establishment of controls over the monitoring of subrecipients pursuant to 2 CFR section 200.331 and 200.332. This includes the requirement for the subaward contract to include information such as the federal award identification (Assistance Listing Number (ALN) and name of the federal program), all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award and any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Condition: Subrecipient awards did not consistently include the required language including the ALN and the pass-through of Federal award requirements. Additionally, the Council did not have controls in place to obtain and review subrecipient single audit reports as a means to ensure the subrecipients are taking timely and appropriate action on deficiencies, if any, pertaining to the Federal award.
Cause: In some cases, the Council used the contract template for a subaward for a state financial assistance program rather than for a Federal award and, as a result, required information and language was missing from the contract. Further, the Council did not update its procedures over subrecipient monitoring to include follow-up of any deficiencies pertaining to the subrecipients’ use of the Federal funding detected through audits, on-site reviews or other means.
Effect: Without the required language in the subrecipient contracts, subrecipients may not have the information necessary for them to establish appropriate controls over compliance required by the Federal award and to appropriately identify the Federal award and related expenditures on their Schedule of Expenditures of Federal Awards, if applicable. Additionally, without the monitoring of the results of audits and on-site reviews, the Council may not have sufficient information to evaluate the risks of noncompliance associated with a subrecipient.
Questioned Costs: None.
Perspective: The Council did perform monitoring activities related to the use of funds by subrecipients; however, not all controls required for subrecipient monitoring to comply with 2 CFR section 200.331 and 200.332 were fully implemented for the fiscal year under audit. Required language was not included in two of the eight subrecipient awards tested. For one of these two contracts, the contract was originally funded with local share and applied to the Federal award only after the grantor modified the award to allow the Council to apply pre-award expenditures to the grant program.
Recommendation: The Council should review existing subrecipient agreements and amend any contracts that may be missing the required Uniform Guidance language. Management should ensure that future contracts use the template appropriate for the funding source (Federal, state or non-grant funded). To ensure compliance with the requirements for subrecipient monitoring, the Council should establish processes to (1) review and reports required by the subrecipient contract; (2) document the Council’s follow-up on action taken by the subrecipient on any deficiencies detected through audits, on-site reviews or other means; and (3) issue a management decision for audit findings pertaining to the Federal award provided to the subrecipient.