FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
Condition: The SEFA, as prepared by management erroneously included expenditures previously incurred and reported in fiscal year 2022, resulting in an overstatement of $7,875 for the Substance Abuse and Mental Health Service Project. Additionally, COVID-19 Education Stabilization Fund expenditures were not complete, resulting in an understatement of $6,000 for the COVID-19 Education Stabilization Fund.
Cause: Administrative oversight with respect to preparation of the SEFA.
Effect or Potential Effect: The original draft SEFA was overstated.
Questioned Costs: None
Context: Due to an error in disbursing grant funds to an incorrect local club in fiscal year 2022, the Alliance attempted to correct this mistake by disbursing additional funds to the correct club in fiscal year 2023. The Alliance included the remedied disbursement on the 2023 SEFA, which resulted in a $7,875 overstatement of expenditures that had already been incurred and reported on the 2022 SEFA. The omission of costs allocated to the COVID-19 Education Stabilization Fund resulted in expenditures being understated by $6,000.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA.
Views of Responsible Officials and Planned Corrective Actions: Management will enhance procedures and internal controls with respect to the preparation and review of the SEFA, by reviewing the detail of expenses included in the prior year SEFA with current year expenses, to prevent duplicate entries being reported.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
Condition: The SEFA, as prepared by management erroneously included expenditures previously incurred and reported in fiscal year 2022, resulting in an overstatement of $7,875 for the Substance Abuse and Mental Health Service Project. Additionally, COVID-19 Education Stabilization Fund expenditures were not complete, resulting in an understatement of $6,000 for the COVID-19 Education Stabilization Fund.
Cause: Administrative oversight with respect to preparation of the SEFA.
Effect or Potential Effect: The original draft SEFA was overstated.
Questioned Costs: None
Context: Due to an error in disbursing grant funds to an incorrect local club in fiscal year 2022, the Alliance attempted to correct this mistake by disbursing additional funds to the correct club in fiscal year 2023. The Alliance included the remedied disbursement on the 2023 SEFA, which resulted in a $7,875 overstatement of expenditures that had already been incurred and reported on the 2022 SEFA. The omission of costs allocated to the COVID-19 Education Stabilization Fund resulted in expenditures being understated by $6,000.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA.
Views of Responsible Officials and Planned Corrective Actions: Management will enhance procedures and internal controls with respect to the preparation and review of the SEFA, by reviewing the detail of expenses included in the prior year SEFA with current year expenses, to prevent duplicate entries being reported.
FINDING 2023-002
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): C. Cash Management – When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR 200.305(b)(3).
M. Subrecipient Monitoring - 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 (2 CFR 200.332(d).
Condition: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022, resulting in untimely payment of pass-through funds to the correct local club and insufficient subrecipient monitoring over subawards.
Cause: Administrative oversight with respect to subrecipient monitoring and cash management.
Effect or Potential Effect: The Organization did not ensure the incorrect local club used the subaward for authorized purposes. The Organization did not make timely payment of pass-through funds within 30 days to the correct club.
Questioned Costs: Below reportable threshold.
Context: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022. This club did not incur expenditures in the period of reimbursement, indicating insufficient subrecipient monitoring over subawards. As the Organization did not disburse the funds to the correct club until February 2024, they did not make appropriate payment within 30 calendar days after receipt of the billing as required at 2 CFR 300.305(b)(3).
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to monitoring over subrecipient activities and reimbursement payments.
Views of Responsible Officials and Planned Corrective Actions: The Organization will enhance its procedures and internal controls with respect to monitoring subrecipient activities, and reimbursement payments, by working with the State of Montana grantor to ensure local clubs are using subawards for authorized purposes.
FINDING 2023-003
Program Information: COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2 CFR 200.303).
M. Subrecipient Monitoring - 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 (2 CFR 200.332(d).
Condition: The Organization’s control processes failed to detect unallowable costs included in quarterly reimbursement requests by local club subrecipients. Although these amounts were not approved by the State agency and ultimately were not reimbursed, the Alliance did not have sufficient internal controls in place in order to independently detect unallowable costs submitted by subrecipients and to provide reasonable assurance the Alliance is managing the Federal award in compliance with the award terms.
Cause: Lack of sufficient controls in place over subrecipient monitoring, allowable costs, and reporting compliance requirements.
Effect or Potential Effect: For 3 out of 3 quarterly reports, the Organization failed to detect unallowable costs requested for reimbursement by local club subrecipients, resulting in inaccurate reporting and insufficient subrecipient monitoring. The control failure was determined to be a material weakness in internal controls over subrecipient monitoring, allowable costs, and reporting compliance requirements.
Questioned Costs: None
Context: The Organization approved unallowable costs for reimbursement, which demonstrated ineffective management oversight related to subrecipient monitoring, allowable costs, and reporting compliance requirements. As the control failed to detect unallowable costs for all 3 quarters of the grant period during the fiscal year, and there were no compensating controls to mitigate the severity of the deficiency, we determined the control deficiency to be a material weakness.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to subrecipient monitoring, allowable costs, and reporting compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization will enhance its procedures and internal controls with respect to monitoring subrecipient activities, and reimbursement payments, by working with the State of Montana grantor to ensure local clubs are using subawards for authorized purposes.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
Condition: The SEFA, as prepared by management erroneously included expenditures previously incurred and reported in fiscal year 2022, resulting in an overstatement of $7,875 for the Substance Abuse and Mental Health Service Project. Additionally, COVID-19 Education Stabilization Fund expenditures were not complete, resulting in an understatement of $6,000 for the COVID-19 Education Stabilization Fund.
Cause: Administrative oversight with respect to preparation of the SEFA.
Effect or Potential Effect: The original draft SEFA was overstated.
Questioned Costs: None
Context: Due to an error in disbursing grant funds to an incorrect local club in fiscal year 2022, the Alliance attempted to correct this mistake by disbursing additional funds to the correct club in fiscal year 2023. The Alliance included the remedied disbursement on the 2023 SEFA, which resulted in a $7,875 overstatement of expenditures that had already been incurred and reported on the 2022 SEFA. The omission of costs allocated to the COVID-19 Education Stabilization Fund resulted in expenditures being understated by $6,000.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA.
Views of Responsible Officials and Planned Corrective Actions: Management will enhance procedures and internal controls with respect to the preparation and review of the SEFA, by reviewing the detail of expenses included in the prior year SEFA with current year expenses, to prevent duplicate entries being reported.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
FINDING 2023-001
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): L. Reporting - The auditee must prepare a schedule of expenditures of Federal awards (the “SEFA”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414.
Condition: The SEFA, as prepared by management erroneously included expenditures previously incurred and reported in fiscal year 2022, resulting in an overstatement of $7,875 for the Substance Abuse and Mental Health Service Project. Additionally, COVID-19 Education Stabilization Fund expenditures were not complete, resulting in an understatement of $6,000 for the COVID-19 Education Stabilization Fund.
Cause: Administrative oversight with respect to preparation of the SEFA.
Effect or Potential Effect: The original draft SEFA was overstated.
Questioned Costs: None
Context: Due to an error in disbursing grant funds to an incorrect local club in fiscal year 2022, the Alliance attempted to correct this mistake by disbursing additional funds to the correct club in fiscal year 2023. The Alliance included the remedied disbursement on the 2023 SEFA, which resulted in a $7,875 overstatement of expenditures that had already been incurred and reported on the 2022 SEFA. The omission of costs allocated to the COVID-19 Education Stabilization Fund resulted in expenditures being understated by $6,000.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to preparation and review of the SEFA.
Views of Responsible Officials and Planned Corrective Actions: Management will enhance procedures and internal controls with respect to the preparation and review of the SEFA, by reviewing the detail of expenses included in the prior year SEFA with current year expenses, to prevent duplicate entries being reported.
FINDING 2023-002
Program Information: Substance Abuse and Mental Health Services Projects (ALN #93.243)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): C. Cash Management – When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR 200.305(b)(3).
M. Subrecipient Monitoring - 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 (2 CFR 200.332(d).
Condition: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022, resulting in untimely payment of pass-through funds to the correct local club and insufficient subrecipient monitoring over subawards.
Cause: Administrative oversight with respect to subrecipient monitoring and cash management.
Effect or Potential Effect: The Organization did not ensure the incorrect local club used the subaward for authorized purposes. The Organization did not make timely payment of pass-through funds within 30 days to the correct club.
Questioned Costs: Below reportable threshold.
Context: The Organization mistakenly disbursed grant funds to an incorrect local club in fiscal year 2022. This club did not incur expenditures in the period of reimbursement, indicating insufficient subrecipient monitoring over subawards. As the Organization did not disburse the funds to the correct club until February 2024, they did not make appropriate payment within 30 calendar days after receipt of the billing as required at 2 CFR 300.305(b)(3).
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to monitoring over subrecipient activities and reimbursement payments.
Views of Responsible Officials and Planned Corrective Actions: The Organization will enhance its procedures and internal controls with respect to monitoring subrecipient activities, and reimbursement payments, by working with the State of Montana grantor to ensure local clubs are using subawards for authorized purposes.
FINDING 2023-003
Program Information: COVID-19 Education Stabilization Fund (ALN #84.425C)
Criteria or Specific Requirement (Including Statutory, Regulatory
or Other Citation): Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2 CFR 200.303).
M. Subrecipient Monitoring - 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 (2 CFR 200.332(d).
Condition: The Organization’s control processes failed to detect unallowable costs included in quarterly reimbursement requests by local club subrecipients. Although these amounts were not approved by the State agency and ultimately were not reimbursed, the Alliance did not have sufficient internal controls in place in order to independently detect unallowable costs submitted by subrecipients and to provide reasonable assurance the Alliance is managing the Federal award in compliance with the award terms.
Cause: Lack of sufficient controls in place over subrecipient monitoring, allowable costs, and reporting compliance requirements.
Effect or Potential Effect: For 3 out of 3 quarterly reports, the Organization failed to detect unallowable costs requested for reimbursement by local club subrecipients, resulting in inaccurate reporting and insufficient subrecipient monitoring. The control failure was determined to be a material weakness in internal controls over subrecipient monitoring, allowable costs, and reporting compliance requirements.
Questioned Costs: None
Context: The Organization approved unallowable costs for reimbursement, which demonstrated ineffective management oversight related to subrecipient monitoring, allowable costs, and reporting compliance requirements. As the control failed to detect unallowable costs for all 3 quarters of the grant period during the fiscal year, and there were no compensating controls to mitigate the severity of the deficiency, we determined the control deficiency to be a material weakness.
Identification as a Repeat Finding: No similar findings noted in the prior year.
Recommendation: We recommend that the Organization enhance its procedures and internal controls with respect to subrecipient monitoring, allowable costs, and reporting compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Organization will enhance its procedures and internal controls with respect to monitoring subrecipient activities, and reimbursement payments, by working with the State of Montana grantor to ensure local clubs are using subawards for authorized purposes.