2024-002 Finding – Federal Award Type: Subrecipient Monitoring – Non-Compliance and Significant Deficiency in Internal Control Over Compliance. (Partial repeat of finding 2023-001) Identification of Federal Program: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, 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 provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Forth Mobility Fund passed through $1,578,580 in funding to subrecipients under Assistance Listing 81.086. During our audit, we noted that Forth Mobility Fund had made improvements to subrecipient monitoring in 2024 by establishing a subrecipient monitoring policy and evaluating for risk of non-compliance for subrecipients prior to engaging in a subcontract on a prospective basis. It was noted that within subaward contracts, required federal contract information was provided and if the subrecipient is subject to 2 CFR Subpart F, the audit for this entity was obtained and reviewed for applicable audit findings. However, while monitoring has improved, as Forth Mobility Fund is having regular meetings to ensure tasks are being completed timely and providing technical assistance when needed, there is no formal documentation of this. Further, while a risk assessment is being made for new subrecipients, past subrecipients have not been evaluated and there is no methodical execution of the results of the risk assessment. Cause: Procedures were not in place to ensure that Forth Mobility Fund is maintaining proper subrecipient monitoring for each federal subrecipient. Effect: Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are prescriptive and being followed. Management’s Response: We agree with the auditor's comments, and effective October 31, 2024, we established procedures for monitoring subrecipients, including obtaining and reviewing their annual audits. We will strengthen these procedures by establishing a monitoring plan based on risk assessment for each subrecipient and formally documenting all monitoring activities by November 30, 2025
2024-003 Finding – Federal Award Type: Cash Management (Invoices) – Material Weakness in Internal Control over Compliance. (Partial repeat of finding 2023-002) Identification of Federal Program: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition / Context: It was noted during the audit that there were insufficient internal controls over invoices submitted for cost reimbursement related to federal grants, as 2 of the 4 invoices were reviewed months after the draws were submitted and received. The two sampled items without timely review were in the beginning of the year under audit, showing that Forth Mobility Fund was correcting this internal control late in the year. While the internal controls were insufficient, our sample of invoices did not contain errors or undocumented amounts. Cause: Procedures were not in place to ensure that Forth Mobility Fund is maintaining adequate internal controls over compliance in regards to cash management requirements. Key duties and functions are not segregated among organization personnel and internal control policies and procedures are inadequate to properly define the roles and responsibilities of accounting personnel performing key functions. Effect: Failure to maintain sufficient internal controls over invoices submitted for cost reimbursement related to federal grants may result in the wrongful use of federal funds and/or non‐compliance with the provisions of applicable requirements. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding invoicing for costreimbursement related to federal grants which include proper segregation of duties. Management’s Response: We agree with the auditor's comments, and effective October 31, 2024, we implemented proper segregation of duties for preparing and submitting cost-reimbursement invoices. These changes have been incorporated into our written policies and procedures.
2024-004 Finding – Federal Award Type: Reporting (Special Reporting – FFATA / FSRS) – Material Non-Compliance and Material Weakness in Internal Control over Compliance. (Repeat 2023-003) Identification of Federal Program: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition / Context: During 2024, Forth Mobility Fund entered into 26 first-tier subawards greater than $30,000. KT tested 4 of these subawards, noting that these were reported under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System. However, 2 of the 4 reports submitted were not made within the required timeframe. The two sampled items without timely reporting were in the beginning of the year under audit, showing that Forth Mobility Fund was correcting this compliance requirement late in the year. Cause: Procedures were not in place to ensure that Forth Mobility Fund is maintaining adequate internal controls over compliance in regards to federal special reporting. Procedures are not in place to track and report first-tier subawards. Effect: Failure to maintain sufficient internal controls and proper procedures, including tracking over reporting firsttier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding first-tier subawards including tracking and proper internal control procedures. Management’s Response: We agree with the auditor's comments, and effective September 30, 2024, we established written policies and procedures for tracking and reporting first-tier subawards. Moving forward, we will add a review step to ensure compliance with federal special reporting requirements, which will help maintain accuracy and consistency.
2024-005 Finding – Federal Award Type: Procurement – Material Non-Compliance and Material Weakness in Internal Control over Compliance. (Repeat of finding 2023-005) Identification of Federal Program: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: Per 2 CFR sections 200.318 through 200.326 an entity receiving federal funds must follow their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition / Context: During the audit it was noted that Forth Mobility Fund has an established Procurement Policy which incorporates procurement requirements identified in 2 CFF Part 200. However, of the 3 items selected for testing, all 3 did not follow the Procurement Policy. Either a sufficient number of quotes were not obtained or proper documentation was not maintained. Cause: While the Procurement Policy is documented, the procedures and policies were not being followed. Effect: Failure to maintain sufficient internal controls and proper procedures may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should follow the establish written policies and procedures regarding procurement and properly document the process for each procurement made. Management’s Response: We agree with the auditor's comments and have taken steps to strengthen compliance with procurement policies. We have established additional documentation requirements for all procurements and will update our policies to incorporate explicit internal controls and approval processes. Staff involved in procurement will also receive guidance on these updated requirements.