Audit 369306

FINDING 2024-002 Subrecipient (Noncompliance, Significant Deficiency) Federal Program Information: Education Stabilization Fund (ALN 84.425U) Criteria: Per 2 CFR § 200.332, pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes specific information at the time of issuance and upon modification. Required elements include federal award identification; all requirements of the subaward including the federal statutes, regulations and terms and conditions; indirect cost rate; access to records; and closeout terms and conditions. Condition: The Organization awarded 39 awards to subrecipients and did not include the information required by 2 CFR § 200.332 in the subaward agreement. Cause: The Organization did not have a standardized process or checklist to ensure all required subaward elements were included in the agreement. Effect or Potential Effect: Failure to communicate the federal nature of the award may result in subrecipients not being aware of their responsibilities under federal regulations, which could lead to noncompliance and misuse of federal funds. The Organization was not in compliance with the subrecipient requirements outlined in the agreement and in 2CFR200.332. Prior Year Finding: Reported as 2023-002 in the prior year. Recommendation: We recommend that the Organization update subaward agreements to include all federal provisions required to be communicated by the grant and also 2 CFR § 200.332. Views of Responsible Officials: Management agrees with the finding and the auditors’ recommendation. See Corrective Action Plan at the end of the report.

FINDING 2024-003 Subrecipient Monitoring (Significant Deficiency) Federal Program Information: Education Stabilization Fund (ALN 84.425U) Criteria: 2 CFR 200.303 states that a receipt or subrecipient of federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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). Condition: The Organization has a policy in place to reimburse subrecipients for allowable expenses once all invoice and payment support is provided by the subrecipient and reviewed and approved by the Organization. While the Organization obtained support from the subrecipient, there was no evidence that the supporting documentation was reviewed and approved by the Organization before reimbursing the subrecipient. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: Failure to maintain adequate internal controls to ensure that all subrecipients are sufficiently monitored may result in the wrongful use of federal funds and non-compliance with the provisions of applicable requirements of the federal awards. Questioned Costs: None Context: The Organization made payments to 39 subrecipients. During our audit we tested 4 subrecipients and noted that the Organization did not have evidence of review of source documentation from the subrecipient for any of the subrecipients selected for testing. Prior Year Finding: Reported as 2023-003 in the prior year. Recommendation: We recommend the Organization enhance its procedures and internal controls over subrecipient monitoring to ensure subrecipient invoices are properly reviewed and the review is documented. Views of Responsible Officials: Management agrees with the finding and the auditors’ recommendation. See Corrective Action Plan at the end of the report.