Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, 10.443 and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 A0242501X443G026 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Direct Award Periods: August 1, 2022 through July 31, 2027, September 1, 2023 through February 28, 2025, September 29, 2022 through September 30, 2027, September 27 2024 through September 26, 2027 and September 27, 2022 through June 30, 2026 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota-March 1, 2022 through February 28, 2025, April 1, 2023 through March 31, 2025, and September 1, 2020 through August 31, 2025; Board of Regents of the University of Wisconsin System-January 1, 2022 through December 31, 2026 and September 1, 2018 through August 31, 2024. Criteria or Specific Requirement: In accordance with 2 CFR § 200.331(a) (now 2 CFR § 200.332), a passthrough entity must make a case-by-case determination whether each agreement it makes for the disbursement of Federal funds casts the party receiving the funds in the role of a subrecipient or a contractor. This determination must be based on the substance of the relationship and not the form of the agreement. Condition: During the audit, we noted that the Organization has not established or implemented a formal process to determine whether entities receiving federal funds are subrecipients or contractors. There was no documentation or consistent methodology in place to support classification decisions for entities engaged under federal awards. Cause: The Organization has not developed or adopted policies and procedures to comply with the requirements under Uniform Guidance for distinguishing between subrecipients and contractors. Effect or Potential Effect: Without a formal and documented determination process, there is a risk that entities may be misclassified, leading to inappropriate application of monitoring procedures. For example, entities functioning as subrecipients may not be subject to required subrecipient monitoring, potentially resulting in noncompliance with federal regulations and increased risk of misuse of federal funds. Repeat Finding: No Recommendation: The Organization should develop and implement written policies and procedures to ensure proper determination and documentation of subrecipient versus contractor relationships in accordance with Uniform Guidance. Staff involved in federal program administration should be trained on how to apply these criteria consistently. Views of Responsible Officials: Management agrees with the finding and will implement and train on written policies and procedures to document the determination of subrecipient versus contractor.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, 10.443 and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 A0242501X443G026 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Direct Award Periods: August 1, 2022 through July 31, 2027, September 1, 2023 through February 28, 2025, September 29, 2022 through September 30, 2027, September 27 2024 through September 26, 2027 and September 27, 2022 through June 30, 2026 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota-March 1, 2022 through February 28, 2025, April 1, 2023 through March 31, 2025, and September 1, 2020 through August 31, 2025; Board of Regents of the University of Wisconsin System-January 1, 2022 through December 31, 2026 and September 1, 2018 through August 31, 2024. Criteria or Specific Requirement: In accordance with 2 CFR § 200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Additionally, changes in key personnel typically require prior written approval from the federal awarding agency or pass-through entity, as described in 2 CFR § 200.308(c)(2). Condition: During the audit, we noted that the Organization does not have documented internal controls or formal procedures in place to monitor and manage compliance with the key personnel requirements under its federal awards. Specifically, There is no control in place to identify or track which personnel are designated as “key personnel” in award documents. No procedures exist to ensure that required prior approvals are obtained from the federal awarding agency before any changes in key personnel are made. No review or oversight process is in place to ensure that key personnel are actively participating at the level of effort committed in the approved award. Cause: The Organization has not developed or implemented policies and procedures to ensure compliance with special terms and conditions related to key personnel requirements under federal awards. Effect or Potential Effect: The lack of internal controls over key personnel requirements increases the risk that required prior approvals may not be obtained when changes occur, or that personnel effort commitments are not being met. This could result in noncompliance with the terms and conditions of the award, potential disallowance of costs, or reputational risk with federal awarding agencies. Repeat Finding: This finding is a repeat of Finding 2023-007. Recommendation: The Organization should implement internal controls and written procedures to: Identify and track key personnel for each award, based on the approved budget or notice of award. Establish a process to ensure that prior written approval is obtained before any changes to key personnel are made. Monitor and document key personnel effort to ensure it aligns with award requirements and commitments. Provide training to relevant staff on the importance of key personnel compliance and the procedures for requesting changes. Views of Responsible Officials: Management agrees with the finding and will implement internal controls and document its policies and procedures related to key personnel.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, 10.443 and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 A0242501X443G026 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Direct Award Periods: August 1, 2022 through July 31, 2027, September 1, 2023 through February 28, 2025, September 29, 2022 through September 30, 2027, September 27 2024 through September 26, 2027 and September 27, 2022 through June 30, 2026 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota-March 1, 2022 through February 28, 2025, April 1, 2023 through March 31, 2025, and September 1, 2020 through August 31, 2025; Board of Regents of the University of Wisconsin System-January 1, 2022 through December 31, 2026 and September 1, 2018 through August 31, 2024. Criteria or Specific Requirement: 2 CFR section 200.332 state pass-through entities are responsible for ensuring proper oversight of subrecipients to ensure compliance with federal requirements. Specifically: § 200.332(a) requires subaward agreements to include specific information such as the Federal award identification, CFDA/Assistance Listing number, subaward period of performance, indirect cost rate, and applicable terms and conditions. § 200.332(f) requires pass-through entities to verify that subrecipients that expend $750,000 or more in federal awards during their fiscal year have met audit requirements under 2 CFR part 200, subpart F. § 200.332(d)(3) requires pass-through entities to review subrecipient audit reports, identify findings related to their federal awards, and ensure corrective actions are taken, including issuing management decisions if needed. Condition: During our audit of subrecipient monitoring controls, we noted the following deficiencies: One out of four subrecipients sampled, the Organization did have documentation that verified a single audit was not required. In another instance of the four sampled, only the financial statement audit was obtained. It indicated there were separate reports for yellow book and single audit. There were no documented procedures or evidence showing that the Organization assessed whether subrecipient audit findings were relevant to its own federal awards, nor that any follow-up or management decisions were issued. Subaward agreements reviewed were missing several elements required by 2 CFR § 200.332(a), including the Assistance Listing number (formerly CFDA), that the award is for research and development, and closeout terms required by the Uniform Guidance. Cause: The Organization has not implemented adequate internal controls, policies, and procedures to ensure compliance with all subrecipient monitoring and subaward agreement requirements under Uniform Guidance. Effect or Potential Effect: These deficiencies increase the risk of noncompliance with federal program requirements, including the potential for unallowable costs, failure to identify material findings affecting the federal program, and weakened enforcement of subrecipient accountability. Additionally, noncompliant subaward agreements may result in ambiguity or disputes related to federal requirements, allowable costs, and required reporting. Repeat Finding: This is a repeat of Findings 2023-002 and 2023-006. Recommendation: We recommend that the Organization: Establish and document a formal process to verify whether each subrecipient is subject to the Uniform Guidance single audit requirement and obtain the applicable reports annually. Implement procedures to review subrecipient audit findings and determine whether they pertain to the Organization’s federal award(s), and issue management decisions when necessary. Develop a standardized subaward agreement template that incorporates all required elements outlined in 2 CFR § 200.332(a), and ensure staff are trained in its use. Periodically review subrecipient files to verify compliance with monitoring and documentation requirements. Views of Responsible Officials: Management agrees with the finding and will implement subrecipient monitoring procedures.