Audit 372878

Finding 2024-001 Significant Deficiency: Subrecipient Monitoring - Compliance and Control Finding ALN 11.307 – Economic Development Cluster Federal Agency: U.S. Department of Commerce Pass-Through Entity: N/A Criteria Or Specific Requirement: 2 CFR Part 332 requires direct recipients of grants to monitor subrecipients as necessary to ensure that the subaward is used forauthorized purposes. Condition: Audit procedures revealed that a subrecipient submitted an expense reimbursement request for an amount greater than the grant expenses that had beenincurred to date. Cause: Files used to track the subrecipient’s expenses contained formula errors that led to misallocations of funds to charge to the grant. Additionally, controls over subrecipient monitoring were not designed effectively to identify this error. Effect: Instances of noncompliance were not detected by management in a timely manner. Context: Of the 15 subrecipient reimbursement requests we tested, one of them contained an error whereby the reimbursement requested exceeded the actual expenses incurred. The subrecipient has acknowledged the error and will deduct this overcharge from its next reimbursement request in 2025. Questioned Costs: Known questioned costs associated with this error are $6,590. If this error is extrapolated over the entire population of 2024 subrecipient reimbursements, this results in projected likely questioned costs of $31,790. Identification As A Repeat Finding: Not applicable. Recommendation: We recommend that management review all documents used to track subrecipient expense to ensure they are accurate and free of error, and have undergoine with proper review and approval prior to submission. Views Of Responsible Officials: In 2025, BioSTL Grant Management and Finance leadership implemented a comprehensive post-award grant process, including extensive policies and procedures for subrecipient management and monitoring. Additionally, early in 2025, internal policies concerning subrecipient invoicing procedures were enhanced to require additional documentation and review for all subrecipient submissions of grant funds. These improvements have proven effective in identifying and rectifying errors prior to submission. Refer to the accompanying corrective action plan for more detail on the processes implemented.