Audit 390864

2025-001 Finding – Subrecipient Monitoring Type: Significant Deficiency in Internal Control over Compliance – Subrecipient Monitoring Criteria / Requirement: Under 2 CFR 332 a pass-through entity must verify the subrecipient is not excluded or disqualified from doing business with the federal government, ensure that every subaward is clearly identified with required federal award information, evaluate each subrecipient’s fraud risk and risk of noncompliance, monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations and the terms and conditions of the subaward. Condition / Context: The Organization did verify the subrecipient was not suspended nor debarred from doing business with the federal government and clearly identified the award to the subrecipient. While the Organization did assess the fraud risk, risk of noncompliance, and performed monitoring activities, there was no documentation available to support these activities. Additionally, per review of the Subrecipient Monitoring Policy, it is not developed in a way that addresses all potential subrecipient types, it does not give a clear policy on how fraud or noncompliance risk is determined, and it does not provide a prescriptive approach to monitoring. Cause: Procedures were not in place to properly document subrecipient monitoring activities and the Subrecipient Monitoring Policy is insufficient to ensure compliance with subrecipient monitoring requirements. Effect: Subrecipient monitoring was not thoroughly documented. Questioned Costs: None Recommendation: We recommend that the Organization implement the necessary internal controls to ensure that subrecipient monitoring is performed and documented. Additionally, we recommend that the Organization revise their Subrecipient Monitoring Policy to address 2 CFR 332 and to give clear directives of how subrecipient monitoring will be performed and documented. Management’s Response: Management concurs with the finding and will implement effective internal controls over Subrecipient Monitoring