Audit 399183

2025-001 Subrecipient Monitoring Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Number 93.912 Rural Health Care Services Outreach, Rural Health Network Development, and Small Health Care Provider Quality Improvement Award Numbers GA1RH33517, G28RH46280 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Title 2 U.S. Code of Federal Regulations (CFR) 200.332 requires that passthrough entities monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with federal statutes, regulations, and the terms and conditions of the subaward. Pass-through entities must review financial and performance reports, to ensure the goals and objectives of the awards are achieved and are required to verify that subrecipients are audited as required by Uniform Guidance, when applicable. Condition During our testing of subrecipient monitoring, we noted that the Network does not have any documented policies and procedures regarding the monitoring of subrecipients. Monitoring activities performed were not sufficient to ensure subrecipient compliance with federal statutes, regulations, and the terms and conditions of the subawards. This finding appears to be a systemic problem. Cause Management does not have a documented policy for monitoring its subrecipients and ensuring the requirements for pass-through entities are met. Effect Without a documented policy to monitor subrecipients, there is an increased risk that noncompliance or performance issues at subrecipients may not be timely identified, addressed, or documented. This may result in the Network being noncompliant with Uniform Guidance and could result in questioned costs and adversely impact the Network’s federal funding. Questioned Costs None noted. Context In a sample of 2 out of 7 subrecipients, we noted that the Network’s monitoring procedures were limited to the review and approval of expenditures based on subrecipient invoice submissions and quarterly performance reports provided by the subrecipients. Recommendation We recommend that the Network develop and implement formal written policies for monitoring subrecipients. These policies should specify both financial and programmatic monitoring procedures, including annual risk assessments for all subrecipients. Based on the assessed level of risk, the Network should perform additional monitoring activities as appropriate, such as trainings, site visits, or enhanced oversight. In addition, we recommend that the Network establish procedures to track, document, and follow up on all monitoring activities, including audit findings and related corrective actions. Views of responsible officials and planned corrective action Management agrees with 2025-001 Subrecipient Monitoring on the schedule of findings and questioned costs. KCHN did not consistently perform and/or document required subrecipient monitoring activities.