Audit 401814

Delinquent Data Collection Form Filing (SF-SAC) (Noncompliance) Finding 2025-001 Identification of the Federal Program: 93.600 – Head Start Cluster, 93.387 – National and State Tobacco Control Program, and 93.872 – Tribal Maternal, Infant, and Early Childhood Home Visit Criteria: Uniform Guidance requires the auditee to submit a reporting package and Data Collection Form to the Federal Audit Clearinghouse within the prescribed timeframe. The auditee must submit the reporting package and DCF within the earlier of 30 calendar days after receipt of the auditor’s reports, or 9 months after the end of the audit period. Condition: For the fiscal year ended 9/30/2024, the auditee’s Data Collection Form and reporting package were not submitted timely to the Federal Audit Clearinghouse. Required submission deadline: May 21, 2025 (30 calendar days after receipt of the auditor’s report) Actual submission date: August 14, 2025 Days delinquent: 85 days Cause: The delinquent filing occurred due to turnover in the Executive Director position reassigning Single Audit responsibilities and misunderstanding of the submission process. Effect: Failure to submit the Data Collection Form and reporting package timely may result in delayed federal oversight and monitoring, increased risk of federal agencies deeming the organization noncompliant with Single Audit requirements, or potential sanctions including withholding of federal awards and/or suspension of future funding. Questioned Costs: $0 Repeat Finding: No Recommendation: We recommend management establish a formal compliance calendar including the required submission deadline under Uniform Guidance. Management Response: Management agrees with the finding. The Council will implement a Single Audit compliance calendar to ensure timely filing. The Executive Director will be responsible for submission of the Data Collection Form and reporting package and will retain confirmation documentation in the finance records.

Subrecipient Monitoring – Risk Assessment (Noncompliance) and significant deficiency in Internal Control Finding 2025-002 Identification of the Federal Program: 93.600 – Head Start Cluster, 93.387 – National and State Tobacco Control Program, and 93.872 – Tribal Maternal, Infant, and Early Childhood Home Visit Criteria: According to 2 CFR § 200.332, a pass-through entity must evaluate each subrecipient's fraud risk and risk of noncompliance as a form of subrecipient monitoring. In doing so, a pass-through entity must review financial reports, including their financial audits, ensure that the subrecipient takes corrective action on all significant developments affecting the subaward, issue a management decision on any audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through and resolve audit findings specifically related to the subaward. If a finding rises to a certain level, the pass-through should consider taking action against noncompliant subrecipients. Condition: The organization does not have a formal risk assessment process in place. As of the date of fieldwork, audit reports of member tribes receiving subrecipient payments were not all received and therefore, were not reviewed to perform a proper risk assessment. We additionally noted that a quarterly report was not submitted as required per the agreement and funds were still distributed. Cause: Management's unfamiliarity with 2 CFR § 200.332 requirements and overall relationship with the Tribes. Effect: Risk assessment is significant to performing sufficient subrecipient monitoring. The structure of the organization being governed by the chairs of each Tribe and created to obtain grants to further support the Tribes creates a level of trust amongst the Tribes and the Organization; however, this does not eliminate the need to perform a risk assessment and ensure that the individual Tribes are in compliance at a Federal level. Questioned Costs: $0 Repeat Finding: No Recommendation: We recommend that management and program managers familiarize themselves with the requirements of 2 CFR § 200.332 and create a formal risk assessment process. We also recommend that Tribes are held accountable for not submitting a timely audit (i.e. withholding funds until provided). Management Response: Management agrees with the finding. The Council will work on implementing an efficient, yet effective risk assessment process for all subrecipients.

Subrecipient Monitoring – Ineligible Subaward (Noncompliance)and Significant Deficiency in Internal Control Finding 2025-003 Identification of the Federal Program: 93.387 – National and State Tobacco Control Program Criteria: According to 2 CFR § 25.300, a recipient may not make a subaward to a subrecipient that has not obtained a UEI and provided it to the recipient. A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient obtains and provides a UEI to the recipient. Condition: For the major program tested, $39,000 of subawards were made to a subrecipient (LIFT), who does not have a UEI. Although due diligence was done in attempted to obtain the information, the EIN was received instead. Cause: Management nor the program manager was unaware of the requirement due to the limited number of subawards that are made outside of the member Tribes, who all have UEI numbers. Effect: The major program is in noncompliance with 2 CFR § 25.300. Questioned Costs: $39,000 Repeat Finding: No Recommendation: We recommend that management reach out to all program managers at the Organization to ensure this information is obtained for all subawards. Additionally, implement the control to verify the information reported on the subaward through the FAC website to ensure it is the correct UEI prior to signing the contract. Management Response: Management agrees with the finding. Communication has been made to program managers regarding the requirement and due diligence will be done in checking the correct UEI with the FAC prior to signing any contracts for subawards.

Subrecipient Monitoring - Contractor vs. Subrecipient Determination (Significant Deficiency in Internal Control) Finding 2025-004 Identification of the Federal Program: 93.600 – Head Start Cluster, 93.387 – National and State Tobacco Control Program, and 93.872 – Tribal Maternal, Infant, and Early Childhood Home Visit Condition: During our testing of internal controls over compliance, we noted that the Organization does not maintain formal documentation supporting its evaluation of whether award recipients are classified as contractors or subrecipients in accordance with Uniform Guidance. Criteria: 2 CFR §200.331 requires pass-through entities to evaluate each subaward to determine whether the recipient is a subrecipient or a contractor. This evaluation should be based on the characteristics outlined in 2 CFR §200.331(a) and (b) and documented to support proper classification. Effective internal control over federal awards also requires documentation of compliance-related judgments to ensure consistent application and oversight. Cause: Management indicated that formal documentation of contractor versus subrecipient evaluations has not been implemented due to reliance on historical practices (new administrative roles) and program managers properly classifying. Effect: Without documented evaluations, there is an increased risk that recipients may be improperly classified, which could result in: • Inadequate subrecipient monitoring • Improper application of compliance requirements (i.e. $50,000 of costs applied to direct when charging indirect) • Increased risk of noncompliance with federal award terms and conditions Questioned Costs: $0 Repeat Finding: No Recommendation: We recommend that management implement a formal process to evaluate and document contractor versus subrecipient determinations in accordance with Uniform Guidance. Documentation should include consideration of applicable criteria and be retained in grant files. Establishing this process will strengthen internal controls over compliance and support consistent application of federal award requirements. Management Response: Management agrees with the finding. The Council will work to implement requirements at the program level to evaluate and document all contracts to properly identify between contract and subaward.