2025-002 Significant Deficiency in Internal Control over Subrecipient Monitoring Identification of federal program: 64.033 VA Support Services for Veteran Families Program Award 20-AK-152 Department of Veterans Affairs Criteria: In accordance with 2 CFR § 200.332(b), prior to making a subaward, a pass-through entity is required to evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward. This evaluation is intended to determine the appropriate level of subrecipient monitoring necessary throughout the period of performance. The pass-through entity should maintain documentation demonstrating that the required risk assessment was performed. Condition: During our testing of subrecipient monitoring, we noted that Fairbanks Rescue Mission, Inc. did not retain documentation demonstrating that it performed and documented a risk assessment of the subrecipient for two out of three sub awardees selected for testing prior to issuing the subaward. Although management indicated that it considers various factors when selecting and overseeing subrecipients, no documentation was maintained to support that a formal risk assessment was completed or to support the monitoring approach selected. Cause: Fairbanks Rescue Mission, Inc. has implemented controls over documentation retention for the risk assessment over the sub awardees. However, they did not retroactively perform the control for subgrantees who had received awards prior to this finding initially being identified. As such, there are still several subawards for which they do not have a documented audit trail showing that a formal risk assessment was performed. Effect or potential effect: Without documented risk assessments, Fairbanks Rescue Mission, Inc. cannot demonstrate compliance with the requirements of 2 CFR § 200.332. In addition, Fairbanks Rescue Mission, Inc. may not appropriately tailor monitoring activities based on the level of risk presented by individual subrecipients, increasing the risk that noncompliance with Federal requirements may not be identified or addressed in a timely manner. Questioned Costs: None Context: We tested three subaward issued during the audit period. For two of the subawards selected for testing, Fairbanks Rescue Mission, Inc. was unable to provide documentation demonstrating that a risk assessment had been completed and documented prior to issuing the subaward. Identification of Repeat Finding: Finding 2024-003 Recommendation: We recommend that as a part of Fairbanks Rescue Mission, Inc.’s internal control structure over compliance subrecipients that Fairbanks Rescue Mission, Inc. is entering into agreements with, they establish procedures to ensure federal subrecipient risk evaluation is completed and maintained. Views of Responsible Officials: Management agrees with finding. See Corrective Action Plan.