Audit 411872

FINDING 2024-002 – Subrecipient Monitoring (Partially Repeated from Prior Year Findings 23-002, 22-002, 21-003, 20-004, 19-005, 18-004, and 17-003) Federal Program: COVID-19 ARP – McKinney Education for Homeless Children Project No: 22-4998-HM and 24-4998-HM Federal Assistance Listing Number: 84.425W Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: A. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) require the Regional Office to ensure the process to monitor subrecipients of federal funds be consistent with the standards set forth in the Uniform Guidance at 2 CFR 200.332. B. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 Internal Controls states the following: “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: The Regional Office of Education #47 did not perform subrecipient monitoring procedures including the preparation and retention of monitoring documentation. During audit testing procedures it was determined that: For one (1) of two (2) subrecipients tested, ROE #47: • Did not identify the subaward and applicable requirements in the agreements. • Did not conduct subrecipient monitoring procedures during the year ended June 30, 2024. For two (2) of two (2) subrecipients tested, ROE #47: • Did not evaluate the risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward. • Did not determine whether the subrecipient met the 2 CFR 200 Subpart F Audit requirements criteria for a single audit. Questioned Costs: None Context: The Regional Office of Education #47 expended a total of $917,485 of federal awards in fiscal year 2024. The Regional Office of Education #47 passed-through to subrecipients a total of $191,630 of federal awards in fiscal year 2024 of which $52,029 was funded by COVID-19 ARP – McKinney Education for Homeless Children grant. Effect: The Regional Office of Education #47 is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200.332 as it relates to subrecipient monitoring requirements. Additionally, the effect of noncompliance can result in questioned costs. Cause: Regional Office Management indicated the ROE is not adhering to established subrecipient monitoring policies and procedures to properly detect and prevent noncompliance with subrecipient monitoring requirements. Recommendation: We recommend that the Regional Office of Education #47 adhere to set subrecipient monitoring policies and procedures and maintain effective internal control over federal awards to ensure subrecipients are properly monitored as required by 2 CFR 200.332. This includes: a. Identifying the subaward and applicable requirements in the agreements; b. Evaluating the risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward; c. Utilizing risk assessment results to develop and implement necessary subrecipient monitoring procedures for the fiscal year; d. Conducting subrecipient monitoring procedures; e. Determining whether the subrecipient met the requirement criteria of 2 CFR 200 Subpart F Audit requirements for a single audit; and f. Retaining supporting monitoring documentation. Management’s Response: Effective with the FY25 School Year, the Regional Office will formally identify the subaward and the applicable requirements in our agreements. We will conduct and document subrecipient monitoring procedures. We will determine if the subrecipient met the requirement criteria of 2 CFR 22 Subpart F Audit requirements for a single audit.