Audit 412171

Federal Agency: USDA Cooperative Fire Assistance Federal Program Name: State and Private Forestry Cooperative F Assistance Listing Number: 10.698 Federal Award Identification Year: 2025 Pass-Through Agency: N/A Award Period: 1/1/25-12/31/25 Compliance Requirement Affected: [M] Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR §200.332 requires pass-through entities to monitor the activities of subrecipients as necessary to provide reasonable assurance that the subrecipient administers federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity should maintain documentation demonstrating performance of required monitoring procedures. Condition: During testing of subrecipient monitoring controls, auditors selected six transactions for review and noted two instances in which management was unable to provide documentation evidencing completion of required subrecipient monitoring procedures. According to management, certain monitoring documentation and related communications could not be located due to turnover of key personnel. As a result, the operating effectiveness of controls over subrecipient monitoring could not be demonstrated for the selected transactions. Context: During testing of six subrecipient monitoring selections, two transactions totaling $56,728 were identified for which CFSC could not provide documentation demonstrating completion of required subrecipient monitoring procedures. Management indicated the documentation could not be located due to turnover of key personnel. The exceptions represented approximately 33% of the items tested. Effect: Without retained documentation demonstrating the performance of subrecipient monitoring activities,the Organization cannot demonstrate compliance with federal requirements designed to ensure federal funds are used in accordance with applicable laws, regulations, and award terms. This increases the risk that noncompliance by subrecipients may not be detected timely. Cause: Management indicated that documentation supporting completion of monitoring activities and related communications could not be located due to turnover of personnel responsible for administering and documenting subrecipient monitoring procedures. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend management strengthen procedures for retaining subrecipient monitoring documentation and establish controls to ensure monitoring activities are consistently documented and maintained, including during personnel transitions. Management’s Views: See separate corrective action plan.