2025-001 – Significant Deficiency in Internal Control over Cash Management and Noncompliance Identification of federal programs: United States Department of Commerce (DOC) ALN 11.463 - Habitat Conservation Grant Awards NA25NMFX463C0022, NA24NMFX463C0009 Criteria: Part 3 Compliance Supplement Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs. Under the advance payment method, federal awarding agency or pass-through entity payment is made to the non-federal entity before the non-federal entity disburses the funds for program purposes (2 CFR section 200.1). A non-federal entity must be paid in advance provided that it maintains, or demonstrates the willingness to maintain, both written procedures that minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the non-federal entity, as well as a financial management system that meets the specified standards for fund control and accountability (2 CFR section 200.305(b)(1)). Condition: The Organization received advanced payments of grant funding and did not minimize the time elapsing between the transfer of funds and disbursement by the Organization. Approximately $3.33 million ($3,328,150) of advanced federal funds remained undisbursed at December 31, 2025 for ALN 11.463. Cause: The Organization's written cash management policies and procedures did not adequately address Uniform Guidance requirements related to advance funding. In addition, management did not implement monitoring controls to ensure drawdowns were limited to immediate cash needs and disbursed within a timeframe consistent with 2 CFR 200.305. Effect or potential effect: Failure to minimize the time between receipt and disbursement of federal funds increases the risk that federal cash is held in excess of immediate program needs and may result in noncompliance with 2 CFR 200.305. Approximately $3.3 million of advanced federal funds remained undisbursed at December 31, 2025. Questioned Costs: None. Context: During fiscal year 2025, management drew federal funds in advance of immediate cash needs due to the economic uncertainties during that time. The matter was identified during audit procedures in September 2025, following identification of this issue, management implemented revised cash management procedures and returned excess federal funds in 2026 that were not required for immediate program needs. Identification of Repeat Finding: 2024-001 Recommendations: We recommend that the Organization continue implementation of revised cash management procedures and establish monitoring controls to ensure future drawdowns are limited to immediate cash needs and comply with 2 CFR 200.305. Views of Responsible Officials: Management agrees with this finding. See Corrective Action Plan.
2025-002 – Significant Deficiency in Internal Control over Reporting and Noncompliance Identification of federal programs: United States Department of Commerce (DOC) ALN 11.463 - Habitat Conservation Grant Award NA25NMFX463C0022 Criteria: Part 3 Compliance Supplement In accordance with the Federal Funding Accountability and Transparency Act (FFATA) and 2 CFR Part 170, recipients of federal awards are required to report information regarding qualifying first-tier subawards to the FFATA Subaward Reporting System (FSRS.gov) within the required reporting timeframe. Condition: The Organization issued one first-tier subaward totaling $127,888 under ALN 11.463 during fiscal year 2025. The required FFATA filing was not submitted within the reporting deadline. Because the award was obligated in April of 2025, the reporting should have been completed by the end of the following month, May 31, 2025. Cause: Management had not established a formal grant compliance review process to identify FFATA reporting requirements for new subawards, and personnel responsible for grant administration had not received training regarding FFATA reporting obligations. Effect or potential effect: Failure to submit required FFATA reports timely reduces transparency of federal expenditures and results in noncompliance with federal reporting requirements. Questioned Costs: None. Context: The Organization issued one subaward totaling $127,888 under the program. This represented 100% of subawards issued under ALN 11.463 during the audit period. Identification of Repeat Finding: N/A Recommendations: We recommend that the Organization reviews and revises their policies and procedures to ensure that they align with the reporting requirements of Uniform Guidance. We also recommend that, as part of the Organization’s internal control structure over compliance with FFATA requirements, to establish a monitoring/compliance checklist to ensure that required reports are submitted in the required timeframe. Views of Responsible Officials: Management agrees with this finding. See Corrective Action Plan.
2025-003 – Significant Deficiency in Internal Control over Subrecipient Monitoring and Noncompliance Identification of federal programs: United States Department of Commerce (DOC) ALN 11.463 - Habitat Conservation Grant Award NA25NMFX463C0022 Criteria: Part 3 Compliance Supplement Under 2 CFR §200.332, pass-through entities are responsible for monitoring the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes, comply with applicable federal statutes, regulations, and the terms and conditions of the subaward, and that performance goals are achieved. Monitoring activities may include reviewing financial and performance reports, performing follow-up on identified deficiencies, and issuing management decisions when applicable. Additionally, pass-through entities are required to verify whether subrecipients that expend $750,000 or more in federal awards obtain the required Single Audit, review audit reports for findings related to the federal program, issue management decisions on applicable findings, and ensure timely corrective action. Condition: The Organization issued one subaward under ALN 11.463 during the fiscal year. The Organization performed a risk assessment of the subrecipient and maintained ongoing communication regarding project activities. However, the Organization did not establish or perform sufficient monitoring procedures to fully demonstrate compliance with Uniform Guidance subrecipient monitoring requirements. Specifically: • The Organization did not require or obtain formal financial reports sufficient to monitor the subrecipient's use of federal funds after subaward funds were advanced. • The Organization did not obtain formal performance reports documenting progress toward program objectives. • The Organization did not document procedures to determine whether the subrecipient was subject to Single Audit requirements. • The Organization did not review applicable Single Audit reports. • The Organization did not document follow-up procedures or management decisions related to audit findings affecting the subrecipient, if applicable. Cause: At the time the subaward was issued and monitored during fiscal year 2025, the Organization had not established procedures addressing all Uniform Guidance subrecipient monitoring requirements. Management adopted revised subrecipient monitoring policies in December 2025; however, the monitoring procedures required by those policies were not fully applied to the subaward issued during the fiscal year. Effect or potential effect: Although the Organization maintained oversight of the subrecipient through risk assessment procedures, project deliverable reviews, ongoing communications, and project management activities, the Organization did not perform and document all monitoring procedures required under 2 CFR 200.332. As a result, the Organization cannot fully demonstrate compliance with all pass-through entity monitoring requirements, increasing the risk that subrecipient compliance issues may not be identified, evaluated, and resolved in a timely manner. Questioned Costs: None. Context: The Organization issued one subaward under ALN 11.463 during fiscal year 2025. Audit procedures identified that required monitoring procedures were not performed or documented for the subaward issued during fiscal year 2025. Although the Organization adopted revised subrecipient monitoring policies in December 2025, the procedures were not applied retrospectively to the subaward under audit. Identification of Repeat Finding: N/A Recommendations: We recommend that management continue implementation of its revised subrecipient monitoring policies and ensure that monitoring procedures are performed and documented for all current and future subawards and well as ensuring those monitoring requirements are communicated to the subrecipient. Monitoring activities should include review of financial and performance reporting, verification of Single Audit requirements, review of applicable audit reports, and documented follow-up of audit findings when required. Views of Responsible Officials: Management agrees with this finding. See Corrective Action Plan.