Audit 413411

Criteria: In accordance with 2 CFR Part 180.300, non-federal entities are prohibited from entering into covered transactions with parties that are suspended or debarred from participation in federal programs. Internal controls should provide reasonable assurance that applicable subrecipients, contractors, and vendors are appropriately vetted before agreements are executed or federal funds are expended. Condition: The Organization had not established or documented procedures to verify whether any applicable subrecipients, contractors, and vendors were suspended or debarred. Management was unable to provide evidence that searches of SAM.gov or other permitted verification methods had been performed before entering into agreements or making federally funded payments. Cause: The Organization had not implemented formal policies requiring suspension and debarment verification or retention of supporting documentation. As a result, verification was performed informally and evidence of review was not retained. Effect: Testing did not identify any parties that were suspended or debarred, however, the absence of documented controls increases the risk that the Organization could enter into federally funded transactions with prohibited parties without timely detection. Questioned Costs: None noted Repeat Finding: No Recommendation: We recommend that management establish procedures to verify and document the suspension and debarment status of applicable subrecipients, contractors, and vendors before entering into agreements or expending federal funds. Evidence of SAM.gov searches or other permitted verification methods should be retained to demonstrate compliance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding; see corrective action plan.

Criteria: In accordance with 2 CFR Part 200.332, pass-through entities are required to evaluate each subrecipient’s fraud risk and risk of noncompliance and determine appropriate monitoring based on that risk. Pass-through entities are also responsible for reviewing applicable audit reports, following up on identified deficiencies or questioned costs, and verifying that subrecipients are eligible to participate in federal programs. Condition: The Organization had not established adequate procedures to monitor 4 of the 9 subrecipients tested receiving federal funds. Documented risk assessments were not performed, applicable audit reports were not consistently obtained and reviewed, and suspension and debarment status was not documented before subawards were issued. Cause: The Organization had not established formal policies governing subrecipient risk assessments, audit report review, suspension and debarment verification, or follow-up procedures. Responsibility for subrecipient monitoring also had not been formally assigned. Effect: The lack of a documented monitoring process increases the risk that noncompliance, audit findings, performance deficiencies, or eligibility issues could occur and remain undetected. Questioned Costs: None noted Repeat Finding: No Recommendation: We recommend that management establish formal subrecipient monitoring procedures that require documented risk assessments, review of applicable audit reports, verification of suspension and debarment status before issuing subawards, and documented follow-up on identified findings. The nature and extent of monitoring should be based on each subrecipient’s assessed risk, with sufficient documentation retained to demonstrate compliance with federal requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding; see corrective action plan.