U.S. Department of Health and Human Services Federal Assistance Listing #93.912 Rural Health Network Development Program Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – The Federal Funding Accountability and Transparency Act (FFATA) explains that the grant award term is issued in accordance with 2 CFR Part 170 Reporting Subaward and Executive Compensation Information. This is designed to increase transparency and improve the public’s access to Federal government information. FFATA requires grant recipients to report first-tier subawards made under Federal grants that are funded at $30,000 or more that meet the reporting conditions as set forth in this grant award term, and such reports must be submitted no later than the last day of the month following the month in which the subaward obligation was made. Condition –. The Health Center did not report the first-tier subawards funded at $30,000 or more in accordance with FFATA. SubawardMissingTransactionsSubawardReportAmountKeyTestedNot ReportedNot TimelyIncorrectElementsQuantity11N/AN/AN/ASubawardMissingTransactionsSubawardReportAmountKeyTestedNot ReportedNot TimelyIncorrectElementsDollar Value138,859$ 138,859$ N/AN/AN/A N/A – As none of the reports were submitted, these categories were not applicable and/or we were unable to test them. Cause – The Health Center did not have adequate internal controls to ensure that the FFATA reporting requirements were completed in accordance with the grant agreement, and within the timeframe required. Effect – $138,859 of subawards that should have been reported in accordance with FFATA was not completed timely. Questioned Costs – None reported. Context/Sampling – No sampling was done as the FFATA reporting was not performed. The full population of first-tier subawards is shown above. Report Finding from Prior Year – No Recommendation – We recommend that management strengthen its internal controls over FFATA reporting to ensure all reportable first-tier subawards are identified, reviewed, and reported in SAM.gov accurately and within the reporting timeframe. Controls should include procedures to monitor subaward activity, determine FFATA applicability, and verify timely submission of required information. Views of Responsible Officials – Management agrees with the finding.
U.S. Department of Health and Human Services Federal Assistance Listing #93.912 Rural Health Network Development Program Subrecipient Monitoring Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria – Under 45 CFR § 75.352, a pass-through entity is required to identify federal awards made to subrecipients, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to provide reasonable assurance that the subaward is used for authorized purposes, complies with applicable federal requirements, and achieves performance goals. Required monitoring includes reviewing financial and performance reports and following up on identified deficiencies, as applicable. In addition, the Health Center did not develop policies to ensure compliance with the various aspects of subrecipient monitoring. Condition – The Health Center did not identify Sakakawea Medical Center (SMC) as a subrecipient of the Rural Health Network Development Program. SMC participated in activities contemplated by the federally funded network workplan and incurred costs associated with those activities, including the purchase of a server and other grant-related expenditures. SMC subsequently submitted the expenditures to the Health Center for reimbursement from the federal award. Because the Health Center did not identify SMC as a subrecipient, the Health Center did not document the applicable pass-through entity requirements, including: •communicating required federal award and subaward information to SMC; •evaluating SMC’s risk of noncompliance with federal requirements; •establishing appropriate monitoring procedures based on the assessed risk; •documenting review of applicable financial and performance information, including the HealthCenter’s required submission of the Federal Funding Accountability and Transparency Act(FFATA) reporting for transactions exceeding $30,000; •verifying and following up on SMC’s compliance with applicable federal requirements, asnecessary. During the year, the Health Center reported $138,859 of federal expenditures passed through to subrecipients under Assistance Listing 93.912, Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Program. Cause – The Health Center considered SMC to be a network partner of the Rural Health Network Development Program rather than a subrecipient. As a result, the Health Center did not apply the subrecipient determination and monitoring requirements to the federal funds used to reimburse SMC for grant-related expenditures. Management had not established formal written policy to ensure subrecipient monitoring requirements were consistently performed, documented, and retained in accordance with Uniform Guidance. Effect – Without identifying SMC as a subrecipient and performing the required monitoring procedures, the Health Center did not document that it fulfilled its responsibilities as a pass-through entity or obtained sufficient assurance that federal funds provided to SMC were used for authorized purposes and in compliance with applicable federal requirements. Questioned Costs – None reported. Context/Sampling – No sampling was done as there was only one subrecipient. Report Finding from Prior Year – No Recommendation – We recommend that the Health Center establish procedures to evaluate each entity receiving federal funds to determine whether the relationship constitutes a subaward or a procurement relationship based on the substance of the arrangement. For entities determined to be subrecipients, the Health Center should implement and document the applicable pass-through entity requirements, including communicating required subaward information and federal requirements, performing and documenting a risk assessment, establishing monitoring procedures responsive to the assessed risk, reviewing applicable financial and performance information, and following up on identified deficiencies. Views of Responsible Officials – Management agrees with the finding. Although the Health Center did not maintain a formal written policy and related documentation, management maintained direct oversight of the subrecipient through common executive leadership and involvement in grant administration activities, reducing the likelihood that significant noncompliance would occur and not be detected.