Reference Number: 2023-002
Prior Year Finding: Yes, 2022-023
Federal Agency: U.S. Department of Labor
Department Name: Mississippi Department of Employment Security
Federal Program: WIOA Cluster
Assistance Listing Number: 17.258, 17.259, 17.278
Award Number and Year: 7/1/22 – 6/30/23
Compliance Requ...
Reference Number: 2023-002
Prior Year Finding: Yes, 2022-023
Federal Agency: U.S. Department of Labor
Department Name: Mississippi Department of Employment Security
Federal Program: WIOA Cluster
Assistance Listing Number: 17.258, 17.259, 17.278
Award Number and Year: 7/1/22 – 6/30/23
Compliance Requirement: Subrecipient Monitoring
Type of Finding: Material Weakness in Internal Control over
Compliance, Material Noncompliance
Criteria or specific requirement:
Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that
every subaward is clearly identified to the subrecipient as a subaward and includes
information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not
available, the pass-through entity must provide the best information available to describe
the Federal award and subaward.
2 CFR section 200.332 also states that pass-through entities must:
(d) Evaluate each subrecipient's risk of noncompliance with Federal statutes,
regulations, and the terms and conditions of the subaward for purposes of
determining the appropriate subrecipient monitoring described in paragraphs (d)
and (e) of this section, which may include consideration of such factors as:
1) The subrecipient's prior experience with the same or similar subawards;
2) The results of previous audits including whether or not the subrecipient receives
a Single Audit in accordance with Subpart F - Audit Requirements of this part,
and the extent to which the same or similar subaward has been audited as a
major program;
3) Whether the subrecipient has new personnel or new or substantially changed
systems;
4) The extent and results of Federal awarding agency monitoring (e.g., if the
subrecipient also receives Federal awards directly from a Federal awarding
agency).
(e) Monitor the activities of the subrecipient as necessary to ensure that the subaward
is used for authorized purposes, in compliance with Federal statutes, regulations,
and the terms and conditions of the subaward; and that subaward performance goals
are achieved. Pass-through entity monitoring of the subrecipient must include:
(1) Reviewing financial and performance reports required by the pass-through
entity.
(2) Following-up and ensuring that the subrecipient takes timely and appropriate
action on all deficiencies pertaining to the Federal award provided to the
subrecipient from the pass-through entity detected through audits, on-site
reviews, and other means.
(3) Issuing a management decision for audit findings pertaining to the Federal
award provided to the subrecipient from the pass-through entity as required by
§ 200.521 Management decision.
(f) Verify that every subrecipient is audited as required by Subpart F - Audit
Requirements of this part when it is expected that the subrecipient's Federal awards
expended during the respective fiscal year equaled or exceeded the threshold set
forth in § 200.501 Audit requirements.
Control – Per 2 CFR section 200.303(a), a 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. These internal controls
should be in compliance with guidance in “Standards for Internal Control in the Federal
Government” issued by the Comptroller General of the United States or the “Internal
Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Condition:
The Mississippi Department of Employment Security (MDES) was unable to provide
documentation of subaward agreements and monitoring activities performed.
Context:
Six subrecipients were selected for testing and the following exceptions were noted:
1 of 6 subawards was not available for audit. Auditors were unable to verify if the
subaward contained all required information nor if it was reviewed and approved
by appropriate program staff prior to issuance.
For 3 of 6 subrecipients, MDES was unable to provide documentation that it
performed monitoring activities nor that it ensured the subrecipients were audited
as required by Subpart F.
Questioned costs:
Undetermined.
Cause:
Internal controls were not sufficient to ensure that copies of subaward agreements were
maintained and available for audit, nor that it maintained documentation of subrecipient
monitoring activities performed.
Effect:
Auditors were unable to verify that subawards were issued in accordance with Federal
requirements nor that the subrecipients had been adequately monitored and were audited
as required by Subpart F.
Recommendation:
MDES should review and enhance internal controls and procedures to ensure that it
maintains copies of all subaward agreements, that proper subrecipient monitoring is
conducted, and that evaluation of independent audits is performed for all subrecipients.
Copies of subawards and documentation of subrecipient monitoring activities should be
readily available for audit.
Views of responsible officials: MDES Response
MDES concurs with this finding.
Corrective Action Plan:
a. MDES Plan: MDES will establish a checklist to verify receipt of the documents
responsive to this compliance requirement. Using the checklist, MDES will ensure
that all documents indicated in this finding will be readily available for the auditors
as early as possible in the audit process. Additionally, MDES will develop a
timeline and plan for the submission of documentation to ensure timely review.
b. Contact Person Responsible: Director of Grant Management.
c. Anticipated Corrective Action Plan Completion Date: July 31, 2024.