Finding No.: 2022-019 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $549,849 Contact Person(s): Nerissa B. Karakaya, CIP COTR / Angelina Phillips, Office of Management and Budget (OMB) Corrective Action Plan: Condi...
Finding No.: 2022-019 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Subrecipient Monitoring Questioned Costs: $549,849 Contact Person(s): Nerissa B. Karakaya, CIP COTR / Angelina Phillips, Office of Management and Budget (OMB) Corrective Action Plan: Condition 1 (N. Karakaya): CIP agrees with this finding. The address this finding, CIP will implement the following: 1. Establish Written Procedures: CNMI has developed and will initiate the implementation of formal written procedures requiring that all potential subrecipients be checked in SAM.gov prior to award and that verification is documented and retained in the official files. 2. Standardized Documentation: A standardized risk assessment checklist will be used for all subrecipients to confirm they are not suspended, debarred, or excluded under 2 CFR §180.300. 3. Staff Training: All staff responsible for subrecipient monitoring will receive training on federal requirements for exclusion checks and proper documentation procedures. 4. Monitoring and Review: CIP will conduct periodic reviews to ensure that SAM.gov checks are consistently performed and documented for all new and existing subrecipients. Condition 2 (N. Karakaya): CIP respectfully disagrees with this finding. The subrecipient was not required to submit the required project narrative report; instead, the report was prepared and submitted by the project manager responsible for managing the project as assigned by the Capital Improvement Program. In accordance with 2 CFR §200.328 – Monitoring and Reporting Program Performance, subrecipients are required to provide performance reports to the pass-through entity that document the status and progress of activities in accordance with the approved scope of work. To correct this issue, the subrecipient will implement a formal internal procedure designating the Program Coordinator as responsible for preparing, reviewing, and submitting all project narrative reports. Additionally, mandatory training will be conducted for all relevant subrecipient staff on federal reporting requirements and proper submission procedures, and all future narrative reports will include a certification by the authorized subrecipient representative confirming proper submission. The Capital Improvement Program will monitor submissions quarterly for the next 12 months to ensure full compliance. Corrective Actions: 1. Implement a formal internal reporting procedure requiring the subrecipient’s Program Coordinator to prepare, review, and submit all project narrative reports. 2. Conduct mandatory training for subrecipient staff on federal reporting requirements, documentation standards, and submission procedures. 3. Include a certification statement on all future narrative reports, signed by the subrecipient’s authorized representative, confirming proper submission. 4. Conduct quarterly monitoring of subrecipient submissions for the next 12 months to ensure compliance with reporting requirements. Proposed Completion Date: December 31, 2025 Condition 3 (N. Karakaya): We acknowledge the finding that documentation was not provided to verify whether eight subrecipients were subject to the audit requirements. The Capital Improvement Program will strengthen its subrecipient monitoring procedures to ensure compliance with 2 CFR 200.331(f) and related audit requirements. Corrective actions will include: 1. Policy Implementation: Adopt and disseminate the newly established Subrecipient Monitoring Policy and Procedures, which specify verification of subrecipients’ audit requirements. 2. Training: Provide training for program and grants management staff on the updated procedures and audit verification process. 3. Documentation: Maintain written evidence of audit requirement verifications for all subrecipients as part of the grant administration files. 4. Ongoing Monitoring: Incorporate periodic review of subrecipient audit status into the regular monitoring schedule to ensure continued compliance. These steps will be implemented immediately and will be applied to all current and future awards to prevent recurrence of this issue. Proposed Completion Date: December 31, 2025