Finding 2025-002 – Incomplete Subrecipient Agreements and Inaccurate Subrecipient SEFA Reporting Subrecipient agreements were executed based on California’s State Administrator of federal funds (CalOES) requirements applicable to second-tier subawards. Based on guidance provided during Federal Grant...
Finding 2025-002 – Incomplete Subrecipient Agreements and Inaccurate Subrecipient SEFA Reporting Subrecipient agreements were executed based on California’s State Administrator of federal funds (CalOES) requirements applicable to second-tier subawards. Based on guidance provided during Federal Grants Advanced Training and the 2025 CalOES Subrecipient Handbook (page 65), entities receiving pass-through funding from the state are required to follow CalOES second-tier subaward requirements. Accordingly, VALOR’s agreements include the elements required for second-tier subawards. Elements of a Second-Tier Subaward (From the 2025 CalOES Subrecipient Handbook) The following elements must be included in a Second-Tier Subaward: • Name of the Subrecipient Organization and the participating agency/organization, • The titles and contact information for the individuals that will serve as the primary contacts,• The timeframe of the agreement (this must cover the Grant Subaward performance period), • The roles and responsibilities (as they relate to the specific Grant Subaward) of the Subrecipient Organization and the participating agency/organization, • Specific information concerning all non-fiscal resources shared between the Subrecipient Organization and the participating agency/organization, • Reporting requirements necessary for the Subrecipient Organization to meet Cal OES reporting requirements, • Signatures of the chief executive or designee of the Subrecipient Organization and the participating agency/organization, including the dates of those signatures, and • Specific information concerning the transfer of any Grant Subaward funds from the Subrecipient Organization to the participating agency/organization. At a minimum, this information must include the total amount of Grant Subaward funds that will be transferred, the process for transferring the Grant Subaward funds (e.g., monthly invoices, payment based on deliverables), what the Grant Subaward funds will be used for, and any match contribution provided by the participating agency/organization. Any funds included in the Second-Tier Subaward must be clearly designated (not itemized) in the Grant Subaward Budget Pages (Cal OES Form 2-106a or b). Additionally, second tier subrecipients are prohibited from charging indirect costs; therefore, indirect cost provisions were not included in the agreements. Based on the above, management believes the subrecipient agreements substantially complied with applicable CalOES requirements. Any omissions identified were administrative in nature and did not impact program performance, allowability of costs, or oversight of subrecipient activities. To strengthen internal controls and ensure full compliance with all applicable grant requirements, beginning January 1, 2027, VALOR’s Director of Operations, Rosemary Gonzales, will include all required elements identified in the finding in future subrecipient agreements. In addition, VALOR will review subrecipient Single Audit reports to verify that applicable grant funding is properly reported on the SEFA. VALOR will also notify subrecipients of the requirement to include these amounts in their future SEFA reporting. Contracts for the current year, 2026, have already been signed.