Finding No. 2025-002: Subrecipient Monitoring and Procurement and Suspension and Debarment – Noncompliance Federal Program Name: Juvenile Mentoring Program Pass-through Entity: None Federal Assistance Listing Number: 16.726 Criteria Uniform Guidance requires that non-Federal entities ensure that they do not make subawards to entities that are suspended or debarred from participating in Federal programs. Recipients and subrecipients are subject to the non-procurement suspension and debarment regulations set forth in 2 CFR §200.214 and 2 CFR Part 180, which restrict the issuance of Federal awards and subawards to excluded parties. Condition During the audit period, the Partnership issued subawards to subrecipients; however, the Partnership’s current subrecipient policies are missing several critical elements, including procedures to verify that subrecipients are not suspended or debarred by the federal government, requirements to pass applicable federal special conditions down to subrecipient awards, methods to track the total amount of funding provided to subrecipients under each federal program, processes to ensure that payments to subrecipients minimize the time between the transfer of federal funds from the grantee and disbursement to the subrecipient, a risk-based monitoring approach, and an on-site monitoring process that includes reviews of financial and administrative aspects of the program, among other areas. Cause The Partnership had not previously developed or updated its subrecipient monitoring policies to fully align with the requirements of Uniform Guidance. Management relied on informal practices and staff knowledge rather than comprehensive, documented procedures to address suspension and debarment verification, subaward compliance requirements, cash management, and risk-based monitoring. In addition, limited compliance resources and the absence of a centralized compliance review process contributed to gaps in policy development and implementation during the audit period. Effect Without verification of suspension and debarment status, the Partnership is at risk of making subawards to entities that are ineligible to receive Federal funds. This could result in questioned costs, required repayment of Federal funds, or other sanctions imposed by the Federal awarding agency or pass-through entity. Questioned Costs None noted. Context Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327 and must follow the subrecipient monitoring and management standards set out at 2 CFR 200.331 through 200.333. They must use their own documented procurement and subrecipient monitoring procedures, which reflect applicable state and local laws and regulations, provided that the procurements and subawards conform to applicable federal statutes and the procurement and subrecipient monitoring requirements identified in 2 CFR Part 200. Recommendation We recommend that the Partnership implement written policies and procedures to ensure that all subrecipients are verified as not suspended or debarred prior to the execution of subawards. Acceptable methods of verification include reviewing SAM.gov exclusion listings, obtaining written certifications from subrecipients, or incorporating suspension and debarment representations into subaward agreements. Documentation of the verification should be retained in accordance with record retention requirements. Management’s Response/View of Responsible Officials Management agrees with this finding, see the Corrective Action Plan.
2025-004 - Lack of Written Federal Program Policies Type: Material Weakness Condition: The Organization does not have documented policies and procedures specific to the administration of the Community Resilience Hubs for Detroit Neighborhoods program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Community Resilience Hubs for Detroit Neighborhoods program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Organization develop and implement written policies and procedures specific to the Community Resilience Hubs for Detroit Neighborhoods program. These should include: - Payments in accordance with §200.302 (6) - Procurement in accordance with §200.318 - Allowability of costs charged to federal programs in accordance with §200.302 (7) - Compensation in accordance with §200.430 and §200.431 - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by December 31, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.
Criteria: Uniform Guidance (2 CFR §200.510(b)) requires the Schedule of Expenditures of Federal Awards (SEFA) to include, for each federal program, the amount provided to subrecipients from federal awards when the auditee passes federal funds through to another entity. 2 CFR 200.331 establishes the criteria for distinguishing subrecipients from contractors. Condition: The SEFA as originally prepared and presented to the auditors did not separately disclose amounts passed through to subrecipients for the major program. During audit procedures, the auditors made inquiry of management regarding the classification of certain disbursements. Upon that inquiry, management determined that a group of entities (representing 55% of the total major program expenditures) previously coded as vendors were subrecipients under 2 CFR 200.331. The SEFA was subsequently revised to separately identify these amounts on the face of the schedule. Total SEFA expenditures were unchanged by the revision. The same system classification failure caused an immaterial incorrect presentation in ALN 93.243 as well. (See also Finding 2025-002 regarding subrecipient monitoring deficiencies arising from the same misclassification.) Cause: Management did not have adequate procedures or controls in place to evaluate and document whether entities receiving federal funds met the Uniform Guidance definition of a subrecipient versus a contractor (vendor). As a result, certain entities were incorrectly classified as vendors, and the related pass-through expenditures were not identified as amounts provided to subrecipients for purposes of SEFA reporting. The condition was not detected by management or those charged with governance prior to auditor inquiry. Effect: Amounts provided to subrecipients were omitted from the SEFA for the major program above as well as ALN 93.243, resulting in incomplete reporting required under Uniform Guidance. The misclassification of subrecipients as vendors caused the SEFA to not accurately disclose pass-through activity and could impair the ability of federal agencies, pass-through entities, and other users of the SEFA to assess the extent of subrecipient relationships and related monitoring responsibilities. The SEFA was revised prior to issuance to correctly reflect amounts provided to subrecipients; accordingly, no misstatement remains in the schedule as issued. Recommendation: Management should establish and document procedures for evaluating each recipient of federal award funds to determine whether the relationship meets the Uniform Guidance criteria for a subrecipient or contractor prior to first payment is processed. In addition, management should implement formal review, with evidence of review retained, of the SEFA to ensure all subrecipient payments are properly identified, accumulated, and disclosed as amounts provided to subrecipients prior to issuance. Management’s Response and Corrective Action Plan is found on page 29-31.
Criteria: 2 CFR 200.332 requires a pass-through entity to identify required subaward information, evaluate each subrecipient’s fraud risk and risk of noncompliance, monitor subrecipient activities, verify required audits under Subpart F, and consider audit or monitoring results for corrective action, adjustments, or enforcement. Condition: The entity did not have formal policies and procedures for subrecipient monitoring, incorrectly classified the subrecipients as vendors, did not perform or document formal subrecipient risk assessments, did not obtain or request subrecipient audit reports, and approved subrecipient agreements that included incorrect Assistance Listing Numbers (ALN). The entity did review and approve sampled reimbursement requests for allowability and performed monitoring of programmatic performance and progress; however, those procedures did not address all required subrecipient monitoring elements under 2 CFR 200.332. (See also Finding 2025-001 regarding the SEFA reporting deficiency arising from the same misclassification.) Cause: The entity had not established formal subrecipient monitoring policies and procedures sufficient to ensure required monitoring activities were consistently performed and documented. Effect: The entity may not identify subrecipient noncompliance, audit findings, corrective action needs, or incorrect federal award information on a timely basis. Incorrect ALNs in subrecipient agreements increase the risk that subrecipients report the award under the wrong federal program. Recommendation: The entity should develop, document, and implement internal control procedures over federal award agreements and subrecipient monitoring to ensure compliance with 2 CFR 200.331 and 2 CFR 200.332. The procedures should require, at a minimum, documented subrecipient-versus-contractor determinations at the onset of each agreement, documented subrecipient risk assessments, accurate identification of required subaward information including the ALN, review of financial and performance reports, verification of required Subpart F audits, review and follow-up of audit findings or other significant developments, and documentation of monitoring procedures performed. Management should also establish a documented review control over subrecipient agreements to ensure required federal award information is accurate before execution and retain evidence of review, approval, monitoring conclusions, and any required corrective action. Management’s Response and Corrective Action Plan is found on page 29-31.
Finding 2025-003: Subrecipient Monitoring and Management Federal Agency: U.S. Agency for International Development (USAID) Federal Program: Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-through Entity (if applicable): Not applicable Award Identification Number and Year: All Criteria or Specific Requirement: 2 CFR 200.331 through 200.333; 2 CFR 200.329; 2 CFR 200.303 A pass-through entity must document subrecipient-versus-contractor determinations, verify that potential subrecipients are not excluded or disqualified, include required Federal information and conditions in subawards, evaluate risk of noncompliance, and monitor activities as necessary. Monitoring includes reviewing financial and performance reports, following up on deficiencies, and issuing management decisions for applicable audit findings. Procedures and specific conditions should respond to assessed risk. Condition: Internews Network could not provide complete documentation for several subrecipients tested. Missing items included classification, risk assessment, exclusion verification, complete agreement and award data, financial and programmatic reports and review evidence. We therefore could not determine whether risk was assessed, requirements communicated, performance and compliance monitored and issues resolved. Cause: Significant reductions in program, grants, and finance personnel followed termination of Federal awards and funding. Files and responsibilities were not fully transitioned; evidence was maintained across individual mailboxes, local drives, and other locations; and no staff-exit procedure required transfer and validation of subrecipient records. Effect or Potential Effect: The absence of monitoring documentation prevented verification that subrecipients used funds for authorized purposes, achieved required performance, complied with award terms, and corrected deficiencies. Noncompliance, unsupported costs, performance issues, or audit findings may not be detected and resolved timely. Questioned Costs: Undetermined Context: Internews Network served as a pass-through entity and provided Federal funds to subrecipients responsible for carrying out portions of the Federal program. It was therefore responsible for documenting pre-award determinations, communicating Federal requirements, assessing subrecipient risk, performing responsive monitoring, following up on deficiencies, and completing closeout. Identification as a Repeat Finding, if Applicable: Not a repeat finding Recommendation: Establish a risk-based lifecycle process with primary and backup owners. Central files should include classification, exclusion verification, risk assessment, required terms and identifiers, monitoring plan, reports, review evidence, invoice testing, audit determinations, finding follow-up, management decisions, corrective actions, and closeout. Use a register to track deadlines, risks, procedures, findings, and open items. Award termination or staffing reduction should trigger formal portfolio transfer, reconciliation of open matters, preservation of records, and certification that duties and system access were reassigned.
Finding 2025-003 Subrecipients Information on the Federal Programs: Federal Agency(ies): Department of Health and Human Services Federal Program(s): Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health Assistance Listing Number(s): 93.421 Pass-through Entity (if Applicable): None for the awards impacted by the finding.Award Identification Number and Year: 6 NU38PW0000-01-02, 5 NU38PW000033-02-01. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Recipients that pass Federal funds through to subrecipients must: Make subawards containing all information required by 2 CFR 200.332(a); Evaluate each subrecipient's risk of noncompliance to determine the appropriate level of monitoring under 2 CFR 200.332(b); Distinguish subrecipients from contractors in accordance with 2 CFR 200.331 and apply the appropriate requirements; Maintain adequate policies, procedures, and accounting records to identify and track subaward expenditures separately from contractor expenditures; and Not exceed fixed amount subawards in excess of the limitations established in 2 CFR 200.333. Condition: BCHC had established certain subrecipient oversight practices, including regular meetings with subrecipients and review of invoices prior to reimbursement. However, the Organization's subrecipient monitoring policies, procedures, and documentation did not fully meet the requirements of Uniform Guidance. Specifically: BCHC issued fixed amount subawards that exceeded the maximum amount permitted under 2 CFR 200.333. BCHC did not perform and document risk assessments of subrecipients prior to making awards. Subaward agreements did not include all information required by 2 CFR 200.332(a). BCHC did not consistently distinguish between subrecipients and contractors, as evidenced by the use of contractor procurement documentation (e.g., sole-source justifications) for subrecipient relationships and the commingling of subaward and consulting expenses within the general ledger. While BCHC had established certain monitoring activities, it had not formalized written policies and procedures governing subrecipient determinations and monitoring responsibilities. Cause: BCHC had established certain practices for administering pass-through awards; however, formal written policies and procedures were not in place to comprehensively address subrecipient determinations, risk assessments, subaward issuance, monitoring, and accounting for subrecipient expenditures. In addition, available guidance and controls could be strengthened to better distinguish subrecipients from contractors, ensure all required information is included in subaward agreements, perform and document risk assessments, monitor compliance with fixed-amount subaward limitations, and separately track subaward expenditures. Effect or Potential Effect: These issues increase the risk that Federal funds may not be administered in accordance with Uniform Guidance requirements and that noncompliance by subrecipients may not be identified or addressed in a timely manner. Additionally, BCHC may be unable to demonstrate effective oversight of subawards or provide complete and accurate information regarding subrecipient expenditures.Questioned Costs: Undeterminable. BCHC maintained ongoing communication with and oversight of the subrecipient to monitor progress and completion of the funded activities. In addition, the subrecipient identified and reported the Federal award in its Uniform Guidance audit and no findings related to the award were reported. As a result, while the control deficiencies constitute noncompliance with Uniform Guidance requirements and increase the risk of undetected noncompliance, the auditor was not aware of any specific expenditures that were unallowable, unsupported, or improperly charged to the Federal program. Accordingly, questioned costs, if any, are undeterminable. Context: There was only one subrecipient during 2025 (with 3 separate awards). Identification as a Repeat Finding, if Applicable: This is not a repeat finding. Recommendation: We recommend that BCHC develop, document, and implement formal policies and procedures for the administration and monitoring of subawards in accordance with Uniform Guidance requirements. At a minimum, these procedures should require: (1) a documented assessment of subrecipient risk prior to issuing a subaward and periodic reassessment as appropriate; (2) inclusion of all required Federal award information in subaward agreements; (3) clear criteria and documentation supporting the determination of whether an entity is a subrecipient or contractor; (4) monitoring procedures commensurate with the assessed level of risk; (5) compliance with limitations applicable to fixed amount subawards; and (6) accounting procedures that separately identify and track subrecipient expenditures within the general ledger. In addition, BCHC should provide training to personnel responsible for Federal award administration to ensure Uniform Guidance requirements related to subrecipient monitoring are consistently applied and documented.
2025-001- Subaward Documentation and Subrecipient Monitoring. Significant deficiency in internal control over compliance and noncompliance with subrecipient monitoring requirements. Under 2 CFR 200.331 and 200.332, as applicable to the respective awards, a pass-through entity must distinguish subrecipient relationships from contractor relationships, clearly identify subawards, communicate required federal award information and applicable terms, evaluate subrecipient risk, and perform appropriate monitoring. Monitoring includes reviewing financial and performance reports and following up on identified issues. SI2’s monitoring procedures should be implemented and supported by records demonstrating the activities performed and resolution of identified concerns. SI2 performed substantive activities to administer and monitor its subawards during 2025 – subrecipient invoices were reviewed and processed through SI2’s award cost trackers, which allocate each invoice between the federal share and required cost sharing. However, documented risk assessments had not been prepared, certain monitoring activities were not documented in the subaward files, and one subaward agreement did not include required federal award information and provisions, as described below. • The Kearns & West SUDS arrangement was documented through a statement-of-work rider to a master services agreement structured as a contractor arrangement, although the substance of the relationship was that of a subaward. Review of the master agreement, rider, and incorporated documents identified the omission of required subaward information and provisions, including identification of the arrangement as a subaward, the federal award identification data required by 2 CFR 200.332, the indirect cost rate provision, flow-down of the applicable federal requirements, audit and compliance requirements appropriate to the subrecipient’s entity type, records-access provisions, and closeout terms. The arrangement provided for a federal share of $579,335 with required nonfederal cost sharing of $144,834; federal expenditures under the subaward during 2025 were approximately $265,215, included in the $393,169 passed through to subrecipients under the SUDS award reported on the SEFA. • In addition, documented risk assessments had not been prepared for the 12 first-tier subawards in the population; subrecipient-versus-contractor determinations were undocumented or contained responses inconsistent with the stated conclusion for two arrangements; and, although subrecipient invoices were reviewed in connection with processing and cost-share allocation, the other monitoring activities described in SI2’s Subrecipient Monitoring Plan were not documented in the subaward files during 2025. Following receipt of the risk-assessment template provided during the audit, management began completing documented risk assessments in 2026 and had completed assessments for five subrecipients as of the date of this report; these actions are corrective in nature and are reflected in the corrective action plan. This was SI2’s first year subject to a Single Audit under the Uniform Guidance, and its subrecipient monitoring processes were in the early stages of formalization. While personnel performed substantive administrative and monitoring activities, SI2’s Accounting Policies and Procedures Manual (adopted January 2025) did not yet specify the nature, frequency, documentation, and retention of monitoring procedures, and agreements were prepared using different formats without a standardized process for confirming required federal award provisions and documenting subrecipient-versus-contractor determinations. The omission of required subaward information and provisions reduced SI2’s assurance that applicable federal requirements were communicated to the affected subrecipient. The absence of documented risk assessments and of retained monitoring documentation reduced the evidence available to demonstrate compliance with subrecipient monitoring requirements and increased the risk that instances of subrecipient noncompliance would not be prevented, or detected and corrected, on a timely basis. Our testing did not identify questioned costs associated with this finding. The population consisted of 12 first-tier subawards under the three federal awards identified above. Federal expenditures provided to subrecipients under these awards during 2025 totaled approximately $856,305, determined on the accrual basis (amounts in this paragraph are presented rounded to the nearest dollar). This amount differs from the $1,040,123 of amounts provided to subrecipients reported on the SEFA because the SEFA total also includes approximately $183,818 passed through under federal programs outside the major program (Solar Ready Vets Network, approximately $181,690, and Aspire, approximately $2,128). We examined subaward documentation, classification determinations, and available risk-assessment and monitoring records for all 12 subawards; accordingly, the subaward-file review covered the entire population and did not involve sampling. This coverage does not represent examination of every underlying expenditure. Exceptions included one subaward with missing required agreement information or provisions, 12 subawards without documented risk assessments, two arrangements with missing or inconsistent classification determinations, and 12 subawards for which the monitoring activities described above were not documented in the subaward files as of the completion of fieldwork. There were no questioned costs identified. The procedures performed did not identify specific expenditures to question in connection with this finding. We recommend that SI2: amend the Kearns & West arrangement to clearly identify it as a subaward and include the missing federal award information and applicable provisions; establish a standard agreement-review checklist addressing required subaward information, applicable federal requirements, and award-specific terms; document and review subrecipient-versus-contractor determinations based on the substance of each arrangement; document subrecipient risk assessments when making subawards and update the assessments as circumstances change; assign responsibility for monitoring, establish the nature and frequency of monitoring based on assessed risk, and retain evidence of financial and performance report reviews and follow-up; and obtain and review support for required subrecipient cost sharing, including reports and certifications required by the applicable agreements.
Subrecipient Monitoring - Contractor vs. Subrecipient Determination (Significant Deficiency in Internal Control) Finding 2025-004 Identification of the Federal Program: 93.600 – Head Start Cluster, 93.387 – National and State Tobacco Control Program, and 93.872 – Tribal Maternal, Infant, and Early Childhood Home Visit Condition: During our testing of internal controls over compliance, we noted that the Organization does not maintain formal documentation supporting its evaluation of whether award recipients are classified as contractors or subrecipients in accordance with Uniform Guidance. Criteria: 2 CFR §200.331 requires pass-through entities to evaluate each subaward to determine whether the recipient is a subrecipient or a contractor. This evaluation should be based on the characteristics outlined in 2 CFR §200.331(a) and (b) and documented to support proper classification. Effective internal control over federal awards also requires documentation of compliance-related judgments to ensure consistent application and oversight. Cause: Management indicated that formal documentation of contractor versus subrecipient evaluations has not been implemented due to reliance on historical practices (new administrative roles) and program managers properly classifying. Effect: Without documented evaluations, there is an increased risk that recipients may be improperly classified, which could result in: • Inadequate subrecipient monitoring • Improper application of compliance requirements (i.e. $50,000 of costs applied to direct when charging indirect) • Increased risk of noncompliance with federal award terms and conditions Questioned Costs: $0 Repeat Finding: No Recommendation: We recommend that management implement a formal process to evaluate and document contractor versus subrecipient determinations in accordance with Uniform Guidance. Documentation should include consideration of applicable criteria and be retained in grant files. Establishing this process will strengthen internal controls over compliance and support consistent application of federal award requirements. Management Response: Management agrees with the finding. The Council will work to implement requirements at the program level to evaluate and document all contracts to properly identify between contract and subaward.
Assistance Listing, Federal Agency, and Program Name 93.889, U.S. Department of Health and Human Services, National Bioterrorism Hospital Preparedness Program Federal Award Identification Number and Year DKT3LLBWFVL3 - 2025 Pass through Entity North Carolina Department of Health and Human Services Finding Type Material weakness Repeat Finding No Criteria WakeMed is responsible for identifying in its accounting records all federal awards received and expended and the federal programs under which they were received, including the Assistance Listing title and number, federal award identification number, award year, and federal agency or pass through entity, as applicable, in accordance with 2 CFR § 200.302(b)(1). In addition, 2 CFR § 200.510(b) requires WakeMed to prepare a schedule of expenditures of federal awards for the period covered by the financial statements that includes total federal awards expended and identifies individual federal programs by federal agency, including applicable Assistance Listing Numbers and pass through identifying information. Under 2 CFR § 200.331, the substance of the relationship is more important than the form of the agreement, and each agreement should be evaluated to determine whether the entity is acting as a subrecipient or contractor. Condition Management did not initially identify a contract with an awarding agency as a federal subaward, which resulted in ALN 93.889 being omitted from the SEFA. The amount was subsequently added to the SEFA. Questioned Costs N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context Management incorrectly identified that they were a contractor of funds received from the North Carolina Department of Health and Human services under ALN 93.889 rather than a subrecipient. As a result, the schedule of expenditures of federal awards reported for the year ended September 30, 2025 did not originally have this grant included and was understated by $485,737. Cause and Effect Controls in place did not ensure the SEFA was complete and accurate. The lack of controls resulted in an understatement of the schedule of expenditures of federal awards for the year ended September 30, 2025. There was no impact to major program determination for the year ended September 30, 2025. Recommendation Management should implement a process to ensure appropriate identification for agreements in which they are considered a subrecipient vs a contractor. Views of Responsible Officials and Corrective Action Plan Management concurs with the finding and has implemented a new grant governance committee and process for identifying grant components before entering into grant agreements. Management also created a new grant department with staff devoted to researching, applying for, monitoring, and reporting on all grants. The accounting function for grants will be done by this team as well but with continued oversight by the Executive Director, Accounting.
Department of Education, passed through the North Dakota Department of Public Instruction ALN 84.371C, award numbers S371C190005 and S371C190005-22DD, Comprehensive Literacy State Development. Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria - Requirements contained in 2 CFR Part 200.331 specifies that pass-through entities be responsible for identifying Federal Award information and applicable compliance requirements at the time of awards to subrecipients; for monitoring the subrecipient's use for Federal awards; providing reasonable assurance that the subrecipient administers Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements; ensuring that subrecipients have required audits completed, reviewing the results of those audits; and evaluating the impact of subrecipient activities on the pass-through entity's ability to comply with applicable Federal regulations. Condition - There were no formal agreements between the District and its subrecipients as required in 2 CFR 200.331 and no formal subrecipient monitoring procedures were being performed. Cause - The District's agreements with subrecipients must properly follow Uniform Guidance and no formal monitoring procedures were in place. Effect - Lacking controls could lead to noncompliance with the requirements of the program by subrecipients and could require the return of grant funds to the grantor agency or the entity receiving less grant funds than they were eligible for. Questioned Costs - None reported Context/Sampling - 100% of the subrecipient entities were selected for subrecipient monitoring testing. Repeat Finding from Prior Year - No Recommendation - We recommend the District maintain formal agreements with the subrecipient entities that include the Uniform Guidance language and implement formal monitoring processes over subrecipient entities. Views of Responsible Officials - There is no disagreement with the audit finding.
Criteria: Under 2 CFR 200.331 and the Federal Funding Accountability and Transparency Act (FFATA), pass-through entities are required to report subaward information—including the amount, recipient details, and other necessary data—to the Federal Subaward Reporting System (FSRS). This report must be submitted by the end of the month following the month in which the subaward is issued. Any subaward of $30,000 or more must be reported to FSRS to meet federal compliance requirements. Condition: Subaward information for federal funds exceeding $30,000 was not reported to the Federal Subaward Reporting System (FSRS), as required by FFATA. Cause: The delay in submitting the FFATA report was due to a personnel transition during the reporting period. The outgoing Executive Director had been responsible for the filing, and the incoming staff member and new Executive Director was not yet aware of the reporting requirement. As a result, the report was inadvertently not submitted. We view this as an isolated incident stemming from the timing of the transition and a gap in knowledge transfer. Effect: Not meeting FFATA reporting requirements can impact transparency and may raise questions about costs, which could affect eligibility for future federal funding if not addressed Recommendation: We recommend that management develop and implement formal policies and procedures to ensure timely and accurate FFATA reporting for all subawards of $30,000 or more. These procedures should include assigning responsibility for FFATA reporting to a designated staff member, creating a standardized checklist and timeline for entering subaward data into the Federal Subaward Reporting System (FSRS), and establishing automated reminders or calendar alerts for reporting deadlines. Additionally, periodic internal reviews should be conducted to verify the completeness and timeliness of submissions, helping maintain compliance and transparency. Views of Responsible Officials and Planned Corrective Actions: The Organization is implementing enhancements to its internal control framework governing Federal Funding Accountability and Transparency Act (FFATA) reporting processes. These improvements are designed to ensure timely and accurate submission of subaward data in strict adherence to the requirements set forth in 2 CFR Part 200 (Uniform Guidance).
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2024-014 Condition: For 2 out of 2 selections, the unique identifier number and federal award identification number were not included in the grant agreement. For 2 out 2 selections, evidence that the prior year Single Audit Report was reviewed was not provided. Criteria: In accordance with 2 CFR §200.303: The non-federal entity must: (a) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the federal award identification including the subrecipient's unique entity identifier, federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the federal award. (b) 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; and (2) The results of previous audits including whether or not the subrecipient receives a Single Audit. (f) Verify that every subrecipient is audited as required by 2 CFR § 200.331 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. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance for subrecipient monitoring. Effect: The subrecipient could not be in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls to ensure grant agreements include the unique identifier number and federal award identification number. We also recommend a process to ensure that the single audit of subrecipients are reviewed timely. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
Finding 2025-003 – Misreporting of Pass-Through Grant Expenditures in SLFRF Compliance Report Criteria: Per Uniform Guidance (2 CFR 200.331 and 2 CFR 200.510), pass-through entities must clearly identify federal awards to subrecipients, including the source of funding, applicable federal requirements, and the Assistance Listing number (21.027 for SLFRF). Subrecipients are required to report only those federal expenditures they directly administer on their Schedule of Expenditures of Federal Awards (SEFA), and not those administered by the pass-through entity. Expenditures of federal pass-through funds should be reported by the pass-through entity (e.g., OWRB) and not by the subrecipient (the City of Sand Springs). Condition: During review of the ARPA Funds Project Spending for March 2025, it was identified that the City of Sand Springs reported $2,392,701.84 in current period expenditures for project #479952 in the SLFRF Compliance report. However, only $1,109,205.41 should have been reported. The discrepancy resulted from the mistaken inclusion of expenditures from the OWRB Grant (a federal pass-through grant from ARPA) in the City of Sand Springs's SLFRF report. Cause and Effect: The Finance Director was unaware that the City of Sand Springs was utilizing OWRB funds (ARPA pass-through) first, followed by direct ARPA funds. As a result, expenditures from the OWRB Grant were incorrectly included in the City of Sand Springs's SLFRF Compliance report, rather than being reported by OWRB as the pass-through entity. The City of Sand Springs's SLFRF Compliance report overstated federal expenditures by $1,283,496.43 for the period. This misreporting could result in inaccurate federal reporting, potential questioned costs, and noncompliance with Uniform Guidance and SLFRF requirements. It also constitutes a significant deficiency in internal controls over federal award reporting. Recommendation: We recommend that the City of Sand Springs implement procedures to ensure that only expenditures of direct federal awards are reported in the SLFRF Compliance report. Expenditures from federal pass-through grants should be tracked separately and reported by the appropriate pass-through entity. Staff responsible for federal reporting should receive training on the distinction between direct and pass-through federal funds and related reporting requirements. Management Response: Management concurs with the finding. The Finance Department will update its procedures to ensure that only direct ARPA funds are reported in the SLFRF Compliance report. Expenditures from OWRB pass-through grants will be tracked separately and excluded from the City of Sand Springs's SLFRF reporting. Staff will receive additional training on federal grant reporting requirements. The City of Sand Springs will coordinate with OWRB to ensure proper reporting of pass-through funds.
Statement of Condition For the year ended June 30, 2025, the County did not maintain effective controls over subrecipient monitoring related to Operation Stonegarden. Required subrecipient financial and performance reporting support was not consistently obtained, retained, or reviewed in a timely manner. Specifically: • 24 subrecipient reports and supporting submissions were required under the subaward. • The County was able to provide 7 of the 24 requested reports for audit testing. • Of the 7 reports provided, 3 were received more than 20 days after the required submission date. County personnel indicated that subrecipients did not always submit reimbursement requests and required reports timely; however, the County did not consistently document follow-up actions, escalation, or enforcement of subaward reporting requirements to ensure timely and complete subrecipient reporting. Criteria Title 2 CFR §200.331 requires pass-through entities to monitor subrecipient activities to ensure that subrecipients comply with federal statutes, regulations, and the terms and conditions of subawards, including the timely receipt and review of required financial and performance reports. Cause The County did not design and/or consistently perform a formal subrecipient monitoring process, including (1) a standardized tracking and follow-up protocol for late or missing submissions, (2) evidence of timely review of financial and performance information, and (3) documented escalation and corrective action when subrecipients do not comply. As a result, subrecipient oversight relied largely on voluntary compliance by subrecipients, without sufficient County review, enforcement, or documentation of monitoring activities. Effect Required subrecipient reporting, monitoring, and follow-up were not consistently performed and documented. As a result, the County lacked reasonable assurance that subrecipients complied with subaward terms and that subrecipient expenditures and performance information used for County reporting were allowable, supported, timely, and reliable. Given that subrecipient activity is integral to the administration of the County’s major program, these conditions increase the risk that unsupported or noncompliant subrecipient activity may not be identified and corrected timely. Such conditions may require additional corrective actions or increased scrutiny by grantor or oversight agencies. Recommendation We recommend that the County: • Develop and implement written subrecipient monitoring policies and procedures that clearly define reporting requirements and submission deadlines. • Track subrecipient report due dates and document follow-up efforts for late or missing reports. • Review subrecipient financial and performance reports timely and retain documentation evidencing the review to ensure compliance with grant requirements. Consider withholding reimbursement or implementing other corrective actions when subrecipients fail to submit required documentation timely. • Provide training to staff responsible for subrecipient oversight to strengthen monitoring and compliance. Views of Responsible Officials Management concurs with the finding. The Operation Stonegarden grants are managed by Broken Arrow Services, LLC, who is contracted with Otero County for this purpose. Broken Arrow Services, LLC has communicated to all sub-recipients the importance of submitting reports and invoices in a timely manner so that financial and performance reports can be completed and submitted to DHSEM by the required deadlines each quarter. All late submissions by sub-recipients will be tracked and follow-up efforts will be documented. Reimbursement to sub-recipients who are not in compliance will be withheld until all proper SUBRECIPIENT MONITORING PROCESSES AND CONTROLS Type of Finding: (E) Material Weakness in Internal Control Over Compliance of Federal Awards, (G) Material Non-Compliance Related to Federal Awards Funding Agency: U.S. Department of Homeland Security Title: Homeland Security and Emergency Management AL #: 97.067 Award #: EMW-2022-SS-00044 EMW-2023-SS-00015 EMW-2024-SS-05231 Award Period: January 1, 2023-March 31, 2025 Compliance Requirement: Reporting Questioned Costs: None documentation and reporting has been submitted and reviewed for accuracy. Finding Resolutions Timeline: June 30, 2026 Designation Of Employee Position Responsible For Meeting This Deadline: Finance Director
The following finding and recommendation relating to an internal control deficiency classified as a Significant Deficiency was communicated to the Department of Transportation (Department) in the previous year and has not been remediated as of June 30, 2025 because the original implementation date provided by the Department was in a subsequent fiscal year. This complete finding and recommendation can be found within the original report and the complete recommendation can be found within Section IV: Disposition of Prior Audit Recommendations of this report. Finding 2024-058 Compliance with Subrecipient Monitoring for the Formula Grants for Rural Areas and Tribal Transit Program, Highway Safety Cluster, and SLFRF The Department receives federal grant funds directly from the federal government for the Formula Grants for Rural Areas and Tribal Transit Program, Highway Safety Cluster, and the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program and then subgrants, or passes through, a portion of the funds to cities and counties and other organizations that are considered to be either a subrecipient or a contractor. For Fiscal Year 2024, the Department had the following transactions that were subject to subrecipient monitoring testing: • Formula Grants for Rural Areas and Tribal Transit Program – 783 subrecipient transactions totaling $23,075,270. • Highway Safety Cluster – 829 subrecipient transactions totaling $5,669,865. • SLFRF – 232 subrecipient transactions totaling $38,321,493. For the SLFRF program, Intergovernmental Agreements are executed between the Department and subrecipients to communicate all relevant federal award information. For both the Formula Grants for Rural Areas and Tribal Transit Program and Highway Safety Cluster, Subaward Agreements (subawards) are executed between the Department and subrecipients to communicate all relevant federal award information. Intergovernmental Agreements and subawards are signed by authorized State personnel, generally the State Controller and the Department’s Chief Engineer. The Department includes a “Subrecipient Risk Assessment” tool with its Intergovernmental Agreements or subawards, which must be completed by Department staff prior to making the award. The Department’s subrecipient monitoring procedures are dependent on the assessed risk level noted in the Subrecipient Risk Assessment tool. Federal regulations [2 CFR Part 200 Section F] state that a non-federal entity that expends $1,000,000 or more in federal awards during the non-federal entity’s fiscal year must have a Single Audit conducted in accordance with 2 CFR 200.514. The Department’s Internal Audit Division staff tracks and receives Single Audit reports from its subrecipients. As part of the Department’s monitoring procedures, the Internal Audit Division personnel complete a “Single Audit Report Review Summary” form to show they reviewed the subrecipient’s Single Audit report, summarized any findings, and concluded on any risks presented to the Department and any related future actions to be taken. The form is signed by a Department preparer and a Department reviewer. For those subrecipients not required to file a Single Audit, an “Audit Division Single Audit Certification Form” must still be submitted by the subrecipients to the Department. These forms note that the entity was exempt from a Single Audit. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine if the Department complied with federal requirements for subrecipient monitoring during Fiscal Year 2024 for the Formula Grants for Rural Areas and Tribal Transit Program, Highway Safety Cluster, and the SLFRF program and to determine whether the Department had adequate internal controls over subrecipient monitoring. As part of our audit work, we reviewed the Department’s internal controls over compliance for subrecipient monitoring and tested the Department’s compliance with federal subrecipient monitoring requirements. Specifically, we performed the following testwork related to each of the following federal programs: • Formula Grants for Rural Areas and Tribal Transit Program—We selected and reviewed a random sample of 40 subrecipient payment transactions. We reviewed subawards, amendments, and other supporting documentation provided by the Department. • Highway Safety Cluster—We selected and reviewed a random sample of 40 subrecipient payment transactions. We reviewed subawards, amendments, and other supporting documentation provided by the Department. • SLFRF—We selected and reviewed a random sample of 29 subrecipient payment transactions. We reviewed Intergovernmental Agreements, amendments, and other supporting documentation provided by the Department. How were the results of the audit work measured? Our audit work was designed to measure the Department’s compliance with the following criteria: • Federal regulation [2 CFR 200.303] states that the Department, as a federal grant recipient, 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.” • Federal regulation [2 CFR 200.332 (a)(1)] states that the Department’s subawards must clearly identify certain information, including but not limited to, the ALN, the Federal Award Date, and the FAIN. • Federal regulation [2 CFR 200.331] states that a pass-through entity, in this case the Department, must make case-by-case determinations as to whether each agreement it makes for the disbursement of federal program funds represents a payment of funds to a subrecipient or a contractor, depending on the role the entity plays. What problems did the audit work identify? We determined that the Department did not fully comply with subrecipient monitoring requirements during Fiscal Year 2024. Specifically, we noted the following: • Formula Grants for Rural Areas and Tribal Transit Program o For 10 of 40 (25 percent) subrecipient payment transactions selected for testing, we determined the subaward documents did not contain the federal award date in the subaward agreement, as required. The 10 transactions totaled $7,432,248 in subrecipient awards. • Highway Safety Cluster o For 1 of 40 (3 percent) subrecipient payment transactions selected for testing, we determined that the subrecipient should have been classified as a contractor, not a subrecipient. The transaction totaled $75,325. The Department had not made an adjusting entry in CORE to reclassify the transaction and correct this error by the end of our audit testwork. o For 5 of 40 (13 percent) subrecipient payment transactions selected for testing, we determined the subaward documents did not contain the federal award date in the subaward agreement. The 5 transactions totaled $25,100 in subrecipient awards. • SLFRF o For 2 of 29 (7 percent) subrecipient payment transactions selected for testing, we determined that the Intergovernmental Agreement did not include the FAIN and Federal Award Dates. The 2 transactions totaled $3,277,779 in subrecipient awards. o For 1 of 29 (3 percent) subrecipient payment transactions selected for testing, we determined the transaction did not include the ALN. This transaction totaled $1,851,279 in subrecipient awards. Why did these problems occur? The Department’s procedures and internal controls were not sufficient to ensure that Intergovernmental Agreements and subawards included all the required information to be included in the subaward, and internal controls did not prevent or detect errors. Department staff were not aware that this information was needed for the subaward to be in compliance with federal regulations. In some situations, the FAIN was only provided to the Department from the U.S. Department of Transportation subsequent to when the subaward was made. In these instances, the Department was not aware that they were required to provide the FAIN to their subrecipients once it was determined by the U.S. Department of Transportation. The Department’s procedures and internal controls were not sufficient to ensure that payments were properly classified as general disbursements or subrecipient payments, and internal controls did not prevent or detect errors. Department staff lacked the appropriate knowledge of the difference in contractors and subrecipients to ensure the proper classification of expenditures. The Department’s reviewers did not complete a sufficient review of the expense classifications to be able to identify the misclassification and propose a subsequent correction. Why do these problems matter? Based on the issues we identified, the Department is out of compliance with federal subrecipient requirements and could face sanctions or other penalties. In addition, by failing to properly report the required federal grant award information at the time of subaward issuance, subrecipients may be uninformed about what funding the subaward related to. This could result in misclassification of subaward information on the subrecipients’ Schedules of Expenditures of Federal Awards (SEFA) and the subrecipient may not know what federal requirements they need to follow as part of receiving the federal award funds. The Department’s improper classification of expenses as general disbursements versus subrecipient payments could lead to misstatements in the amounts reported on the SEFA, both for the State as a whole and at the subrecipient level. See "Schedule of Findings and Questioned Costs" for chart/table. Recommendation 2024-058 The Department of Transportation (Department) should strengthen its internal controls over and ensure that it complies with federal subrecipient monitoring requirements for the Formula Grants for Rural Areas and Tribal Transit Program, the Highway Safety Cluster, and the Coronavirus State and Local Fiscal Recovery Funds. Specifically, the Department should ensure that all required information is included in subawards or intergovernmental agreements or provide amendments to the subawards or intergovernmental once the Department receives the necessary information from the federal government, and that Department staff are sufficiently aware of the difference in subrecipients and contractors and properly classify general disbursements versus subrecipient payments. Response Department of Transportation Agree Implementation Date: June 2026 Department will strengthen controls to ensure that the required award information is provided, once available. Certain information such as Federal Award Identification Number and Federal Transit Administration and National Highway Traffic Safety Administration award date are not available at the time of contracting CDOT is working on a process to provide this information, once it is available in a publicly available format on CDOT’s website or on a subrecipient facing grant management site. We will add a note to the contract explaining where the information will be posted on our site when it becomes available. The Department will also identify staff requiring additional training on classification and coding for contractors vs. subrecipients.
Department of Health and Human Services Iowa Department of Health and Human Services Public Health Emergency Preparedness 93.069 – PUHE-EPR-25-003 for 2025 Subrecipient Monitoring Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – The County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award, were not complied with. Questioned Costs – None reported. Context – $754,170 was passed through to one subrecipient during the year ended June 30, 2025. Repeat Finding from Prior Years – No Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. Views of Responsible Officials – Clinton County is working with Genesis Health System on implementing a subrecipient agreement and will put a control process in place to monitor.
Program: Congressionally Recommended Awards / HOME Investment Partnerships Program / Homeland Security Grant Program / Epidemiology and Laboratory Capacity for Infectious Disease Federal Financial Assistance Listing Number: 16.753 / 14.239 / 97.067 / 93.323 Federal Grantor: U.S. Department of Justice / U.S. Department of Housing and Urban Development / U.S. Department of Homeland Security / U.S. Department of Health and Human Services Award No. and Year: Multiple Compliance Requirements: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the County is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the County must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The Sheriff-Coroner Department did not properly identify the amount expended for the Congressionally Recommended Awards, AL No. 16.753. The expenditures reported by the Department were overstated by $2,638,516. • The Orange County Community Resources Department did not properly identify the amount of Federal funding passed through to subrecipients for the HOME Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the Department was overstated by $4,500,624. • The Sheriff-Coroner Department did not properly identify the amounts expended for the Homeland Security Grant Program, AL No. 97.067. The expenditures reported by the Department were overstated by $715,489. • The Orange County Health Care Agency (HCA) did not properly identify the amount expended for the Epidemiology and Laboratory Capacity for Infectious Disease program, AL No. 93.323. The expenditures reported by the Agency were overstated by $486,000. Cause: As a result, the County lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the County’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the County’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Years: No. Recommendation: The County, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials: See separately issued Corrective Action Plan.
Finding #2025-001: #84.048 -Career and Technical Education - Basic Grants to States Federal Grantor Agency: U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Condition: During our audit procedures, we noted that the District does not have formal, written procedures governing subrecipient monitoring. Although the District reviews supporting documentation—such as invoices—submitted by subrecipient schools prior to submitting claims to the Department of Public Instruction (DPI), these practices are not documented in an established policy or procedure. Criteria: Uniform Guidance (2 CFR 200.331–200.332) requires pass-through entities to establish and implement written procedures for monitoring subrecipients to ensure compliance with federal program requirements and achievement of performance goals. Cause: The District has not developed or implemented formal written policies and procedures for subrecipient monitoring. Effect: In the absence of formalized procedures, the District’s monitoring practices may be applied inconsistently, increasing the risk of unallowable costs, noncompliance with federal requirements, or misunderstandings between the District and its subrecipients. This could lead to questioned costs or administrative issues during oversight by DPI or other regulatory bodies. Recommendation: We recommend that the District develop and adopt formal written procedures outlining its subrecipient monitoring activities. These procedures should clearly describe monitoring responsibilities, required documentation, review steps, communication expectations, and follow-up actions. Implementing a formalized process will help ensure consistent oversight and compliance with federal regulations. Grantee Response: The District will develop and implement written procedures that outline the required monitoring steps, documentation standards, communication protocols, and follow-up expectations for subrecipient oversight. These procedures will align with the requirements of Uniform Guidance and DPI expectations.
Finding 2025-007: Pre-Award Risk Assessment for Sub-Recipient (Significant Deficiency) Federal Agency: National Institute of Health Federal Program: All of Us Research Program Assistance Listing Number: 93.368 Criteria: As stated in 2 CFR 200.331 part (b), all pass-through entities must 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 procedures to prescribe to each individual subrecipient. Condition: During our testing performed over subrecipient expenditures, we were unable to obtain evidence that pre-award risk assessment procedures were performed over subrecipients, consistent with 2 CFR §200.332(b). As such, the Foundation did not adequately determine appropriate monitoring procedures over the sub-recipients. Cause: The Foundation does not have established internal controls or policies regarding subrecipients. Effect or Potential Effect: The Organization could inadvertently be engaged in relationships with subrecipients of higher risk without the appropriate level of oversight to ensure subrecipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted as this compliance requirement is a administrative reporting requirement that does not impact cost eligibility. Context: Our audit procedures consisted of substantive testwork over a sample of subrecipients. We consider our sample to be representative of the population. The samples were made using statistical sampling and we believe the condition appeared to be systematic in nature. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend the Foundation formalize internal control procedures and policies with respect to sub-recipient pre-award risk assessment. The risk assessments should be conducted in order to establish appropriate monitoring procedures.
Finding 2025-002: Deficiency in Internal Control Over Subrecipient Monitoring Classification: Significant Deficiency in Internal Control Over Compliance Federal Programs: CFDA 93.310 (All of Us); CFDA 93.137 (OASH HEALS); CFDA 93.185 (Vaccination Coverage/CDC-F) Compliance Requirement: Subrecipient Monitoring — 2 CFR §§200.331–.333 Questioned Costs: None Criteria: Under 2 CFR §200.331, AHC as a pass-through entity must issue written subaward agreements containing all required elements, assess subrecipient risk prior to award, monitor subrecipient activities and performance during the award period and verify subrecipient UEIs against SAM.gov prior to payment. Condition: AHC passed approximately $542,500 through to community-based subrecipients across all three major programs during FY2025. Our testing found no written subaward agreements containing the required elements under 2 CFR §200.331(a), no pre-award risk assessments, no monitoring of subrecipient performance or financial activity, and no SAM.gov UEI verification. AHC has no formal subrecipient monitoring policies or designated staff responsible for this function. Cause: AHC has not developed a subrecipient monitoring program and has relied on informal program-level relationships with its community partners in lieu of structured compliance oversight. Effect: AHC cannot provide reasonable assurance that federal funds passed through to subrecipients were used for authorized purposes or that subrecipients complied with applicable requirements. This deficiency affects the Subrecipient Monitoring compliance requirement across all three major programs. Recommendation: AHC should establish a written subrecipient monitoring policy that includes subaward agreement templates with all required §200.331(a) elements, pre-award risk assessments, annual review of subrecipient financial and programmatic reports, SAM.gov UEI verification prior to each payment, and a designated staff member responsible for compliance oversight. Management’s Response. See accompanying Corrective Action Plan.
Reporting Federal Agency: U.S. Department of Health and Human ServicesFederal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2534CACCDD; October 1, 2024 – September 30, 2027 2534CACCDF; October 1, 2024 – September 30, 2027 2534CACCDM; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) 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). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA subaward submissions for the CCDF Cluster reported in SAM.gov and a comparison of those submissions to underlying agreements and funding allocations applicable to FY 2024–25. Our testing identified that CDSS did not consistently perform or retain a documented evaluation of whether agreements constituted subawards or procurement contracts in accordance with 2 CFR § 200.331 prior to FFATA reporting. FFATA submissions did not align with the timing and structure of funding communicated through Child Care Bulletins, including allocation amendments and contract modifications, and all submissions tested contained errors in key data elements, including subrecipient identification and linkage to the prime award. In addition, CDSS included agreements in FFATA reporting without documented support that the substance of the relationship met the definition of a subaward, while agreements with subaward characteristics were not consistently identified and reported, resulting in reported amounts that did not consistently reflect underlying funding actions. Accordingly, controls over FFATA reporting were not performed with sufficient precision to ensure that agreements were appropriately classified and that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The condition occurred because CDSS has not established an effective, centralized process to identify, evaluate, track, and report first-tier subawards subject to FFATA across its federal programs. CDSS did not maintain a complete reporting workflow that links funding actions, allocation amendments, agreement modifications, subrecipient classifications, and SAM.gov reporting deadlines. As a result, FFATA reporting relied on manual program-level processes that did not consistently ensure reportable subawards were identified, supported, reviewed, and submitted by the required deadline. Effect: Failure to timely and accurately report FFATA subaward information results in noncompliance with federal reporting requirements and reduces the transparency and reliability of publicly available federal spending data. Late, incomplete, or inaccurate reporting limits the ability of federal agencies, oversight bodies, and the public to determine how federal funds were passed through to subrecipients. Because similar FFATA deficiencies were identified across multiple CDSS-administered programs, there is an increased risk that reporting errors may continue or affect other federal programs unless CDSS implements a department-wide corrective action. Repeat finding: Yes – 2024-014 Recommendation: We recommend that CDSS revise its department-wide FFATA reporting procedures to address errors resulting from reliance on manual tracking, decentralized spreadsheets, and program-level processes that do not consistently capture funding actions, allocation amendments, agreement modifications, reporting deadlines, and SAM.gov submission status. Revised procedures should require program-specific review of each federal program’s funding structure and supporting documentation to determine whether agreements, allocations, amendments, or other funding actions are reportable subawards or procurement contracts, and whether new or updated FFATA reporting is required. CDSS should also require documented review before submission to verify that reported subrecipient information, award amounts, Assistance Listing numbers, prime award linkages, and reporting dates agree to underlying award documents, allocation letters, amendments, and agreements. These controls should help ensure FFATA submissions are accurate, timely, supported, and aligned with the unique funding structure of each CDSS-administered federal program. CDSS should consider utilizing a grant management solution to manage the full grant lifecycle more efficiently and ensure compliance with federal reporting requirements. The solution should support centralized tracking of awards, subawards, amendments, reporting deadlines, supporting documentation, review responsibilities, automated reminders, and submission status. This would reduce reliance on manual tracking and decentralized spreadsheets, improve accountability over responsible personnel, and strengthen CDSS’s ability to complete FFATA reporting accurately and timely. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Compliance Requirement M. Subrecipient Monitoring Finding Type Material Weakness in Internal Control Over Compliance and Compliance Finding Federal Agency U.S. Department of Treasury Federal Program Title Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Criteria: M. 2 CFR §200.331 requires pass-through entities to evaluate subrecipient risk, ensure each subaward is properly identified, issue required subaward notifications, verify suspension/debarment status, monitor subrecipient activities, and ensure subrecipients meet audit requirements. Condition: The Organization has not established written procedures to identify, assess, monitor, or accurately account for amounts provided to subrecipients of Coronavirus State and Local Fiscal Recovery Funds funding. The Organization could not provide a complete and accurate accounting of the amounts passed through to a subrecipient during the audit period. Cause: Lack of formal policies and training regarding subaward responsibilities under Uniform Guidance. Effect: The Organization cannot demonstrate compliance with federal subaward requirements. This increases the risk of unallowable costs, subrecipient noncompliance, and misstated SEFA reporting due to the inability to determine and disclose amounts passed through to subrecipients. Questioned Costs: $ 185,000 Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Content: The Organization entered into an agreement with a post-secondary institution to support the development of a Whole Homes Repair workforce through scholarships to eligible students. The Organization considered the post-secondary institution a contractor. However, the guidance in the U.S. Treasury Final Rule states that whether an entity is a subrecipient or a beneficiary is contingent upon the reason why an entity receives Recovery Funds. If an entity receives Recovery Funds for their own benefit, they are a beneficiary. For example, if an entity receives Recovery Funds as a response to the negative economic impact experienced due to the COVID-19 pandemic, they are a beneficiary. If they receive the funds for the purpose of carrying out the program, they are a subrecipient. Recommendation: The Organization should adopt written subrecipient monitoring and tracking policies, perform risk assessments, issue subaward notifications with all required elements, and implement procedures to accurately record and disclose the amounts provided to subrecipients in the general ledger and SEFA. Views of Responsible Officials: The Organization disagrees with this audit finding rationale.
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds / HOME Investment Partnership Program Federal Financial Assistance Listing Number.: 21.027 / 14.239 Federal Grantor: U.S. Department of the Treasury / U.S. Department of Housing and Urban Development Award Number and Year: Affects all grant awards included under assistance listing 14.239 and 21.027 on the Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the City) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the City is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the City must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The City did not properly identify the amount expended for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The expenditures reported by the City were understated by $176,324. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The amount passed through to subrecipients reported by the City was understated by $418,183. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the Home Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the City was overstated by $2,591,181. Cause: As a result, the City lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the City’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the City’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Year: No. Recommendation: The City, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials and Planned Corrective Action: See separate corrective action plan.
Material Weakness Finding No. 2025-002: Subrecipient Monitoring U.S. Department of Health and Human Services Substance Abuse and Mental Health Services Federal Assistance Listing Number 93.243. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.”Condition We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors. Cause Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies. Effect The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization. Identification of Repeat Finding This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2024-002. Recommendation We again recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards.Views of Responsible Officials and Planned Corrective Action The Organization acknowledges 2 CFR§ 200.331 and 2 CFR §200.332 of the Uniform Guidance, and its subrecipient monitoring and management provisions emphasizing accountability and compliance in managing federal funds and subrecipients. The Organization concurs with the prior year (2024-002) and current year renumbered recommendation (2025-002) and highlights its ongoing progressive and corrective implementation of policy and process actions.For context, the Organization’s progressive and corrective actions as of the fiscal year ended (FYE) June 30, 2024 report included the following: A. Subrecipient Monitoring and Management. Implemented internal process changes, effective November 1, 2024, specifically, prospectively, and consistently the: 1. Use of a checklist, to comprehensively assess risk of determining subrecipient or contractor classification, before entering into any subrecipient agreement; 2. Provision of identification details such as CFDA number, amount of federal funds obligated, and the award period for determined subrecipient awards; 3. Submission of programmatic and financial reports as specified in the subrecipient agreement; 4. Review of a single audit in accordance with 2 CFR Part 200, Subpart F for subrecipients that expend $750,000 or more in federal funds during a fiscal year, if applicable; and 5. Review of their audit report(s) and addressing any finding(s) related to their federal award(s), including the related appropriate corrective actions, when applicable. B. Retroactive Subrecipient Portfolio Risk Assessment and Correction(s). Performed a risk assessment of the existing subrecipient portfolio to identify risks, for the audit periods July 1, 2022 – June 30, 2023, and July 1, 2023 – June 30, 2024. The objective of this risk assessment was to identify, evaluate, and prioritize risks that could adversely impact the Organization’s ability to achieve its strategic, operational, compliance and quality assurance goals. The completion of the Organization’s portfolio risk assessment resulted in correction of identified non-compliant subrecipient agreement(s). C. Subrecipient Policies and Procedures. Updated, by December 31, 2024, the implemented financial policies and procedures aligned to the subrecipient monitoring and management provision of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance, including checklists, flowcharts, samples, data sheets, data sharing agreements, etc. For the year ended June 30, 2025, to the period of the audit report date, the Organization continued the prospective implementation of the above policies and processes, including the following reflective contract review work: A. Reviewed all contracts executed between July 1, 2024 to June 30, 2025. B. Discussed with respective program director(s), the implementation of initiation, consideration, decision, documentation and monitoring phased activities. C. Worked with respective program director(s) to document in memorandum(s) to file (MTF), the basis for decision and documentation on a contract-by-contract basis. D. Initiated work with respective program contract monitors to implement and document consistent Organization wide contract monitoring processes and activities (e.g., contract, term, billing, deliverables, eligible expenditures, data input, frequency).Although as of June 30, 2025 the implementation of the resolution was not completed, the implementation continues and is expected to be fully implemented by the next audit report date.
Federal Agency: Department of the Treasury Federal Program: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds SLFRP4542 State Agency: Office of Administration (OA) Type of Finding: A - Internal Control (Material Weakness) and Material Noncompliance B - Internal Control (Material Weakness) and Material Noncompliance Compliance Requirement: Subrecipient Monitoring As noted in our previous 2 audits, during the year ended June 30, 2025, the OA had not established policies and procedures regarding monitoring subrecipients of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. As a result, the OA and 2 other state agencies did not comply with the Uniform Guidance (UG) requirements regarding identifying and monitoring subrecipients of the SLFRF program. The OA is the lead agency responsible for administering the SLFRF program. The purpose of the SLFRF program is to provide funding to respond to the COVID-19 public health emergency (PHE) or its negative impacts; respond to workers performing essential work during the PHE; provide government services, to the extent of the reduction in revenue due to the PHE (revenue replacement); make necessary investments in water, sewer, or broadband infrastructure; provide emergency relief from natural disasters or the negative economic impacts of natural disasters; and finance certain surface transportation and housing projects. The OA and various state agencies designed projects within the various allowable SLFRF program categories, and are responsible for administering the projects. The OA developed the American Rescue Plan Act Grant Management Portal (portal) to serve as the official repository of information and documentation supporting each SLFRF program project. The state agencies upload supporting documentation to the portal, including contracts, payment requests, and other supporting documentation. Most payments are made on a reimbursement basis. The OA reviews each payment request and processes the payments. Some SLFRF program projects are administered through subawards. The OA and various state agencies establish contracts with each subrecipient that outline various SLFRF program requirements, terms, and conditions. In the Schedule of Expenditures of Federal Awards (SEFA), the OA reported that approximately $302 million was passed through to subrecipients of the SLFRF program during the year ended June 30, 2025. This amount represents approximately 41% of the SLFRF program expenditures. These awards were administered through the OA and 8 other state agencies. In response to our prior audit findings, the OA held a training for state agency personnel in August 2024; sent a letter to state agencies in January 2025 covering agency responsibilities related to certain SLFRF program subrecipient monitoring requirements, such as subrecipient determinations, risk assessments, and single audits; and executed interagency agreements with the various state agencies in October and November 2025 (after the current audit period). Of the 8 state agencies that administered subawards reported in the SEFA during the year ended June 30, 2025, 4 administered the majority of the subawards, with payments totaling approximately $272 million, or 90% of the total subrecipient payments reported in the SEFA. These 4 state agencies were the Department of Mental Health (DMH), the Department of Higher Education and Workforce Development (DHEWD), the Department of Natural Resources (DNR), and the Department of Economic Development (DED). Our review and testing of subrecipient monitoring procedures focused on the OA and these 4 state agencies. For the 4 state agencies, a total of 287 recipients were identified as subrecipients in the SEFA. To understand the OA and state agency procedures, and to test compliance with subrecipient monitoring requirements, we randomly selected a sample of payments for 30 subrecipient projects from the 4 state agencies. The 30 subrecipients were awarded a total of approximately $191 million in SLFRF program funding and were paid a total of approximately $53 million during the year ended June 30, 2025. We reviewed records in the portal and requested information from the state agencies to support the subawards. A. Subrecipient Determination During the year ended June 30, 2025, the OA had not established policies and procedures to determine whether recipients of the SLFRF program funds were subrecipients or contractors. As a result, 1 of the 4 state agencies, the DHEWD, had not conducted determinations for any of their subrecipients. Subrecipient monitoring requirements are outlined in the UG. Regulation 2 CFR Section 200.331 states the pass-through entity is responsible for making case-by-case determinations to determine whether the entity receiving federal funds is a subrecipient or a contractor. The classification of a subrecipient is dependent upon whether the entity is responsible for making eligibility determinations for assistance, has its performance measured in relation to whether the objectives of the federal program were met, has responsibility for programmatic decision-making, is responsible for adherence to federal program requirements, and implements a program for a public purpose. The OA did not evaluate each SLFRF program recipient for the UG criteria, and did not make a determination of whether the entity was a subrecipient or contractor. OA officials assigned responsibility for making these determinations and identifying subrecipients to the applicable state agencies, but did not provide clear guidance to the state agencies or ensure the state agencies properly performed and documented the determinations. The DHEWD had not conducted determinations for either of its 2 sampled subrecipients. DHEWD personnel indicated they did not believe they were responsible for performing subrecipient determinations for the SLFRF program. Without adequate procedures over subrecipient or contractor determinations, the OA lacks assurance that its subrecipients have been identified for subrecipient monitoring purposes. B. Subrecipient Monitoring During the year ended June 30, 2025, the OA did not implement an effective subrecipient monitoring program to monitor the SLFRF program subrecipients. As a result, 2 of the 4 agencies reviewed, the DHEWD and the DMH, did not perform sufficient subrecipient monitoring procedures. Regulation 2 CFR Section 200.332(c) states that pass-through entities must evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring. Risk assessments may consider factors such as the subrecipient's prior experience with the same or similar subawards, the results of previous audits, whether the subrecipient has new personnel or new or substantially-changed systems, and the extent and results of any federal agency monitoring. Regulation 2 CFR Section 200.332(e) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure the subrecipient complies with federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must (1) review financial and performance reports; (2) ensure the subrecipient takes corrective action on all significant developments that negatively affect the subaward; (3) issue a management decision for audit findings pertaining only to the federal award provided to the subrecipient from the pass-through entity; and (4) resolve audit findings specifically related to the subaward. To monitor subrecipients of the SLFRF program, the OA relies on its pre-payment monitoring process. During the year ended June 30, 2025, the OA did not perform any post-payment monitoring procedures, and relied on the state agencies to perform these procedures without sufficiently communicating with the state agencies regarding their subrecipient monitoring responsibilities or ensuring the state agencies performed monitoring reviews. Risk assessments The OA did not ensure required risk assessments for subrecipients of the SLFRF program were performed to determine the nature, timing, and extent of monitoring procedures necessary. Two of the 4 state agencies, the DHEWD and the DMH, did not perform any risk assessments for any of the sampled subrecipients. OA officials indicated risk assessment procedures are the responsibility of the state agencies; however, during the year ended June 30, 2025, the OA did not provide clear guidance to the state agencies or ensure the state agencies performed and used risk assessments as required. DHEWD officials indicated they did not perform subrecipient risk assessments because the subrecipients are institutions of higher education, to which the DHEWD distributes annual state funding. However, the UG does not provide for exemptions to the risk assessment requirements for such entities. DMH officials indicated assessments were informally completed; however, the DMH could not provide any documentation of such informal risk assessments or how those risk assessments were considered in monitoring decisions. DMH officials stated they are in the process of developing formal risk assessment tools. In addition to complying with federal requirements, risk assessments are necessary to ensure monitoring reviews are conducted with adequate frequency to help ensure subrecipient compliance with program requirements. The interagency agreements the OA executed with the various state agencies in October and November 2025 (after the current audit period) describe agency responsibilities for monitoring subrecipient compliance with SLFRF program requirements, including risk assessments. OA pre-payment monitoring process The OA has not developed policies and procedures outlining its pre-payment monitoring process and did not always clearly document monitoring performed prior to making payments. In their review and approval of each SLFRF program subrecipient payment request, OA officials stated they thoroughly review supporting documentation uploaded to the portal by the state agencies, including contracts, bid documentation, invoices, and other supporting documentation. OA officials further stated they review for compliance with certain types of SLFRF program compliance requirements, including allowable activities and allowable costs, procurement, and period of performance. However, the OA does not clearly document review procedures performed. For each of the 30 subrecipient projects sampled, the portal included documentation pertaining to some, but not all of the applicable compliance requirements. Without documented policies and procedures and documentation of prepayment monitoring procedures performed, the OA cannot demonstrate subrecipient monitoring procedures were performed. Additional monitoring procedures The OA did not monitor subrecipients beyond the pre-payment monitoring process previously described. OA officials stated post-payment monitoring procedures are the responsibility of the state agencies; however, during the year ended June 30, 2025, the OA did not sufficiently communicate with the agencies regarding subrecipient monitoring responsibilities or ensure the agencies performed monitoring reviews. Our review of subrecipient monitoring procedures at the 4 state agencies noted 2 agencies, the DHEWD and the DMH, had not developed written policies or procedures regarding subrecipient monitoring and did not perform sufficiently documented monitoring procedures. For 4 of 30 subrecipient projects sampled for the 4 agencies (13%), the DHEWD (2 subrecipients) and the DMH (2 subrecipients) could not provide documentation of subrecipient monitoring performed. While DHEWD officials indicated they perform pre-payment monitoring procedures, they could not provide documentation of such reviews for either of the 2 sampled projects. Furthermore, the DHEWD does not perform any additional subrecipient monitoring, such as monitoring subrecipients' compliance with procurement requirements. As a result, the DHEWD was unable to provide documentation to support the bidding of applicable aspects for 1 of 9 DHEWD projects sampled for a review of compliance with procurement requirements. While DMH officials indicated they perform annual billing service reviews to monitor subrecipients, the DMH did not perform such reviews for the 2 DMH projects sampled. In addition to noncompliance with subrecipient monitoring requirements, the failure to ensure sufficient monitoring procedures were performed and documented increases the risk that subrecipient noncompliance will not be prevented or detected timely. The interagency agreements the OA executed with the various state agencies in October and November 2025 (after the current audit period) describe agency responsibilities for monitoring subrecipient compliance with SLFRF program requirements. Conclusions The OA is the lead agency responsible for administering the SLFRF program. OA officials indicated the state agencies were responsible for some of the subrecipient monitoring requirements. However, without clear communication and monitoring of these responsibilities, the OA lacks assurance of compliance with all subrecipient monitoring requirements. Without an established subrecipient monitoring program, the OA cannot provide assurance subrecipients are complying with SLFRF program requirements and there is increased risk that noncompliance with program requirements or subaward terms and conditions will go undetected, or that subaward performance goals will not be achieved. In addition, a subrecipient monitoring program is necessary to demonstrate adequate internal controls over compliance with subrecipient monitoring requirements. Documented policies and procedures are necessary to clearly communicate responsibilities to the state agencies, prevent misunderstandings, and demonstrate adequate internal controls over compliance with subrecipient monitoring requirements. Regulation 2 CFR Section 200.303(a) requires the recipient to "[e]stablish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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)." Paragraph 3.10 of the Standards for Internal Control in the Federal Government, also known as the Green Book, states, "[e]ffective documentation assists in management's design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel, as well as a means to communicate that knowledge as needed to external parties, such as external auditors." Paragraph 12.01 states, "[m]anagement should implement control activities through policies." Recommendations The OA: A. Continue to work with the state agencies to ensure documented determinations are prepared to determine whether all recipients of SLFRF program funds are subrecipients or contractors. B. Develop policies and procedures outlining pre-payment monitoring procedures and document monitoring performed prior to making payments. The OA should also continue to ensure subrecipient monitoring tasks delegated to state agencies are adequately communicated. Procedures should be established to ensure subrecipient monitoring procedures are appropriately completed in accordance with the Uniform Guidance, including performing risk assessments for each subrecipient, monitoring for compliance with federal requirements and subaward terms and conditions, and ensuring subaward goals and objectives are achieved. Auditee's Response A. We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding. B. We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
2025-003: Workforce Investment Opportunity Cluster – Assistance Listing #17.258 / 17.259 / 17.278, Subrecipient Monitoring – Material Noncompliance (Material Weakness) Condition During our review of subrecipient monitoring, we noted that the City’s monitoring was not performed according to the formal written policy. There was a lack of evidence of testing and suggestions to the subrecipient during the fiscal year 2025. Criteria According to 2CFR 200.331(a) of the OMB Compliance Supplement, the City should make subrecipients aware of award information. According to the City’s Program Participant Monitoring Plan, the City is supposed to conduct subrecipient monitoring on a semi-annual basis which should include desk reviews of payroll, disbursements, and other financial items. City of Roanoke, Virginia Schedule of Findings and Questioned Costs June 30, 2025 174 Cause Staff turnover, particularly for the role of grant accountant, caused these procedures to be overlooked. Management prioritized core operating activities with staffing vacancies in lieu of monitoring activities. Management asserts staff went onsite to review key documents, as documented by email activities, but did not document specific items subject to review. Effect Noncompliance with federal grant requirements with regard to subrecipient monitoring, as well as an increased risk of subrecipient misusing funds. Questioned Cost Amount Not applicable. Perspective Information Two out of two subawards. Recommendation We recommend performing subrecipient monitoring in accordance with the City’s guidelines and following the procedures laid out in the Program Participant Monitoring Plan. Repeat Finding 2024-002 View of Responsible Officials and Planned Corrective Action Management concurs with the finding. The City has reinforced its subrecipient monitoring procedures and will ensure monitoring is performed and documented in accordance with its Program Participant Monitoring Plan. Responsibilities have been clarified, a monitoring schedule and checklist have been implemented, and supervisory review will be incorporated to help ensure required monitoring activities are completed, documented, and retained in the grant files.
2025-002 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Coronavirus State and Local Fiscal Recovery Funds program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Coronavirus State and Local Fiscal Recovery Funds program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Coronavirus State and Local Fiscal Recovery Funds program. These should include: - Payments in accordance with §200.302 (6), - Procurement in accordance with §200.318, - Allowability of costs charged to federal programs in accordance with §200.302 (7), - Compensation in accordance with §200.430 and §200.431, - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.
2025-003 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Water and Waste Disposal for Rural Communities program. This includes the absence of written guidance on key compliance areas such as procurement, subrecipient monitoring, allowable costs, and reporting requirements under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Water and Waste Disposal for Rural Communities program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Questioned Costs: n/a. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Water and Waste Disposal Systems for Rural communities program. These should include: - Procurement standards in accordance with 2 CFR 200.318 – 200.327. - Subrecipient monitoring protocols. - Guidelines for allowable costs and cost principles. - Reporting and recordkeeping requirements. - Internal control procedures to ensure compliance. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.
2024-004 Allowable Costs Federal Programs – AL 64.033 – Supportive Services for Veteran Families (SSVF) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). Condition – For the year ended December 31, 2024, we noted one instance in which noneligible expense by a subrecipient were reimbursed and CAPND drew down on the grant for. Cause – There was a request for by a subrecipient to reimburse expenses that did not exist. This request was authorized by CAPND and the payment was sent to the subrecipient for noneligible expenses. CAPND then drew down on the grant for the non-existing expense. Effect – Noncompliance with the grant. Questioned costs – $159.73 Repeat Finding – This is not a repeat finding. Recommendation – Implement a system of internal control in which all expenses that subrecipient request to be reimbursed have supporting documentation. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-005 Subrecipient Monitoring Federal Programs – AL 64.033 – Supportive Services for Veteran Families (SSVF) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). Condition – For the year ended December 31, 2024, we noted one instance in which noneligible expense by a subrecipient were reimbursed and CAPND drew down on the grant for. Cause – There was a request for by a subrecipient to reimburse expenses that did not exist. This request was authorized by CAPND and the payment was sent to the subrecipient for noneligible expenses. CAPND then drew down on the grant for the non-existing expense. Effect – Noncompliance with the grant. Questioned costs – $159.73 Repeat Finding – This is not a repeat finding. Recommendation – Implement a system of internal control in which all expenses that subrecipient request to be reimbursed have supporting documentation. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-006 Subrecipient Monitoring Federal Programs – AL 93.569 – Community Services Block Grant (CSBG) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes the review of independent audits of subrecipients and response to deficiencies detected through audits (2CFR section 200.331 (f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition – For the year ended December 31, 2024, we reviewed CAPND's subrecipient monitoring policy, requested supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Uniform Guidance for subrecipient monitoring and per CAPND's internal policies could not be substantiated or were determined to not have occurred during the year under audit. Cause – There was missing required information on subawards granted to subrecipients. Context– Of the total federal expenditures under the program noted above, $283,852 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: We requested copies of all subawards awarded to subrecipients. Of the five subawards awarded to pass-through entities for the grant year October 2023 to September 2024, all five were missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient's unique entity identifier. o Amount of federal funds obligated by this action by the pass-through entity to the subrecipient. Effect – Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Question costs – None. Repeat Finding – This is a repeat finding. Recommendation – The entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-006 Subrecipient Monitoring Federal Programs – AL 93.569 – Community Services Block Grant (CSBG) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes the review of independent audits of subrecipients and response to deficiencies detected through audits (2CFR section 200.331 (f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition – For the year ended December 31, 2024, we reviewed CAPND's subrecipient monitoring policy, requested supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Uniform Guidance for subrecipient monitoring and per CAPND's internal policies could not be substantiated or were determined to not have occurred during the year under audit. Cause – There was missing required information on subawards granted to subrecipients. Context– Of the total federal expenditures under the program noted above, $283,852 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: We requested copies of all subawards awarded to subrecipients. Of the five subawards awarded to pass-through entities for the grant year October 2023 to September 2024, all five were missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient's unique entity identifier. o Amount of federal funds obligated by this action by the pass-through entity to the subrecipient. Effect – Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Question costs – None. Repeat Finding – This is a repeat finding. Recommendation – The entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
Finding #2024-002 – Significant Deficiency and Other Noncompliance. Applicable federal programs: U. S. Environmental Protection Agency, Assistance Listing #66.456, National Estuary program, Passed through Texas Commission on Environmental Quality: Contract period: 09/01/23 – 08/31/25, Contract number: 582-24-50165. Criteria: In accordance with Uniform Guidance OMB 2 CFR §200.331(a), pass through entities must provide subrecipients with specific information at the time of the subaward, including the assistance listing number, federal award identification number (FAIN), name of the federal awarding agency, pass through entity and contact information for awarding official, federal award date of award to the recipient by the Federal agency, access to subrecipient’s records and retention period, and a statement regarding the close-out terms and conditions. Condition and context: We reviewed one of the two subrecipient awards for the required information described in the criteria above and noted such provisions were not included in the subrecipient agreement. Effect: Failure to communicate required information may result in subrecipients not properly complying with federal requirements, increasing the risk of noncompliance. Recommendation: Policies and procedures should be implemented to ensure all required information is included in the subrecipient agreement before issuance. View of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.
SOME FEDERAL AWARDS MAY CONTAIN COST LIMITATIONS ON RECOVERY OF INDIRECT COSTS THAT DIFFER FROM THE FEDERALLY NEGOTIATED INDIRECT COST RATES. IN THESE CASES, THE INDIRECT COST RATE WILL BE SPECIFIED IN THE AWARD, AD DESCRIBED IN 2 CFR SECTIONS 200.210(A)(15) AND 200.331(A)(1)(XIII). NONPROFIT ORGANIZATIONS MUST CONFORM TO COST PRINCIPLES IN 2 CFR PART 200, SUBPART E, APPENDIX IV, AND CAS (IF APPLICABLE), AND IN ACCORDANCE WITH ANY NEGOTIATED RATE AGREEMENTS AND SPECIFIC AWARD CONDITIONS/LIMITATIONS. ADDITIONALLY, RATES USED MUST BE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AWARD AND THE AMOUNTS CLAIMED MUST BE APPLIED TO THE APPROPRIATE BASE. IDAHO IMMUNIZATION COALITION, INC. WAS UNABLE TO PROVIDE DOCUMENTATION OF AN APPROPRIATE BASE OF EXPENDITURES FOR THE AWARD APPROVED RATE WAS APPLIED TO.
SOME FEDERAL AWARDS MAY CONTAIN COST LIMITATIONS ON RECOVERY OF INDIRECT COSTS THAT DIFFER FROM THE FEDERALLY NEGOTIATED INDIRECT COST RATES. IN THESE CASES, THE INDIRECT COST RATE WILL BE SPECIFIED IN THE AWARD, AD DESCRIBED IN 2 CFR SECTIONS 200.210(A)(15) AND 200.331(A)(1)(XIII). NONPROFIT ORGANIZATIONS MUST CONFORM TO COST PRINCIPLES IN 2 CFR PART 200, SUBPART E, APPENDIX IV, AND CAS (IF APPLICABLE), AND IN ACCORDANCE WITH ANY NEGOTIATED RATE AGREEMENTS AND SPECIFIC AWARD CONDITIONS/LIMITATIONS. ADDITIONALLY, RATES USED MUST BE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AWARD AND THE AMOUNTS CLAIMED MUST BE APPLIED TO THE APPROPRIATE BASE. IDAHO IMMUNIZATION COALITION, INC. WAS UNABLE TO PROVIDE DOCUMENTATION OF AN APPROPRIATE BASE OF EXPENDITURES FOR THE AWARD APPROVED RATE WAS APPLIED TO.
Criteria: In accordance with 2 CFR § 200.331, a non-federal entity that passes federal awards to subrecipients is responsible for 1) evaluating each subrecipient’s risk of noncompliance, 2) monitoring the activities of subrecipients to ensure that the subaward is used for authorized purposes, in compliance with laws and the terms and conditions of the subaward, and 3) verifying that subrecipients have audits in accordance with the Uniform Guidance, if applicable. Adequate internal controls are required to ensure compliance with these requirements under 2 CFR § 200.303. Condition: During our audit, we noted that the Parish did not have sufficient internal controls in place to ensure effective subrecipient monitoring. Specifically, there was no documented risk assessment of subrecipients prior to issuing subawards, the Parish did not perform periodic reviews or site visits to monitor subrecipient performance or compliance, and the subrecipient audit reports were not consistently obtained or reviewed. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: Failure to properly monitor subrecipients increases the risk that federal funds may be misused or not spent in accordance with program requirements to achieve program objectives. It also exposes the Parish to potential liability for questioned costs incurred by subrecipients to be repaid to the federal agency. Recommendation: We recommend that the entity establish and implement formal policies and procedures for subrecipient monitoring in accordance with 2 CFR § 200.331. This should include conducting and documenting pre-award risk assessments, developing a subrecipient monitoring plan (e.g., site visits, desk reviews), reviewing subrecipient performance and audit reports on a regular basis.
Federal Program: AL 11.307 – Economic Adjustment Assistance Criteria: Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (The Chamber Foundation) must perform certain activities to ensure that the subrecipient uses funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes review of independent audits of subrecipients and response to deficiencies detected through audits (2 CFR section 200.331(f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition: For the four-month period from September 1, 2024 through December 31, 2024, we reviewed the Foundation’s subrecipient internal controls, requesting supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Unform Guidance for subrecipient monitoring and per the Foundation’s internal controls could not be substantiated or were determined to not have occurred during the year under audit. Cause: Due to internal control deficiency noted in 2024-001, the subrecipient monitoring requirement was not in compliance during the year. Context: Of the federal expenditures under the program noted, $91,125 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: - We requested copies of the correspondence with subrecipients requesting copies of the financial statement audits performed in compliance with 2 CFR 200. Follow up discussion with the Chamber Foundation staff confirmed that this requirement was not completed during the year under audit. Subsequently, of the four subrecipient audit reports required to be requested, zero were requested. - We requested copies of all subawards awarded to subrecipients. Of the four subawards awarded to pass-through entities, one was missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient’s unique entity identifier. Effect: Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Questioned costs: None Recommendation: The Foundation should request yearly audit reports as determined by 2 CFR 200. Additionally, the entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials: Management recognizes the deficiency and plans to implement the auditor’s recommendations. Indication of Repeat Finding: This is a repeat finding of August 31, 2024 - 003 from the prior year.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-001 – Fiscal Policies and Procedures Not Fully Aligned with Uniform Guidance Federal Program: Temporary Assistance for Needy Families, Family Violence Prevention Services Act, ARP Supplemental and ARP Covid-19 Federal Assistance Listing Number: 93.558 and 93.671 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000380000040 Criteria: Non-federal entities are required under 2 CFR §200.303 to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of the award. Adequate written policies and procedures are a critical component of an effective internal control system. Condition: During our review of the Center’s fiscal policies and procedures, we noted that several key elements required for compliance with 2 CFR Part 200 were either missing or lacked sufficient detail. Specifically, the following areas were underdeveloped: Conflict of interest policies were not clearly defined or aligned with 2 CFR § 200.112. Procedures for determining allowable costs under 2 CFR §200.403–§200.405 were not well documented. Subrecipient monitoring procedures required by 2 CFR §200.331 were not adequately addressed. Record retention and access policies under 2 CFR §200.333–§200.338 were not clearly outlined. While some general policies were in place, they do not currently meet the level of specificity and comprehensiveness required under the Uniform Guidance. Cause: The Center is in the process of updating its financial policies and procedures to comply with Uniform Guidance requirements. A consultant has been engaged to assist with this process, and updates are expected to be finalized and approved by the Board of Directors in August 2025. Effect: The lack of complete and detailed policies increases the risk of noncompliance with federal requirements, especially in areas such as cost allowability, subrecipient oversight, and recordkeeping. It also creates challenges in ensuring consistent and compliant financial practices across the Center. Questioned Costs: $0 – No noncompliant expenditures were identified; however, the absence of sufficient policies represents a control deficiency. Recommendation: We recommend for the Center to prioritize the completion and formal adoption of revised fiscal policies and procedures, ensuring they fully align with the requirements of 2 CFR Part 200. These should include detailed written policies on conflict of interest, allowable costs, subrecipient monitoring, and record retention. Finalizing and implementing these policies ahead of the new fiscal year, as planned, will strengthen internal controls and help ensure compliance moving forward. Management’s Views and Corrective Action Plan: Management agrees with the finding. The Center is currently in the process of updating its fiscal policies and procedures to align with the requirements of 2 CFR Part 200. The Finance Committee is leading this effort and is reviewing each policy area identified, including conflict of interest, allowable costs, subrecipient monitoring, and record retention. Updated policies and procedures will be finalized and presented for Board approval by August 30, 2025. Once approved, the Center will ensure implementation across all departments and provide internal guidance to promote consistent application. Anticipated Completion Date: August 30, 2025 Responsible Party: Finance Committee, with support from Executive Director, Nichole Henry.
2024-004 Allowable Costs Federal Programs – AL 64.033 – Supportive Services for Veteran Families (SSVF) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). Condition – For the year ended December 31, 2024, we noted one instance in which noneligible expense by a subrecipient were reimbursed and CAPND drew down on the grant for. Cause – There was a request for by a subrecipient to reimburse expenses that did not exist. This request was authorized by CAPND and the payment was sent to the subrecipient for noneligible expenses. CAPND then drew down on the grant for the non-existing expense. Effect – Noncompliance with the grant. Questioned costs – $159.73 Repeat Finding – This is not a repeat finding. Recommendation – Implement a system of internal control in which all expenses that subrecipient request to be reimbursed have supporting documentation. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-005 Subrecipient Monitoring Federal Programs – AL 64.033 – Supportive Services for Veteran Families (SSVF) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). Condition – For the year ended December 31, 2024, we noted one instance in which noneligible expense by a subrecipient were reimbursed and CAPND drew down on the grant for. Cause – There was a request for by a subrecipient to reimburse expenses that did not exist. This request was authorized by CAPND and the payment was sent to the subrecipient for noneligible expenses. CAPND then drew down on the grant for the non-existing expense. Effect – Noncompliance with the grant. Questioned costs – $159.73 Repeat Finding – This is not a repeat finding. Recommendation – Implement a system of internal control in which all expenses that subrecipient request to be reimbursed have supporting documentation. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-006 Subrecipient Monitoring Federal Programs – AL 93.569 – Community Services Block Grant (CSBG) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes the review of independent audits of subrecipients and response to deficiencies detected through audits (2CFR section 200.331 (f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition – For the year ended December 31, 2024, we reviewed CAPND's subrecipient monitoring policy, requested supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Uniform Guidance for subrecipient monitoring and per CAPND's internal policies could not be substantiated or were determined to not have occurred during the year under audit. Cause – There was missing required information on subawards granted to subrecipients. Context– Of the total federal expenditures under the program noted above, $283,852 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: We requested copies of all subawards awarded to subrecipients. Of the five subawards awarded to pass-through entities for the grant year October 2023 to September 2024, all five were missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient's unique entity identifier. o Amount of federal funds obligated by this action by the pass-through entity to the subrecipient. Effect – Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Question costs – None. Repeat Finding – This is a repeat finding. Recommendation – The entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
2024-006 Subrecipient Monitoring Federal Programs – AL 93.569 – Community Services Block Grant (CSBG) Criteria – Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (CAPND) must perform certain activities to ensure that the subrecipient uses the funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes the review of independent audits of subrecipients and response to deficiencies detected through audits (2CFR section 200.331 (f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition – For the year ended December 31, 2024, we reviewed CAPND's subrecipient monitoring policy, requested supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Uniform Guidance for subrecipient monitoring and per CAPND's internal policies could not be substantiated or were determined to not have occurred during the year under audit. Cause – There was missing required information on subawards granted to subrecipients. Context– Of the total federal expenditures under the program noted above, $283,852 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: We requested copies of all subawards awarded to subrecipients. Of the five subawards awarded to pass-through entities for the grant year October 2023 to September 2024, all five were missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient's unique entity identifier. o Amount of federal funds obligated by this action by the pass-through entity to the subrecipient. Effect – Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Question costs – None. Repeat Finding – This is a repeat finding. Recommendation – The entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials – Management recognized the deficiency and plans to implement the auditor’s recommendation.
Finding #2024-002 – Significant Deficiency and Other Noncompliance. Applicable federal programs: U. S. Environmental Protection Agency, Assistance Listing #66.456, National Estuary program, Passed through Texas Commission on Environmental Quality: Contract period: 09/01/23 – 08/31/25, Contract number: 582-24-50165. Criteria: In accordance with Uniform Guidance OMB 2 CFR §200.331(a), pass through entities must provide subrecipients with specific information at the time of the subaward, including the assistance listing number, federal award identification number (FAIN), name of the federal awarding agency, pass through entity and contact information for awarding official, federal award date of award to the recipient by the Federal agency, access to subrecipient’s records and retention period, and a statement regarding the close-out terms and conditions. Condition and context: We reviewed one of the two subrecipient awards for the required information described in the criteria above and noted such provisions were not included in the subrecipient agreement. Effect: Failure to communicate required information may result in subrecipients not properly complying with federal requirements, increasing the risk of noncompliance. Recommendation: Policies and procedures should be implemented to ensure all required information is included in the subrecipient agreement before issuance. View of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.
SOME FEDERAL AWARDS MAY CONTAIN COST LIMITATIONS ON RECOVERY OF INDIRECT COSTS THAT DIFFER FROM THE FEDERALLY NEGOTIATED INDIRECT COST RATES. IN THESE CASES, THE INDIRECT COST RATE WILL BE SPECIFIED IN THE AWARD, AD DESCRIBED IN 2 CFR SECTIONS 200.210(A)(15) AND 200.331(A)(1)(XIII). NONPROFIT ORGANIZATIONS MUST CONFORM TO COST PRINCIPLES IN 2 CFR PART 200, SUBPART E, APPENDIX IV, AND CAS (IF APPLICABLE), AND IN ACCORDANCE WITH ANY NEGOTIATED RATE AGREEMENTS AND SPECIFIC AWARD CONDITIONS/LIMITATIONS. ADDITIONALLY, RATES USED MUST BE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AWARD AND THE AMOUNTS CLAIMED MUST BE APPLIED TO THE APPROPRIATE BASE. IDAHO IMMUNIZATION COALITION, INC. WAS UNABLE TO PROVIDE DOCUMENTATION OF AN APPROPRIATE BASE OF EXPENDITURES FOR THE AWARD APPROVED RATE WAS APPLIED TO.
SOME FEDERAL AWARDS MAY CONTAIN COST LIMITATIONS ON RECOVERY OF INDIRECT COSTS THAT DIFFER FROM THE FEDERALLY NEGOTIATED INDIRECT COST RATES. IN THESE CASES, THE INDIRECT COST RATE WILL BE SPECIFIED IN THE AWARD, AD DESCRIBED IN 2 CFR SECTIONS 200.210(A)(15) AND 200.331(A)(1)(XIII). NONPROFIT ORGANIZATIONS MUST CONFORM TO COST PRINCIPLES IN 2 CFR PART 200, SUBPART E, APPENDIX IV, AND CAS (IF APPLICABLE), AND IN ACCORDANCE WITH ANY NEGOTIATED RATE AGREEMENTS AND SPECIFIC AWARD CONDITIONS/LIMITATIONS. ADDITIONALLY, RATES USED MUST BE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AWARD AND THE AMOUNTS CLAIMED MUST BE APPLIED TO THE APPROPRIATE BASE. IDAHO IMMUNIZATION COALITION, INC. WAS UNABLE TO PROVIDE DOCUMENTATION OF AN APPROPRIATE BASE OF EXPENDITURES FOR THE AWARD APPROVED RATE WAS APPLIED TO.
Criteria: In accordance with 2 CFR § 200.331, a non-federal entity that passes federal awards to subrecipients is responsible for 1) evaluating each subrecipient’s risk of noncompliance, 2) monitoring the activities of subrecipients to ensure that the subaward is used for authorized purposes, in compliance with laws and the terms and conditions of the subaward, and 3) verifying that subrecipients have audits in accordance with the Uniform Guidance, if applicable. Adequate internal controls are required to ensure compliance with these requirements under 2 CFR § 200.303. Condition: During our audit, we noted that the Parish did not have sufficient internal controls in place to ensure effective subrecipient monitoring. Specifically, there was no documented risk assessment of subrecipients prior to issuing subawards, the Parish did not perform periodic reviews or site visits to monitor subrecipient performance or compliance, and the subrecipient audit reports were not consistently obtained or reviewed. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: Failure to properly monitor subrecipients increases the risk that federal funds may be misused or not spent in accordance with program requirements to achieve program objectives. It also exposes the Parish to potential liability for questioned costs incurred by subrecipients to be repaid to the federal agency. Recommendation: We recommend that the entity establish and implement formal policies and procedures for subrecipient monitoring in accordance with 2 CFR § 200.331. This should include conducting and documenting pre-award risk assessments, developing a subrecipient monitoring plan (e.g., site visits, desk reviews), reviewing subrecipient performance and audit reports on a regular basis.
Federal Program: AL 11.307 – Economic Adjustment Assistance Criteria: Uniform Guidance requires, for any funds passed through to a subrecipient, that the pass-through entity (The Chamber Foundation) must perform certain activities to ensure that the subrecipient uses funds within provisions of the grant award and Uniform Guidance (2 CFR sections 200.331 (d) through (f)). This includes review of independent audits of subrecipients and response to deficiencies detected through audits (2 CFR section 200.331(f)). It also includes requiring all subawards granted to subrecipients have specific identifications with the award to ensure the subaward is clearly identifiable (2 CFR Section 200.331(a)). Condition: For the four-month period from September 1, 2024 through December 31, 2024, we reviewed the Foundation’s subrecipient internal controls, requesting supporting documentation for monitoring activities included, and interviewed key members of management when documentation was not available. Performance of several of the policies noted as required under Unform Guidance for subrecipient monitoring and per the Foundation’s internal controls could not be substantiated or were determined to not have occurred during the year under audit. Cause: Due to internal control deficiency noted in 2024-001, the subrecipient monitoring requirement was not in compliance during the year. Context: Of the federal expenditures under the program noted, $91,125 are passed through to subrecipients. The following are specific items noted that were not in compliance with the criteria listed above: - We requested copies of the correspondence with subrecipients requesting copies of the financial statement audits performed in compliance with 2 CFR 200. Follow up discussion with the Chamber Foundation staff confirmed that this requirement was not completed during the year under audit. Subsequently, of the four subrecipient audit reports required to be requested, zero were requested. - We requested copies of all subawards awarded to subrecipients. Of the four subawards awarded to pass-through entities, one was missing the following required information under (2 CFR Section 200.331(a)): o Subrecipient’s unique entity identifier. Effect: Increased risk of potential noncompliance with subrecipient monitoring requirements under Uniform Guidance. Questioned costs: None Recommendation: The Foundation should request yearly audit reports as determined by 2 CFR 200. Additionally, the entity should include all required information as determined in CFR Section 200.331(a) in all subawards. Views of Responsible Officials: Management recognizes the deficiency and plans to implement the auditor’s recommendations. Indication of Repeat Finding: This is a repeat finding of August 31, 2024 - 003 from the prior year.