Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
Compliance Requirement – Subrecipient Monitoring – Significant Deficiency and Noncompliance Criteria Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and programmatic (performance and special reports) required by the PTE. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. 3. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Additionally, in accordance with federal requirements, the University shall maintain internal controls over federal programs designed to provide reasonable assurance that transactions are executed in compliance with federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program. Condition and Context We selected thirteen subrecipients for testwork out of 82 in total and we noted that the University did not properly receive and review the single audit reports for seven of those subrecipients to ensure they had no material findings that would impact the University. The University then identified an additional six subrecipients outside of our sample where the same deficiency occurred. Cause The University had turnover in staff in the Office of Sponsored Projects during the fiscal year 2024 and this led to miscommunication which resulted in this monitoring step not being performed timely. Effect Subrecipient monitoring that is not performed timely could result in federal dollars being passed down to subrecipients with significant control or compliance issues that could impact the University. Questioned Costs There were no questioned costs related to this finding. Recommendation We recommend that the University strengthen its policies and procedures to ensure that subrecipient monitoring is being performed timely. The University should provide training to the departments responsible for these reviews.
The County failed to comply with subrecipient monitoring requirements as mandated by federal regulations and the grant terms. The County did not conduct regular oversight and monitoring of its subrecipients' programmatic and financial activities. The non-compliance with 2 CFR §200.330-332 (Subrecipient Monitoring) increases the likelihood of unallowable costs, misallocated resources, and non-compliance with program objectives. There was a change in key personnel responsible for the County's compliance with guidelines related to the federal program. Per 2 CFR §200.330-200.332, pass-through entities must monitor subrecipients to ensure compliance with federal statutes, award terms, and program objectives The County should strengthen its internal control procedures to ensure that the subaward agreement includes a clause for subrecipient monitoring activities and conduct monitoring reviews on a regular basis. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.
The County failed to comply with subrecipient monitoring requirements as mandated by federal regulations and the grant terms. The County did not conduct regular oversight and monitoring of its subrecipients' programmatic and financial activities. The non-compliance with 2 CFR §200.330-332 (Subrecipient Monitoring) increases the likelihood of unallowable costs, misallocated resources, and non-compliance with program objectives. There was a change in key personnel responsible for the County's compliance with guidelines related to the federal program. Per 2 CFR §200.330-200.332, pass-through entities must monitor subrecipients to ensure compliance with federal statutes, award terms, and program objectives The County should strengthen its internal control procedures to ensure that the subaward agreement includes a clause for subrecipient monitoring activities and conduct monitoring reviews on a regular basis. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.
The County failed to comply with subrecipient monitoring requirements as mandated by federal regulations and the grant terms. The County did not conduct regular oversight and monitoring of its subrecipients' programmatic and financial activities. The non-compliance with 2 CFR §200.330-332 (Subrecipient Monitoring) increases the likelihood of unallowable costs, misallocated resources, and non-compliance with program objectives. There was a change in key personnel responsible for the County's compliance with guidelines related to the federal program. Per 2 CFR §200.330-200.332, pass-through entities must monitor subrecipients to ensure compliance with federal statutes, award terms, and program objectives The County should strengthen its internal control procedures to ensure that the subaward agreement includes a clause for subrecipient monitoring activities and conduct monitoring reviews on a regular basis. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-043) Title: Internal control over HAF Program subrecipient monitoring needs improvement Prior Year Findings: None State Department: Professional and Financial Regulation State Bureau: Consumer Credit Protection Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Homeowner Assistance Fund Program (COVID-19) Assistance Listing Number: 21.026 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department 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. • verify that the subrecipient is audited as required when a subrecipient’s Federal award expenditures are expected to equal or exceed $750,000 during the fiscal year. • monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition: The Homeowner Assistance Fund (HAF) Program provides funding to mitigate financial hardships associated with the pandemic, including preventing homeowner mortgage delinquencies, defaults, foreclosures, and loss of utilities or home energy services and displacements of homeowners experiencing financial hardships. In fiscal year 2024, the Department passed through HAF Program funds to one subrecipient responsible for administering the program. The Department contracted with a vendor to perform all subrecipient monitoring for the HAF Program; however, only one monitoring report for the first quarter of fiscal year 2024 had been received by the Department at the time of audit testing in February 2025. No subrecipient monitoring information was received by the Department during the actual use of the grant award in fiscal year 2024. As a result, the Department had no assurance in fiscal year 2024 that: • the subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward was evaluated for purposes of determining the appropriate subrecipient monitoring procedures. • the subrecipient received a Single Audit as required. The Office of the State Auditor reviewed the quarterly monitoring report received from the vendor and noted that the subrecipient’s Single Audit requirement and related monitoring was not addressed. • the activities of the subrecipient were monitored as necessary to ensure that the subaward was used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals were achieved. In addition to untimely vendor subrecipient monitoring reports, the Department’s review and approval of subrecipient reimbursement requests was not adequately designed, as submission of detailed expenditure information with the subrecipient’s requests for reimbursement of HAF Program funds was not required. A summary spreadsheet outlining actual and projected expenditures for the second-tier subrecipient was the only support provided to the Department with each reimbursement request, which does not provide adequate detail to ensure that the subaward was used for authorized purposes. Context: In fiscal year 2024, the Department expended $29.4 million in HAF Program funds; the entire amount was passed through to the subrecipient. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Lack of ongoing or adequate subrecipient monitoring procedures could result in subrecipient noncompliance that would go undetected during the award term. Recommendation: We recommend that the Department develop and implement policies and procedures to ensure that: • all Federal award program subrecipients of the Department are subject to ongoing monitoring activities during the grant award term. • detailed documentation in support of subrecipient reimbursement requests is received prior to payment approval. Corrective Action Plan: See F-20 Management’s Response: The Department agrees with this finding. The Department has contracted with a vendor to perform subrecipient monitoring of the HAF program. The Department will ensure that subrecipient reports adequately detail expenditures. Contact: Rachel Hendsbee, Director, Administrative Services Division, Department of Professional and Financial Regulation, 207-624-8500 (State Number: 24-1698-02)
(2024-044) Title: Internal control over CSLFRF reporting needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Security and Employment Service Center Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332(b); 2 CFR 200.510 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must maintain accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number (ALN) and include the total amount provided to subrecipients from each Federal program. Condition: The Department of Administrative and Financial Services’ Security and Employment Service Center (SESC) is responsible for accurately recording information needed to report on the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Quarterly Project and Expenditure Reports. Information from these CSLFRF reports is used by the Office of the State Controller for SEFA preparation. The Office of the State Auditor reviewed amounts reported on the SEFA and identified $9.7 million of Federal expenditures incorrectly reported as amounts provided to subrecipients that should have been reported as direct expenditures. SESC inaccurately identified vendors as subrecipients. As a result, vendor payments were incorrectly classified as subrecipient payments on the CSLFRF Quarterly Project and Expenditure Reports and were incorrectly included in the initial amount reported on the SEFA as amounts provided to subrecipients. Context: Payments to the providers totaled $9.7 million of the $209.6 million in fiscal year 2024 CSLFRF expenditures. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Incomplete or inaccurate reporting of expenditures on the CSLFRF reports and SEFA, which are submitted to the Federal government, may result in incorrect information used for programmatic, policy or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure contractors and subrecipients are appropriately classified and reported on the CSLFRF Quarterly Project and Expenditure Reports and SEFA. Corrective Action Plan: See F-20 Management’s Response: The Department agrees with this finding. The Security and Employment Service will continue to work with our partner agencies to help ensure the sub-recipient/vendor classification is appropriately determined when the initial contracts are written. In this case, the contracts ended in July 2023 and the contracting agency did not amend the contracts to change the classification. Contact: Marilyn Leimbach, Director, SESC, DAFS, 207-248-2556 (State Number: 24-1699-03)
(2024-045) Title: Internal control over CSLFRF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Labor State Bureau: Commissioner’s Office Federal Agency: U.S. Department of the Treasury Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to 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 2 CFR 200.332. Condition: As part of the American Rescue Plan Act, the State was advanced approximately $997 million in Federal Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) to support its response to and recovery from the COVID-19 public health emergency. The Maine Department of Labor (MDOL) partnered with subrecipients to support the administration of CSLFRF. MDOL has a documented policy that requires subrecipient risk evaluations. The Office of the State Auditor (OSA) tested 44 subrecipients paid by various State agencies under CSLFRF, including five MDOL subrecipients, to ensure that proper subrecipient monitoring was performed as required by Federal regulations. MDOL subrecipient monitoring procedures included providing Federal award information in grant award agreements, communicating program guidelines, establishing reporting requirements, providing technical assistance, and communicating with the subrecipients to discuss program performance; however, MDOL could not provide evidence to demonstrate that monitoring procedures were established in response to an evaluation of the subrecipient’s risk of noncompliance for the five MDOL subrecipients tested. OSA selected a nonstatistical random sample. Context: During fiscal year 2024, the Department provided $5.8 million to 39 MDOL subrecipients, from a total of $137.9 million provided to all CSLFRF subrecipients. Cause: • Lack of supervisory oversight • Lack of adequate procedures Effect: Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department enhance oversight over policies and procedures that require evaluation of each subrecipient’s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-20 Management’s Response: The Department agrees with this finding. MDOL received funds via the Maine Jobs and Recovery Plan to accomplish several goals across 20 unique initiatives. To best meet the goals of several initiatives, MDOL selected various partners to work with - via a competitive Request for Applications (RFA) process or other contractual arrangement. MDOL’s competitive RFA process required evaluating individual applicants’ previous experience in managing grants and delivering similar programs, which directly correlated with selection criteria and grantee scoring. After selection, grantees are required to submit quarterly performance reports and participate in grantee check-in calls at least twice per year. For grantees not on track to meet their performance goals, monthly calls were held with interim progress milestones set to track performance. While the above procedures were implemented for all subrecipients, going forward, the Department will document that monitoring procedures were established in response to an evaluation of the subrecipient’s risk of noncompliance. Contact: Kimberley Moore, Director, Bureau of Employment Services, MDOL, 207-620-0183 (State Number: 24-1699-04)
(2024-049) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education State Bureau: Commissioner’s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: • a description and identification number; • the source of funding, including the Federal Award Identification Number; • who holds title and the acquisition date; • the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; • the location, use and condition; and • any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. In the fiscal year 2022 and 2023 audits, the Office of the State Auditor identified that the Department did not have procedures in place to track SAU equipment purchases reimbursed with ESF. During fiscal year 2024, the Department developed policies and procedures to track SAU equipment purchases reimbursed with ESF. These procedures outline documentation to be obtained from SAUs during the next subrecipient monitoring activity. Because the Department has not completed the subrecipient monitoring to obtain the necessary documentation, the Department does not have assurance that: • a complete and accurate record of all equipment purchased with ESF was maintained by each SAU. • subrecipients are in compliance with Federal regulations for equipment and real property management. Context: In fiscal year 2024, ESF expenditures totaled $194.1 million, of which $175.1 million was paid to subrecipient SAUs. Because a complete and accurate record of equipment purchased with ESF is not maintained, the amount of equipment purchased in fiscal year 2024 is unknown. Cause: • Newly developed policies and procedures have not been fully implemented. • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • SAUs may not be in compliance with equipment and real property management requirements. • Recordkeeping for assets purchased with ESF is not adequate, and as a result, the assets may not be properly safeguarded. Recommendation: We recommend that the Department conduct necessary subrecipient monitoring activities to ensure that a complete and accurate record of all equipment purchased with ESF is maintained by the Department and by each SAU. This record should be documented and maintained in order to verify ongoing compliance with Federal regulations for equipment and real property management. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The former Office of Federal Emergency Relief Programs will incorporate the collection of this information in the fiscal year 2024 and 2025 annual performance report. All equipment purchased with ESF will be self-reported by each individual School Administrative Unit. Contact: Shelly Chasse-Johndro, Director, ESEA, DOE, 207-458-3180 (State Number: 24-1235-01)
(2024-049) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education State Bureau: Commissioner’s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: • a description and identification number; • the source of funding, including the Federal Award Identification Number; • who holds title and the acquisition date; • the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; • the location, use and condition; and • any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. In the fiscal year 2022 and 2023 audits, the Office of the State Auditor identified that the Department did not have procedures in place to track SAU equipment purchases reimbursed with ESF. During fiscal year 2024, the Department developed policies and procedures to track SAU equipment purchases reimbursed with ESF. These procedures outline documentation to be obtained from SAUs during the next subrecipient monitoring activity. Because the Department has not completed the subrecipient monitoring to obtain the necessary documentation, the Department does not have assurance that: • a complete and accurate record of all equipment purchased with ESF was maintained by each SAU. • subrecipients are in compliance with Federal regulations for equipment and real property management. Context: In fiscal year 2024, ESF expenditures totaled $194.1 million, of which $175.1 million was paid to subrecipient SAUs. Because a complete and accurate record of equipment purchased with ESF is not maintained, the amount of equipment purchased in fiscal year 2024 is unknown. Cause: • Newly developed policies and procedures have not been fully implemented. • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • SAUs may not be in compliance with equipment and real property management requirements. • Recordkeeping for assets purchased with ESF is not adequate, and as a result, the assets may not be properly safeguarded. Recommendation: We recommend that the Department conduct necessary subrecipient monitoring activities to ensure that a complete and accurate record of all equipment purchased with ESF is maintained by the Department and by each SAU. This record should be documented and maintained in order to verify ongoing compliance with Federal regulations for equipment and real property management. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The former Office of Federal Emergency Relief Programs will incorporate the collection of this information in the fiscal year 2024 and 2025 annual performance report. All equipment purchased with ESF will be self-reported by each individual School Administrative Unit. Contact: Shelly Chasse-Johndro, Director, ESEA, DOE, 207-458-3180 (State Number: 24-1235-01)
(2024-049) Title: Internal control over ESF subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Education State Bureau: Commissioner’s Office Federal Agency: U.S. Department of Education Assistance Listing Title: Education Stabilization Fund (ESF) (COVID-19) Assistance Listing Number: 84.425D, 84.425R, 84.425U Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.313; 2 CFR 200.332 The Department must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Department is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. For equipment acquired with Federal funding, records must be maintained that include: • a description and identification number; • the source of funding, including the Federal Award Identification Number; • who holds title and the acquisition date; • the cost of the property, including the percentage of Federal participation in the project costs for the Federal award under which the property was acquired; • the location, use and condition; and • any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Condition: The Education Stabilization Fund (ESF) provides funding to school administrative units (SAUs) to purchase equipment for use in preventing, preparing for, or responding to the COVID-19 pandemic. All SAU equipment purchases reimbursed with ESF are subject to applicable inventory control, log maintenance, and disposition requirements consistent with Federal regulations for equipment and real property management. In the fiscal year 2022 and 2023 audits, the Office of the State Auditor identified that the Department did not have procedures in place to track SAU equipment purchases reimbursed with ESF. During fiscal year 2024, the Department developed policies and procedures to track SAU equipment purchases reimbursed with ESF. These procedures outline documentation to be obtained from SAUs during the next subrecipient monitoring activity. Because the Department has not completed the subrecipient monitoring to obtain the necessary documentation, the Department does not have assurance that: • a complete and accurate record of all equipment purchased with ESF was maintained by each SAU. • subrecipients are in compliance with Federal regulations for equipment and real property management. Context: In fiscal year 2024, ESF expenditures totaled $194.1 million, of which $175.1 million was paid to subrecipient SAUs. Because a complete and accurate record of equipment purchased with ESF is not maintained, the amount of equipment purchased in fiscal year 2024 is unknown. Cause: • Newly developed policies and procedures have not been fully implemented. • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • SAUs may not be in compliance with equipment and real property management requirements. • Recordkeeping for assets purchased with ESF is not adequate, and as a result, the assets may not be properly safeguarded. Recommendation: We recommend that the Department conduct necessary subrecipient monitoring activities to ensure that a complete and accurate record of all equipment purchased with ESF is maintained by the Department and by each SAU. This record should be documented and maintained in order to verify ongoing compliance with Federal regulations for equipment and real property management. Corrective Action Plan: See F-21 Management’s Response: The Department agrees with this finding. The former Office of Federal Emergency Relief Programs will incorporate the collection of this information in the fiscal year 2024 and 2025 annual performance report. All equipment purchased with ESF will be self-reported by each individual School Administrative Unit. Contact: Shelly Chasse-Johndro, Director, ESEA, DOE, 207-458-3180 (State Number: 24-1235-01)
(2024-050) Title: Internal control over ICA program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the Immunization Cooperative Agreement (ICA) program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The ICA program’s subawards are either cost-settled or cost-settled by invoice. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, MeCDC’s monitoring procedures do not include review of subrecipient invoices to ensure ICA grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $1.9 million to subrecipients from ICA grant funds totaling $31.1 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the ICA program. • implement monitoring procedures over ICA program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-22 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1118-01)
(2024-050) Title: Internal control over ICA program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Maine Center for Disease Control & Prevention Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Immunization Cooperative Agreements (COVID-19) Assistance Listing Number: 93.268 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. Maine Center for Disease Control & Prevention (MeCDC) is responsible for ensuring the Immunization Cooperative Agreement (ICA) program’s subrecipients comply with Federal requirements; however, MeCDC’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The ICA program’s subawards are either cost-settled or cost-settled by invoice. Therefore, DCM and MeCDC procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, MeCDC’s monitoring procedures do not include review of subrecipient invoices to ensure ICA grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $1.9 million to subrecipients from ICA grant funds totaling $31.1 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that MeCDC: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the ICA program. • implement monitoring procedures over ICA program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-22 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1118-01)
(2024-055) Title: Internal control over TANF program subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Division of Contract Management Office for Family Independence Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. The Department must monitor the activities of the subrecipient as necessary to ensure that subawards are used for authorized purposes and in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. • For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement nor do they request supporting documentation at a subsequent date. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes. • Cash management requirements are not applicable for fee-for-service subawards. The Office for Family Independence (OFI) is responsible for ensuring the Temporary Assistance for Needy Families (TANF) program’s subrecipients comply with Federal requirements; however, OFI’s subrecipient monitoring procedures do not include review of subrecipient compliance with cash management requirements. The TANF program’s subawards are cost-settled, cost-settled by invoice, or fee-for-service. Therefore, DCM and OFI procedures do not support that subrecipient cash management is properly monitored as required by Federal regulations. Additionally, OFI’s monitoring procedures do not include review of subrecipient invoices to ensure TANF grant funds are used for allowable purposes. Context: In fiscal year 2024, the Department provided $34.2 million to subrecipients from TANF grant funds totaling $92.4 million. Cause: • Lack of adequate subrecipient monitoring procedures • Lack of centralized oversight of subrecipient monitoring Effect: • Noncompliance with Federal regulations • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that OFI: • collaborate with DCM to implement monitoring procedures over subrecipient cash management requirements to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for the TANF program. • implement monitoring procedures over TANF program subrecipients to ensure that grant funds are used for allowable purposes. Corrective Action Plan: See F-23 Management’s Response: The Department disagrees with this finding. The Department is in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement of the funds. Payments are made as close as administratively feasible. The Compliance Supplement suggested audit procedures for Cash Management for pass-through entities refers to 200.305(b)(1)...that same paragraph states that the timing and amount of advance payments must be as close as is administratively feasible. Contact: Anthony Madden, Deputy Director, Division of Audit, DHHS, 207-287-2834 Auditor’s Concluding Remarks: The Department’s interpretation of the applicable Federal regulation selectively emphasizes a single sentence from the broader paragraph, omitting critical context that informs the regulation’s full intent. According to the 2024 Compliance Supplement, pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of Federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the Federal award to the recipient (2 CFR section 200.305(b)(1)). 2 CFR section 200.305(b)(1) states that the recipient or subrecipient must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient or subrecipient, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. The Department references the phrase “as close as is administratively feasible” to justify their current process; however, this phrase is part of a broader requirement that establishes specific conditions for advance payments. The regulation requires that the timing between when the subrecipient receives Federal funds from the State and when the subrecipient disburses those funds is closely monitored to ensure that disbursements align with actual, immediate cash needs. A full reading of the provision indicates that “administratively feasible” does not negate the obligation to implement effective controls that minimize this gap, nor does it permit delays or inadequate oversight in Federal cash management. The Department could not provide evidence to demonstrate that they adequately monitored subrecipient cash drawdowns to ensure alignment with actual, immediate cash needs. Additionally, the Department does not require subrecipients to submit invoice documentation to substantiate the timing, amount, or nature of expenditures included in the request of Federal funds. As a result, the Department cannot demonstrate an adequate level of monitoring, as there is no evidence that they collect the necessary information to ensure compliance with Federal cash management requirements. Furthermore, the Department did not comment on the lack of monitoring procedures over subrecipient invoices to ensure Federal grant funds are used for allowable purposes. The finding remains as stated. (State Number: 24-1111-04)
(2024-056) Title: Internal control over TANF subrecipient risk evaluation procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Division of Contract Management Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to 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 2 CFR 200.332. Condition: The Department determines subrecipient monitoring procedures based on the justification for the selection of the subrecipient and the services provided. If a subaward is competitively bid, the Department’s Division of Contract Management’s (DCM) Competitive Procurement Unit seeks input from the Department of Health and Human Services’ Service Center, the Department’s Division of Audit, and DCM’s Contracts Unit regarding known issues with the provider who submitted the bid. Those responses are collected and provided to the evaluation team, which consists of various program personnel. However, for both competitively bid and non-competitively bid subawards, the level of subrecipient monitoring that the Department performs is based on the services provided and not based on the specific subrecipient. The Office of the State Auditor (OSA) selected six TANF subrecipients, which included 11 subawards that were competitively bid and eight subawards that were not competitively bid and found that for: • seven competitively bid subawards, DCM provided evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance; however, evidence could not be provided to support the level of subrecipient monitoring that was performed based on a risk evaluation. • four competitively bid subawards, DCM could not provide evidence to support that feedback was solicited from other Bureaus for any known issues or prior noncompliance. In addition, evidence could not be provided to support the level of subrecipient monitoring that was performed based on a risk evaluation. • eight non-competitively bid subawards, evidence could not be provided to support the level of subrecipient monitoring that was performed based on a risk evaluation. OSA selected a non-statistical random sample. Context: The Department provided $34.2 million from a total of $92.4 million to TANF subrecipients during fiscal year 2024. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients that are deemed higher risk may not be monitored on a more frequent basis. Conversely, subrecipients that are deemed lower risk may not be monitored on a less frequent basis, which would free resources and time to dedicate towards other higher risk subrecipients. Recommendation: We recommend that the Department implement policies and procedures that require evaluation of each subrecipient’s risk of noncompliance specifically for the purposes of determining the appropriate subrecipient monitoring to be performed. This will ensure subrecipients are monitored appropriately based on risk designation. Corrective Action Plan: See F-24 Management’s Response: The Department disagrees with this finding. The Department evaluates risk on its subrecipients for the purpose of determining the appropriate subrecipient monitoring in multiple ways. The first assessment of risk is when a subaward is competitively bid. The second assessment of risk is built into the Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP) in which higher risk subrecipients undergo a higher level of testing by Independent Public Accountants. Finally, the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: 2 CFR 200.332(b) states that the Department 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. The Department has indicated in Management’s Response that the criteria set forth in 2 CFR 200.332(b) have been met; however, the following rebuttals illustrate that the Department’s assessments are inconsistent with Federal regulation requirements: • The Department identifies the first assessment of risk: when a subaward is competitively bid. o While OSA acknowledges this does occur, not all subawards are competitively bid. As stated in the Condition, for both competitively bid and non-competitively bid subawards, the level of subrecipient monitoring that the Department performs is based on the services provided, rather than on an evaluation of risk assessed for specific subrecipients. • The Department identifies the second assessment of risk: built into MAAP in which higher risk subrecipients undergo a higher level of testing by independent public accountants. o The Department did not provide documentation to support that the level of subrecipient monitoring performed correlates to MAAP; and o A subrecipient deemed higher risk as the result of a risk evaluation in accordance with 2 CFR 200.332 may not be deemed higher risk in accordance with MAAP standards. • The Department identifies the third assessment of risk: the Social Service Unit of the Division of Audit performs a risk assessment and tests transactions for those subrecipients that have been determined to be higher risk. o The Department did not provide documentation to demonstrate that these procedures are performed as a result of a risk evaluation. The Department’s existing policies and procedures do not require nor provide support for the evaluation of each subrecipient’s risk of noncompliance specifically for the purpose of determining the appropriate subrecipient monitoring to be performed. The finding remains as stated. (State Number: 24-1111-07)
2024-003 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring (Significant Deficiency) Identification of the Federal Program: Assistance Listing Number: 21.027 Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of Treasury Pass-Through Entity: N/A Federal Award Number and Award Year: N/A Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): C.F.R. § 200.332 prescribes that the pass-through entity must conduct monitoring activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. Condition: During the review of subrecipient monitoring records, several areas were noted for improvement: • For two (2) out of three (3) subrecipients, the official agreement was not formally documented. One subrecipient agreement was executed via internal resolution and email approval; another subrecipient’s agreement lacked sufficient identification and award details, omitting key funding terminology. • The City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect. For all three (3) subrecipients, the City is unable to provide any documentation of the review of Financial and Performance Reports. • The required Pre-Award Risk Assessments have not been provided for at least one subrecipient because the City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect. Cause: These conditions appear to stem from transitional challenges as the City implemented the new Monitoring Policy on April 17, 2024. In addition, there is an opportunity to enhance the documentation processes by moving from informal approvals to more formal subrecipient agreements, and by ensuring that Pre-Award Risk Assessments are consistently documented and maintained. Effect or Potential Effect: The City was not able to do the necessary subrecipient monitoring activities resulted to internal control and compliance requirement finding. Questioned Costs: None. Context: See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Yes. See prior year finding 2023-006. Recommendation: We recommended the City to fully implement its Monitoring Policy by formalizing subrecipient agreements, strengthening internal controls, and establishing consistent processes for documenting Pre-Award Risk Assessments and Financial and Performance Reports. Views of Responsible Officials: Management concurs.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.332, which established requirements over subawards for pass-through entities and states, in part: All pass-through entities must: a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in §200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414. c) 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 paragraph (f) of this section; d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; f) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (c) of this section), the CFR lists monitoring tools that may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals. We noted the District did not perform a subrecipient checklist prior to allocating funds. Additionally, the District did not complete monitoring procedures for subrecipients. Further, we noted the District signed a service agreement with the subrecipient; however, the agreement did not specifically identify the subrecipient as a subrecipient or include all award information as required above. Per inquiry of the Treasurer, the District does not review audit reports of the subrecipient for any noted deficiencies. The District should implement procedures to verify that all required reviews and any additional required follow ups are completed and accurately documented. Further, the District should ensure all required information is included in the subrecipient agreement. We recommend that the District request copies of annual audit reports of the subrecipient to review the report for any potential deficiencies.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.332, which established requirements over subawards for pass-through entities and states, in part: All pass-through entities must: a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in §200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414. c) 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 paragraph (f) of this section; d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. e) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved; f) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (c) of this section), the CFR lists monitoring tools that may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals. We noted the District did not perform a subrecipient checklist prior to allocating funds. Additionally, the District did not complete monitoring procedures for subrecipients. Further, we noted the District signed a service agreement with the subrecipient; however, the agreement did not specifically identify the subrecipient as a subrecipient or include all award information as required above. Per inquiry of the Treasurer, the District does not review audit reports of the subrecipient for any noted deficiencies. The District should implement procedures to verify that all required reviews and any additional required follow ups are completed and accurately documented. Further, the District should ensure all required information is included in the subrecipient agreement. We recommend that the District request copies of annual audit reports of the subrecipient to review the report for any potential deficiencies.
Criteria: 2 CFR 200.332(b)(1) requires every subaward to include required information and is clearly identified. Condition: Review of the agreements with three subrecipients identified certain communications required were not included in the language of the agreement. Cause: The Center was not aware of the information that is required to be included in the subaward agreement. Effect: The Center was not in compliance with 2 CFR 200.332(b)(1). Questioned Costs: None Recommendation: Management should review and refine its subaward agreements to include the necessary information as required by 2 CFR 200.332(b)(1). Views of Responsible Officials: Management agrees with the finding; see corrective action plan.
Reference Number: 2024-006 – Subrecipient Monitoring Federal Program Title: WIOA Cluster Federal Assistance Listing Number: 17.258 BWC Federal Agency: Department of Labor (DOL) Pass-Through Entity: State of California Employment Development Department Federal Award Number and Year: AA211079 Fiscal Year 2023-2024 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332, all pass-through entities (PTE) must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (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. (c) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. (d) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Condition During our audit of compliance with subrecipient monitoring, we noted that for one (1) subrecipient agreement, the agreement did not include one or more of the required elements defined in 2 CFR § 200.332 (a)(1) in the subrecipient’s agreement. For the same one (1) subrecipient, the Organization did not perform the risk assessment procedures defined in 2 CFR § 200.332 (b) or verify that the subrecipient should be audited as defined in 2 CFR § 200.332 (d). Cause Due to significant turnover in key personnel in the Organization’s finance department and management in past years, the Organization has no documented policies and procedures for subrecipient monitoring. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to provide all the required subaward information may result in subrecipients incorrectly reporting on federal pass-through awards in their Single Audit reports. Failure to document subrecipient risk assessment and verifying the subrecipient audit requirement result in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332. Questioned Costs Questioned costs were not determinable. Context For one (1) subrecipient selected for testing, with total expenditures of $325,977, from a population of one (1) subrecipient, the Company did not communicate all of the required subaward data elements, did not perform subrecipient risk assessment, and did not verify if subrecipient received audit. The sample was not a statistically valid sample. Recommendation We recommend that the Organization perform the following: (1) Develop procedures for future subrecipient agreements to ensure agreements will include all the required elements of 2 CFR § 200.332 (a)(1). (2) For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR § 200.332 (a)(1). (3) Maintain sufficient records of subrecipient risk assessment and monitoring subrecipients in accordance with subrecipient monitoring requirements noted in 2 CFR § 200.332 (b) – (d). Views of Responsible Officials and Planned Corrective Action Person responsible: Leona Smith Di Faustino, Interim Executive Director Corrective Action Plan: The Organization will update its subrecipient monitoring policies to ensure all required elements as defined in 2 CFR § 200.332 (a)(1) are included in subrecipient agreements, Additionally, a checklist will be established to perform a risk assessment process to evaluate subrecipient risk prior to contract execution and annually thereafter and to verify each subrecipient’s that meets the audit threshold and if required has a current Single Audit on file or is otherwise in compliance. Anticipated Implementation Date: July 1, 2025
Dairy Business Innovation Initiatives—Subrecipient Monitoring Background: During FY 2023-24, UW-Madison expended $9.9 million in federal funds for the DBII grant, which is administered by the U.S. Department of Agriculture. This grant program was first authorized in 2018, and UW-Madison has received annual awards for the program since 2019. UW-Madison subawarded approximately 60.0 percent of each DBII award it received to a subrecipient. The subrecipient’s primary function was to award grants to farmers or dairy processors to diversify farming activities, create value-added products, or enhance dairy export programs. Criteria: Under 2 CFR s. 200.332 (e), UW-Madison is required 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. Additionally, under 2 CFR s. 200.332 (f), pass-through entities must verify that a subrecipient is audited as required by 2 CFR Part 200 Subpart F, which requires that certain entities expending $750,000 or more of federal funds during a year have a single audit performed. UW Madison’s Research and Sponsored Programs (RSP) is responsible for monitoring subrecipient audit requirements prior to entering into contracts. As part of fulfilling its requirements under 2 CFR s. 200.332 (d), RSP requires subrecipients to complete an annual audit certification and provide a copy of its single audit, if applicable. Condition: We identified from UW Madison’s expenditures that it made payments to the DBII subrecipient of more than $750,000 during FY 2022-23 and, therefore, the subrecipient should have been subject to a single audit. However, UW Madison did not sufficiently monitor the subrecipient during FY 2023 24 to ensure the subrecipient was audited as required by 2 CFR s. 200.332 (f). The subrecipient did not have a FY 2022-23 single audit performed. Context: UW Madison made payments totaling $6.3 million to the DBII subrecipient during FY 2023 24 with a similar amount provided in the prior fiscal year. We reviewed the April 2024 annual audit certification submitted by the subrecipient, which included whether the subrecipient had completed a single audit for FY 2022 23. We searched the federal audit clearinghouse to determine whether the DBII subrecipient had submitted a single audit report. After we raised the issue, UW Madison contacted the subrecipient. UW-Madison indicated to us that the subrecipient had misunderstood the requirements. Questioned Costs: None. Effect: Without adequate monitoring, there is an increased risk of unallowable costs being charged to the DBII grant, or other noncompliance with federal regulations. Cause: RSP did not adequately evaluate the annual audit certification provided by the DBII subrecipient or perform other procedures to identify that an audit was required for the subrecipient. Recommendation: We recommend the University of Wisconsin Madison update its procedures for reviewing annual audit certifications received from subrecipients to include reviewing its expenditures with a subrecipient or other procedures to assist it in assessing subrecipient responses. Finding 2024-701: Dairy Business Innovation Initiatives—Subrecipient Monitoring Dairy Business Innovation Initiatives (Assistance Listing number 10.176) Award Numbers Award Years AM200100XXXXG001 2020 21DBIWI1006 2021 AM21DBIWI1010 2022 AM22DBIWI1014 2022 23DBIWI1019 2023 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the University of Wisconsin-Madison: The University of Wisconsin-Madison agrees with the audit finding and recommendation.
Supplemental Nutrition Assistance Program—Subrecipient Monitoring Background: The USDA provides funding to DHS for the Supplemental Nutrition Assistance Program (SNAP) Cluster, which provides funding for SNAP benefits (Assistance Listing number 10.551). These SNAP benefits assist low-income households to buy the food needed for good health. The SNAP Cluster also provides funding for the State Administrative Matching Grants for SNAP (Assistance Listing number 10.561), which is used to pay administrative costs related to the provision and oversight of benefits. To administer the SNAP program, DHS contracts with ten multi-county income maintenance consortia, which are made up of county staff. These income maintenance consortia are responsible for a variety of administrative tasks, including program enrollment and caseload management, and are required to meet certain performance measures specified in the contract. DHS uses GEARS to process the reimbursement requests for these consortia, which are considered subrecipients. Criteria: DHS administers federal programs that are subject to Uniform Guidance. Uniform Guidance includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Condition: We found DHS did not perform the required risk assessments for the income maintenance consortia in FY 2020-21, FY 2021-22, FY 2022-23, and FY 2023-24. In addition, DHS did not define the level of monitoring to be performed based on the completed risk assessments. For example, there was no documentation to indicate the level monitoring required for low-, moderate-, and high-risk subrecipients, including the reliance that could be placed on the review of subrecipient single audit reports and whether additional fiscal monitoring such as a review of financial information to assess the allowability of reimbursement requests would be needed. DHS did perform monitoring procedures for each income maintenance consortia related to the contractual performance measures, including standards for timely processing of applications. DHS also performed annual management evaluations related to specific topics. Context: DHS expended $105.7 million in federal funds to administer the SNAP program during FY 2023-24, including $61.3 million that was provided to subrecipients, of which $37.5 million was provided to the income maintenance consortia agencies for program administration. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients and its policies and procedures for monitoring subrecipients to ensure the subaward was used for authorized purposes, complied with the terms and conditions of the subaward, and achieved performance goals. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures were insufficient, and because DHS did not perform any required risk assessments in the last four fiscal years, DHS is at increased risk of noncompliance with federal regulations for the SNAP program. Further, there is an increased risk of improper payments for the SNAP program. Cause: DHS did not complete the required risk assessments or develop and document a plan related to the monitoring necessary for each level of subrecipient risk. Although DHS performed certain monitoring related to contractual performance measures, these procedures were not part of a documented monitoring plan and there was no assessment of additional procedures that could have been determined necessary based upon the risk assessments. Recommendation: We recommend the Wisconsin Department of Health Services: -complete risk assessments for each income maintenance consortia receiving administrative funding under the Supplemental Nutrition Assistance Program; -develop and document a written monitoring plan that includes a description of the monitoring expected for low-, moderate-, and high-risk subrecipients to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals; -specify in the written monitoring plan how existing monitoring procedures are incorporated into the plan and assess what additional monitoring procedures may be needed; and -implement the written monitoring plan and maintain documentation related to the monitoring performed. Finding 2024-308: Supplemental Nutrition Assistance Program—Subrecipient Monitoring State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (Assistance Listing number 10.561) Award Numbers Award Years 2WI400115 2023 2WI400115 2024 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Geographic Programs - Great Lakes Restoration Initiative—Subrecipient Monitoring Background: DNR receives federal funding from the EPA for the GLRI program. The objective of the GLRI program is to advance protection and restoration of the Great Lakes Basin Ecosystem through the funding of various projects. To administer the GLRI program, DNR contracts with subrecipients located around the State, including counties, cities, and sewage districts. During our FY 2022-23 single audit (report 24-3), we identified that DNR did not perform subrecipient risk assessments or have a plan to monitor subrecipients for the GLRI program based on the risk assessments. Further, DNR did not have sufficient procedures in place to ensure all GLRI subrecipient single audit reports were being obtained and reviewed. We recommended that DNR develop a written monitoring plan for the GLRI program that includes policies and procedures for: -completing risk assessments for each subrecipient; -the specific monitoring steps that are required based on the level of subrecipient risk identified in a risk assessment; -independently identifying and reviewing subrecipient single audit reports, if applicable; and -maintaining documentation of all subrecipient monitoring activities (Finding 2023-800). During FY 2023-24, and in response to our recommendations, DNR developed policies and procedures for monitoring and performing risk assessments of the GLRI subrecipients. In addition, DNR developed procedures to ensure GLRI subrecipient single audit reports were being obtained and reviewed. DNR completed its review of these reports in May 2024. Criteria: DNR administers federal programs that are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Uniform Guidance includes three requirements related to the monitoring of subrecipients. First, 2 CFR s. 200.332 (a) (1) requires DNR to communicate certain award information to subrecipients at the time of the subaward. Second, 2 CFR s. 200.332 (b) requires DNR to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring. Finally, 2 CFR s. 200.332 (d) through (f) requires DNR to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. An EPA subaward policy further clarifies that the Uniform Guidance provisions are applicable to its grant programs, including a requirement for DNR to establish and follow a system for evaluating the risks of subrecipient noncompliance with laws, regulations, and the terms and conditions of the subaward, as required by 2 CFR ss. 200.332 (b) and (d). This policy also requires DNR to document its evaluations. In addition, EPA’s policy requires that DNR establish and follow a process for deciding whether to impose additional requirements on subrecipients based on the risk assessments. Condition: In response to our FY 2023-24 recommendation, in June 2024 DNR developed policies and procedures for monitoring GLRI subrecipients, including procedures for completing a risk assessment for each GLRI subrecipient and ranking each subrecipient based on the risk assessment to determine the level of monitoring needed. However, DNR did not complete risk assessments for any of its GLRI subrecipients during FY 2023-24. Context: DNR expended $15.5 million under the GLRI program during FY 2023-24, including $4.0 million that it provided to 21 subrecipients. We interviewed DNR staff to gain an understanding of its procedures for monitoring subrecipients. We reviewed the agreements between DNR and the subrecipients to identify whether DNR had communicated the required award information to them. We also reviewed monitoring activities DNR performed for the GLRI program, including DNR’s process to review subrecipient single audit reports and DNR’s monitoring of subrecipients through progress reporting and reimbursement requests. Finally, we reviewed and discussed with DNR staff the new procedures for completing subrecipient risk assessments. Questioned Costs: None. Effect: Because DNR did not comply with all subrecipient monitoring compliance requirements for the GLRI program, there is a higher risk that DNR and its GLRI subrecipients are not in compliance with all federal requirements. Cause: Although DNR developed policies and procedures for monitoring and performing risk assessments for the GLRI subrecipients, it did not complete risk assessments for the GLRI subrecipients during FY 2023-24. DNR indicated it would implement its policies and procedures for monitoring and performing risk assessments for the GLRI subrecipients as new subawards are created in FY 2024-25. However, DNR should also perform risk assessments for existing GLRI subrecipients to ensure its monitoring of the activities for ongoing GLRI projects is appropriate. Recommendation: We recommend the Wisconsin Department of Natural Resources implement its new monitoring policies and procedures for completing risk assessments for each subrecipient of the Geographic Programs - Great Lakes Restoration Initiative program, including for all its existing subrecipients for ongoing projects. Finding 2024-801: Geographic Programs - Great Lakes Restoration Initiative—Subrecipient Monitoring Geographic Programs - Great Lakes Restoration Initiative (Assistance Listing number 66.469) Award Numbers Award Years 00E02349 2018 00E02393 2018 00E02456 2019 00E02490 2019 00E02824 2020 00E02975 2021 00E02979 2021 00E03010 2021 03E00712 2022 01E03010 2022 00E03149 2022 00E03250 2022 00E03252 2022 00E03490 2023 00E03486 2023 00E03589 2023 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Natural Resources: The Wisconsin Department of Natural Resources agrees with the audit finding and recommendation.
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)—Subrecipient Monitoring Background: The U.S. Department of Health and Human Services, Centers for Disease Control and Prevention (CDC) provides funding to DHS under the ELC grant. The ELC grant provides financial support and technical assistance to the State to detect, prevent, respond to, and control emerging infectious diseases. To administer the award under the ELC grant, DHS contracted with a variety of subrecipients, including local and tribal public health agencies and nonprofit entities. DHS uses GEARS to process the reimbursement requests for the majority of subrecipients. Criteria: DHS administers federal programs that are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Uniform Guidance includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Finally, DHS policies in the Division of Public Health Bureau of Operations Contract Management Manual suggest that when GEARS is used to process reimbursement requests, grant administrators should use enhanced expenditure reporting from subrecipients to ensure expenditures are allowable. These policies note that additional verification may be performed by reviewing subrecipient financial records through a desk review or an on-site visit. Condition: DHS did not complete subrecipient risk assessments for two tribal governments that were subrecipients of the ELC grant. In addition, DHS did not define the level of monitoring to be performed based on the completed risk assessments. There was no documentation to indicate the level of monitoring required for low-, moderate-, and high-risk subrecipients, such as when DHS would be required to review subrecipient invoices through a desk review or an on-site visit. Further, DHS did not develop procedures for assessing and documenting desk reviews of subrecipient invoices, for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports, and for documenting management oversight of the monitoring plan. Context: DHS expended $46.9 million under the ELC grant during FY 2023-24, including $9.1 million that was provided to subrecipients. Of the $9.1 million provided to subrecipients, $4.8 million was processed through GEARS. In FY 2023-24 DHS provided funding to 73 subrecipients to administer the program, including six tribal governments. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients, including its use of GEARS and DHS policies and procedures for monitoring subrecipients. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures are insufficient, DHS is at increased risk of noncompliance with federal regulations for the ELC grant. There is also an increased risk of improper payments for the ELC grant. Cause: DHS staff noted that turnover in staff responsible for completion of risk assessments for tribal public health departments contributed to the risk assessments not being completed. DHS Division of Public Health established an internal control checklist for subrecipient monitoring in order to help guide staff in completing subrecipient monitoring, including prompts for staff to establish monitoring steps required for low-, moderate-, and high-risk subrecipients. However, this checklist was not implemented until July 2024. Recommendation: We recommend the Wisconsin Department of Health Services: -develop a written monitoring plan for the Epidemiology and Laboratory Capacity for Infectious Diseases grant that includes a description of the subrecipient monitoring expected for low-, moderate-, and high-risk subrecipients; procedures for completing and documenting desk reviews of subrecipient invoices; and procedures for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports; -provide training on the monitoring plan to staff with responsibilities for subrecipient monitoring activities; and -develop and implement management oversight procedures to ensure monitoring is being completed and documented. Finding 2024-305: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)—Subrecipient Monitoring Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing number 93.323) Award Number Award Years NU50CK000534 2019-2024 Questioned Costs: None COVID-19—Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing number 93.323) Award Number Award Years NU50CK000534 2019-2024 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)—Subrecipient Monitoring Background: The U.S. Department of Health and Human Services, Centers for Disease Control and Prevention (CDC) provides funding to DHS under the ELC grant. The ELC grant provides financial support and technical assistance to the State to detect, prevent, respond to, and control emerging infectious diseases. To administer the award under the ELC grant, DHS contracted with a variety of subrecipients, including local and tribal public health agencies and nonprofit entities. DHS uses GEARS to process the reimbursement requests for the majority of subrecipients. Criteria: DHS administers federal programs that are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Uniform Guidance includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Finally, DHS policies in the Division of Public Health Bureau of Operations Contract Management Manual suggest that when GEARS is used to process reimbursement requests, grant administrators should use enhanced expenditure reporting from subrecipients to ensure expenditures are allowable. These policies note that additional verification may be performed by reviewing subrecipient financial records through a desk review or an on-site visit. Condition: DHS did not complete subrecipient risk assessments for two tribal governments that were subrecipients of the ELC grant. In addition, DHS did not define the level of monitoring to be performed based on the completed risk assessments. There was no documentation to indicate the level of monitoring required for low-, moderate-, and high-risk subrecipients, such as when DHS would be required to review subrecipient invoices through a desk review or an on-site visit. Further, DHS did not develop procedures for assessing and documenting desk reviews of subrecipient invoices, for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports, and for documenting management oversight of the monitoring plan. Context: DHS expended $46.9 million under the ELC grant during FY 2023-24, including $9.1 million that was provided to subrecipients. Of the $9.1 million provided to subrecipients, $4.8 million was processed through GEARS. In FY 2023-24 DHS provided funding to 73 subrecipients to administer the program, including six tribal governments. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients, including its use of GEARS and DHS policies and procedures for monitoring subrecipients. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures are insufficient, DHS is at increased risk of noncompliance with federal regulations for the ELC grant. There is also an increased risk of improper payments for the ELC grant. Cause: DHS staff noted that turnover in staff responsible for completion of risk assessments for tribal public health departments contributed to the risk assessments not being completed. DHS Division of Public Health established an internal control checklist for subrecipient monitoring in order to help guide staff in completing subrecipient monitoring, including prompts for staff to establish monitoring steps required for low-, moderate-, and high-risk subrecipients. However, this checklist was not implemented until July 2024. Recommendation: We recommend the Wisconsin Department of Health Services: -develop a written monitoring plan for the Epidemiology and Laboratory Capacity for Infectious Diseases grant that includes a description of the subrecipient monitoring expected for low-, moderate-, and high-risk subrecipients; procedures for completing and documenting desk reviews of subrecipient invoices; and procedures for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports; -provide training on the monitoring plan to staff with responsibilities for subrecipient monitoring activities; and -develop and implement management oversight procedures to ensure monitoring is being completed and documented. Finding 2024-305: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)—Subrecipient Monitoring Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing number 93.323) Award Number Award Years NU50CK000534 2019-2024 Questioned Costs: None COVID-19—Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing number 93.323) Award Number Award Years NU50CK000534 2019-2024 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response—Subrecipient Monitoring Background: The CDC provides funding to DHS under the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response grant, which DHS refers to as the Public Health Emergency Response grant. The Public Health Emergency Response grant is intended to provide funding to rapidly respond to public health emergencies as identified by the CDC. DHS received three awards from the CDC to be funded by the Public Health Emergency Response grant: COVID Crisis Response, which ended during FY 2022-23; COVID Public Health Workforce; and Monkey Pox Crisis Response. Under the COVID Public Health Workforce award, DHS contracted with subrecipients, including local and tribal public health agencies and cooperative educational service agencies (CESAs), to administer the award. DHS uses GEARS to process the reimbursement requests for the local and tribal public health agencies. Reimbursement requests for CESAs are processed directly through STAR, the State’s accounting system, based upon review and approval of detailed invoices. Under the Monkey Pox Crisis Response award, DHS contracted with a nonprofit organization and local public health agencies to administer the award, and used GEARS to process reimbursement requests from the subrecipients. During our FY 2022-23 audit (report 24-3), we identified concerns with subrecipient monitoring for the Public Health Emergency Response grant and recommended DHS review the tracking spreadsheets and complete its assessment of progress and fiscal reports and consideration of unallowable costs, and return funding to the federal government for unallowable costs identified; develop a monitoring plan; develop a central location to maintain monitoring documentation; and provide sufficient training to staff administering the Public Health Emergency Response grant (Finding 2023-306). DHS agreed with our recommendations and noted specific steps in its corrective action plan to address the concerns. Criteria: DHS administers federal programs that are subject to Uniform Guidance, which includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Finally, DHS policies in the Division of Public Health Bureau of Operations Contract Management Manual suggest that when GEARS is used to process reimbursement requests, grant administrators should use enhanced expenditure reporting from subrecipients to ensure expenditures are allowable. These policies note that additional verification may be performed by reviewing subrecipient financial records through a desk review or an on-site visit. Condition: In response to our prior year recommendation, DHS developed an internal control checklist for subrecipient monitoring, established a central location for filing monitoring documentation, and provided training to remind staff of their responsibilities related to subrecipient monitoring. However, the internal control checklist was implemented through a DHS, Division of Health, Bureau of Operations policy in July 2024, and we continued to identify concerns with subrecipient monitoring during FY 2023-24. We found that DHS did not provide documentation that it completed subrecipient risk assessments for three local public health agencies and seven tribal public health agencies that were subrecipients under the Public Health Emergency Response grant and had a contract modification in FY 2023-24. Further, DHS staff indicated that subrecipient risk assessments were not completed for seven of the nine tribal public health agencies when they were first subgranted funding in FY 2021-22. In addition, DHS did not define the level of monitoring to be performed based on the completed risk assessments. For example, there was no documentation to indicate the level of monitoring required for low-, moderate-, and high-risk subrecipients, such as when it would be required to review subrecipient invoices through a desk review or an on-site visit. Further, DHS did not develop procedures for assessing and documenting desk reviews of subrecipient invoices, for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports, and for documenting management oversight of the monitoring plan. Finally, DHS did not address the prior year recommendation regarding incomplete information and the identification of potential unallowable costs on the FY 2022-23 tracking spreadsheets. Context: DHS expended $14.7 million under the Public Health Emergency Response grant during FY 2023-24, including $8.3 million that was provided to subrecipients. Of the $8.3 million provided to subrecipients, $3.5 million was processed through GEARS. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients, including its use of GEARS; DHS policies and procedures for monitoring subrecipients; and the steps taken to address our prior year recommendations. For the COVID Public Health Workforce award, DHS contracted with 79 local and tribal public health agencies and 12 CESAs to administer the award. For the Monkey Pox Crisis Response award, DHS contracted with three subrecipients to administer the award. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures are insufficient, DHS is at increased risk of noncompliance with federal regulations for the Public Health Emergency Response grant. There is also an increased risk of improper payments for the Public Health Emergency Response grant. Cause: Although DHS implemented some new subrecipient monitoring procedures and provided training to staff on subrecipient monitoring activities, it continued to have deficiencies in its procedures and monitoring of subrecipients for the Public Health Emergency Response grant during FY 2023-24. DHS indicated it continued to review and update its procedures in FY 2024-25. Recommendation: We recommend the Wisconsin Department of Health Services: -complete its review of the FY 2022-23 subrecipient tracking spreadsheets and complete the assessment of the progress and fiscal reports and consideration of unallowable costs, document the conclusion, and return funding to the federal government if costs were determined to be unallowable; -complete risk assessments for the three local and seven tribal public health agencies receiving funding under the Public Health Emergency Response grant during FY 2023-24 and adjust subrecipient monitoring appropriately; -continue to develop a written monitoring plan for the Public Health Emergency Response grant that includes a description of the subrecipient monitoring expected for low-, moderate-, and high-risk subrecipients; procedures for completing and documenting desk reviews of subrecipient invoices; and procedures for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports; -provide training on the monitoring plan to staff with responsibilities for subrecipient monitoring activities; and -develop and implement management oversight procedures to ensure monitoring is being completed and documented. Finding 2024-307: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response—Subrecipient Monitoring Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response (Assistance Listing number 93.354) Award Number Award Year 6 NU90TP922227-01 2023 Questioned Costs: None COVID-19—Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response (Assistance Listing number 93.354) Award Numbers Award Years 6 NU90TP922078-01 2020 6 NU90TP922132-01 2021 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response—Subrecipient Monitoring Background: The CDC provides funding to DHS under the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response grant, which DHS refers to as the Public Health Emergency Response grant. The Public Health Emergency Response grant is intended to provide funding to rapidly respond to public health emergencies as identified by the CDC. DHS received three awards from the CDC to be funded by the Public Health Emergency Response grant: COVID Crisis Response, which ended during FY 2022-23; COVID Public Health Workforce; and Monkey Pox Crisis Response. Under the COVID Public Health Workforce award, DHS contracted with subrecipients, including local and tribal public health agencies and cooperative educational service agencies (CESAs), to administer the award. DHS uses GEARS to process the reimbursement requests for the local and tribal public health agencies. Reimbursement requests for CESAs are processed directly through STAR, the State’s accounting system, based upon review and approval of detailed invoices. Under the Monkey Pox Crisis Response award, DHS contracted with a nonprofit organization and local public health agencies to administer the award, and used GEARS to process reimbursement requests from the subrecipients. During our FY 2022-23 audit (report 24-3), we identified concerns with subrecipient monitoring for the Public Health Emergency Response grant and recommended DHS review the tracking spreadsheets and complete its assessment of progress and fiscal reports and consideration of unallowable costs, and return funding to the federal government for unallowable costs identified; develop a monitoring plan; develop a central location to maintain monitoring documentation; and provide sufficient training to staff administering the Public Health Emergency Response grant (Finding 2023-306). DHS agreed with our recommendations and noted specific steps in its corrective action plan to address the concerns. Criteria: DHS administers federal programs that are subject to Uniform Guidance, which includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Finally, DHS policies in the Division of Public Health Bureau of Operations Contract Management Manual suggest that when GEARS is used to process reimbursement requests, grant administrators should use enhanced expenditure reporting from subrecipients to ensure expenditures are allowable. These policies note that additional verification may be performed by reviewing subrecipient financial records through a desk review or an on-site visit. Condition: In response to our prior year recommendation, DHS developed an internal control checklist for subrecipient monitoring, established a central location for filing monitoring documentation, and provided training to remind staff of their responsibilities related to subrecipient monitoring. However, the internal control checklist was implemented through a DHS, Division of Health, Bureau of Operations policy in July 2024, and we continued to identify concerns with subrecipient monitoring during FY 2023-24. We found that DHS did not provide documentation that it completed subrecipient risk assessments for three local public health agencies and seven tribal public health agencies that were subrecipients under the Public Health Emergency Response grant and had a contract modification in FY 2023-24. Further, DHS staff indicated that subrecipient risk assessments were not completed for seven of the nine tribal public health agencies when they were first subgranted funding in FY 2021-22. In addition, DHS did not define the level of monitoring to be performed based on the completed risk assessments. For example, there was no documentation to indicate the level of monitoring required for low-, moderate-, and high-risk subrecipients, such as when it would be required to review subrecipient invoices through a desk review or an on-site visit. Further, DHS did not develop procedures for assessing and documenting desk reviews of subrecipient invoices, for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports, and for documenting management oversight of the monitoring plan. Finally, DHS did not address the prior year recommendation regarding incomplete information and the identification of potential unallowable costs on the FY 2022-23 tracking spreadsheets. Context: DHS expended $14.7 million under the Public Health Emergency Response grant during FY 2023-24, including $8.3 million that was provided to subrecipients. Of the $8.3 million provided to subrecipients, $3.5 million was processed through GEARS. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients, including its use of GEARS; DHS policies and procedures for monitoring subrecipients; and the steps taken to address our prior year recommendations. For the COVID Public Health Workforce award, DHS contracted with 79 local and tribal public health agencies and 12 CESAs to administer the award. For the Monkey Pox Crisis Response award, DHS contracted with three subrecipients to administer the award. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures are insufficient, DHS is at increased risk of noncompliance with federal regulations for the Public Health Emergency Response grant. There is also an increased risk of improper payments for the Public Health Emergency Response grant. Cause: Although DHS implemented some new subrecipient monitoring procedures and provided training to staff on subrecipient monitoring activities, it continued to have deficiencies in its procedures and monitoring of subrecipients for the Public Health Emergency Response grant during FY 2023-24. DHS indicated it continued to review and update its procedures in FY 2024-25. Recommendation: We recommend the Wisconsin Department of Health Services: -complete its review of the FY 2022-23 subrecipient tracking spreadsheets and complete the assessment of the progress and fiscal reports and consideration of unallowable costs, document the conclusion, and return funding to the federal government if costs were determined to be unallowable; -complete risk assessments for the three local and seven tribal public health agencies receiving funding under the Public Health Emergency Response grant during FY 2023-24 and adjust subrecipient monitoring appropriately; -continue to develop a written monitoring plan for the Public Health Emergency Response grant that includes a description of the subrecipient monitoring expected for low-, moderate-, and high-risk subrecipients; procedures for completing and documenting desk reviews of subrecipient invoices; and procedures for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports; -provide training on the monitoring plan to staff with responsibilities for subrecipient monitoring activities; and -develop and implement management oversight procedures to ensure monitoring is being completed and documented. Finding 2024-307: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response—Subrecipient Monitoring Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response (Assistance Listing number 93.354) Award Number Award Year 6 NU90TP922227-01 2023 Questioned Costs: None COVID-19—Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response (Assistance Listing number 93.354) Award Numbers Award Years 6 NU90TP922078-01 2020 6 NU90TP922132-01 2021 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises—Subrecipient Monitoring Background: The CDC provides funding to DHS under the Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises grant, which DHS refers to as the Health Disparities grant. The grant is intended to address health disparities for high-risk and underserved populations to address COVID-19 related health disparities and advance health equity. To administer the award under the Health Disparities grant, DHS contracted with a variety of subrecipients, including local and tribal public health agencies and nonprofit entities. DHS uses GEARS to process the reimbursement requests for the majority of its subrecipients. During our FY 2022-23 audit (report 24-3), we identified concerns with subrecipient monitoring for the Health Disparities grant and recommended DHS develop a monitoring plan, develop a central location to maintain monitoring documentation, and provide sufficient training to staff administering the Health Disparities grant (Finding 2023-305). DHS agreed with our recommendation and noted specific steps in its corrective action plan to address the concerns. Criteria: DHS administers federal programs that are subject to Uniform Guidance, which includes the following requirements related to the monitoring of subrecipients: -2 CFR s. 200.332 (b) requires DHS to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring; and -2 CFR s. 200.332 (d) through (f) requires DHS to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. DHS established policies requiring grant administrators to conduct a risk assessment for every subaward of federal funds and to use the risk assessment to determine the frequency and extent of monitoring. DHS policies include a subrecipient risk assessment template to assist grant administrators in completing the risk assessment and determining the risk level of the subrecipient. DHS policies also require grant administrators to monitor subrecipients based on the risk assessments. DHS policies indicate that monitoring may include providing subrecipient training and technical assistance; performing desk reviews of the subrecipient’s records; and performing on-site reviews of the subrecipient’s records and operations. Finally, DHS policies in the Division of Public Health Bureau of Operations Contract Management Manual suggest that when GEARS is used to process reimbursement requests, grant administrators should use enhanced expenditure reporting from subrecipients to ensure expenditures are allowable. These policies note that additional verification may be performed by reviewing subrecipient financial records through a desk review or an on-site visit. Condition: In response to our prior year recommendation, DHS developed an internal control checklist for subrecipient monitoring, established a central location for filing monitoring documentation, and provided training to remind staff of their responsibilities related to subrecipient monitoring. However, the internal control checklist was implemented through a DHS, Division of Public Health, Bureau of Operations policy in July 2024, and we continued to identify concerns with subrecipient monitoring during FY 2023-24. We found that DHS did not define the level of monitoring to be performed based on the completed risk assessments. For example, there was no documentation to indicate the level of monitoring required for low-, moderate-, and high-risk subrecipients, such as when it would be required to review subrecipient invoices through a desk review or an on-site visit. Further, DHS did not develop procedures for assessing and documenting desk reviews of subrecipient invoices, for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports, and for documenting management oversight of the monitoring plan. Context: DHS expended $7.9 million under the Health Disparities grant during FY 2023-24, including $2.6 million that was provided to subrecipients. Of the $2.6 million provided to subrecipients, $2.4 million was processed through GEARS. DHS contracted with 87 subrecipients to administer the grant. We interviewed DHS staff to gain an understanding of DHS policies and procedures for processing reimbursement requests from subrecipients, including its use of GEARS; DHS policies and procedures for monitoring subrecipients; and the steps taken to address our prior year recommendations. Questioned Costs: None. Effect: Because its subrecipient monitoring procedures are insufficient, DHS is at increased risk of noncompliance with federal regulations for the Health Disparities grant. There is also an increased risk of improper payments for the Health Disparities grant. Cause: Although DHS implemented some new subrecipient monitoring procedures and provided training to staff on subrecipient monitoring activities, it continued to have deficiencies in its procedures and monitoring of subrecipients for the Health Disparities grant during FY 2023-24. DHS indicated it continued to review and update its procedures in FY 2024-25. Recommendation: We recommend the Wisconsin Department of Health Services: -continue to develop a written monitoring plan for the Health Disparities grant that includes a description of the subrecipient monitoring expected for low-, moderate-, and high-risk subrecipients; procedures for completing and documenting desk reviews of subrecipient invoices; and procedures for assessing and documenting the reliance that can be placed on review of subrecipient single audit reports; -provide training on the monitoring plan to staff with responsibilities for subrecipient monitoring activities; and -develop and implement management oversight procedures to ensure monitoring is being completed and documented. Finding 2024-306: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises—Subrecipient Monitoring COVID-19—Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Assistance Listing number 93.391) Award Numbers Award Years 1 NH75OT000039-01-00 2021 6 NH75OT000039-01-03 2023 6 NH75OT000039-01-05 2024 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendations.
Social Services Block Grant—Subrecipient Contracts Background: DHHS provides funding to DHS for SSBG. This program provides flexible financial assistance to states that allows them to tailor social services programs to the needs of their populations. In addition, a state may transfer funds received under the Temporary Assistance for Needy Families (TANF) program (Assistance Listing number 93.558) to the SSBG program for use under this program. During FY 2023-24, $14.7 million was transferred from the TANF program to the SSBG program. DHS uses the SSBG funding, including the amounts transferred from the TANF program and general purpose revenue, to provide funding for the community aids program, and more specifically, amounts designated within this program as the “basic county allocation” that can be used by counties to support any eligible service. DHS contracts with each county for the administration of the community aids program. Because DHS provides funding to counties to carry out the purpose of a federal program, DHS is considered a pass-through entity, and the counties are considered subrecipients. DHS uses its Grant Enrollment, Application and Reporting System (GEARS) and establishes GEARS profiles to designate the program, the purpose of the program, the types of costs that will be reimbursed, and the federal programs that are used in funding the amount of the contract. The information provided to the counties for a GEARS profile will include the federal assistance listing number, as appropriate, and other required information. The counties use the GEARS profile established for the basic county allocation when determining the costs that can be funded and in requesting reimbursement for costs incurred. As part of our FY 2022-23 audit (report 24-3), we reported that DHS identified both the SSBG and TANF programs as providing funding for the basic county allocation. Because the TANF funds transferred to SSBG are subject to the SSBG requirements, the information DHS provided to the counties inaccurately identified the TANF program as a funding source for the basic county allocation. We recommended DHS update its procedures for contract development to ensure the information provided in its subrecipient contracts identified SSBG as the federal funding source for the basic county allocation of the community aids program related to the transferred TANF funds (Finding 2023-301). Criteria: Under 2 CFR s. 200.332, the pass-through entity is required to clearly identify to the subrecipient certain information that allows the subrecipient to understand the federal requirements related to the funding provided. This information includes providing the federal assistance listing number and the amount being provided under the assistance listing number. Under 42 USC s. 604, the transfer of funds from the TANF program to the SSBG program is allowed. Once transferred, the funding is no longer considered TANF funding and is subject to the SSBG requirements. The expenditures incurred with the transferred TANF funds would be considered an expenditure of SSBG. Condition: For calendar year 2024 contracts with each county for the administration of the community aids program, DHS identified that both the SSBG and TANF programs were being used to provide funding for the basic county allocation. Although the TANF funds transferred to SSBG are subject to the SSBG requirements, the information DHS provided to the counties, which included the assistance listing number, inaccurately identified the TANF program as a funding source for the basic county allocation. Because the contracts for calendar year 2024 were entered into prior to the communication of our finding for FY 2022-23 (Finding 2023-301), it was not unexpected to find contracts that continued to identify the incorrect assistance listing number. Context: During FY 2023-24, DHS expended $33.3 million in SSBG funds, which included transferred TANF funds, and subawarded $32.3 million. We reviewed 8 of the 72 county contracts that were executed during FY 2023-24 and discussed with DHS staff the steps taken in response to our finding for FY 2022-23 (Finding 2023-301). Questioned Costs: None. Effect: Because the contracts with the counties did not accurately identify the transferred TANF funds as those from the SSBG program, the counties were not aware of the full amount of SSBG funds received and, as a result, may not be aware of the federal requirements related to this funding. This could result in the counties not complying with federal requirements related to the SSBG funding. Cause: In contract development, DHS separately identified the SSBG and transferred TANF funds used in funding the basic county allocation. This separation resulted in the error in identifying TANF as a funding source in the contracts with the counties for the basic county allocation. DHS indicated it has implemented our recommendation from FY 2022-23 (Finding 2023-301) and has updated procedures for contract development to ensure information provided in its subrecipient contracts identify SSBG as the federal funding source for the basic county allocation of the community aids program related to the transferred TANF funds. However, DHS did not complete contract amendments for the calendar year 2024 contracts. Recommendation: We recommend the Wisconsin Department of Health Services implement its updated procedures for contract development to ensure information provided in its subrecipient contracts correctly identifies the Social Services Block Grant as the federal funding source for the basic county allocation of the community aids program related to the transferred Temporary Assistance for Needy Families funds. Finding 2024-302: Social Services Block Grant—Subrecipient Contracts Social Services Block Grant (Assistance Listing number 93.667) Award Numbers Award Years 2401WISOSR 2024 2301WISOSR 2023 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Health Services: The Wisconsin Department of Health Services agrees with the audit finding and recommendation.
Geographic Programs - Great Lakes Restoration Initiative—Subrecipient Monitoring Background: DNR receives federal funding from the EPA for the GLRI program. The objective of the GLRI program is to advance protection and restoration of the Great Lakes Basin Ecosystem through the funding of various projects. To administer the GLRI program, DNR contracts with subrecipients located around the State, including counties, cities, and sewage districts. During our FY 2022-23 single audit (report 24-3), we identified that DNR did not perform subrecipient risk assessments or have a plan to monitor subrecipients for the GLRI program based on the risk assessments. Further, DNR did not have sufficient procedures in place to ensure all GLRI subrecipient single audit reports were being obtained and reviewed. We recommended that DNR develop a written monitoring plan for the GLRI program that includes policies and procedures for: -completing risk assessments for each subrecipient; -the specific monitoring steps that are required based on the level of subrecipient risk identified in a risk assessment; -independently identifying and reviewing subrecipient single audit reports, if applicable; and -maintaining documentation of all subrecipient monitoring activities (Finding 2023-800). During FY 2023-24, and in response to our recommendations, DNR developed policies and procedures for monitoring and performing risk assessments of the GLRI subrecipients. In addition, DNR developed procedures to ensure GLRI subrecipient single audit reports were being obtained and reviewed. DNR completed its review of these reports in May 2024. Criteria: DNR administers federal programs that are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Uniform Guidance includes three requirements related to the monitoring of subrecipients. First, 2 CFR s. 200.332 (a) (1) requires DNR to communicate certain award information to subrecipients at the time of the subaward. Second, 2 CFR s. 200.332 (b) requires DNR to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate nature and level of subrecipient monitoring. Finally, 2 CFR s. 200.332 (d) through (f) requires DNR to monitor the activities of the subrecipient as necessary to ensure that the subrecipient uses the subaward for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. An EPA subaward policy further clarifies that the Uniform Guidance provisions are applicable to its grant programs, including a requirement for DNR to establish and follow a system for evaluating the risks of subrecipient noncompliance with laws, regulations, and the terms and conditions of the subaward, as required by 2 CFR ss. 200.332 (b) and (d). This policy also requires DNR to document its evaluations. In addition, EPA’s policy requires that DNR establish and follow a process for deciding whether to impose additional requirements on subrecipients based on the risk assessments. Condition: In response to our FY 2023-24 recommendation, in June 2024 DNR developed policies and procedures for monitoring GLRI subrecipients, including procedures for completing a risk assessment for each GLRI subrecipient and ranking each subrecipient based on the risk assessment to determine the level of monitoring needed. However, DNR did not complete risk assessments for any of its GLRI subrecipients during FY 2023-24. Context: DNR expended $15.5 million under the GLRI program during FY 2023-24, including $4.0 million that it provided to 21 subrecipients. We interviewed DNR staff to gain an understanding of its procedures for monitoring subrecipients. We reviewed the agreements between DNR and the subrecipients to identify whether DNR had communicated the required award information to them. We also reviewed monitoring activities DNR performed for the GLRI program, including DNR’s process to review subrecipient single audit reports and DNR’s monitoring of subrecipients through progress reporting and reimbursement requests. Finally, we reviewed and discussed with DNR staff the new procedures for completing subrecipient risk assessments. Questioned Costs: None. Effect: Because DNR did not comply with all subrecipient monitoring compliance requirements for the GLRI program, there is a higher risk that DNR and its GLRI subrecipients are not in compliance with all federal requirements. Cause: Although DNR developed policies and procedures for monitoring and performing risk assessments for the GLRI subrecipients, it did not complete risk assessments for the GLRI subrecipients during FY 2023-24. DNR indicated it would implement its policies and procedures for monitoring and performing risk assessments for the GLRI subrecipients as new subawards are created in FY 2024-25. However, DNR should also perform risk assessments for existing GLRI subrecipients to ensure its monitoring of the activities for ongoing GLRI projects is appropriate. Recommendation: We recommend the Wisconsin Department of Natural Resources implement its new monitoring policies and procedures for completing risk assessments for each subrecipient of the Geographic Programs - Great Lakes Restoration Initiative program, including for all its existing subrecipients for ongoing projects. Finding 2024-801: Geographic Programs - Great Lakes Restoration Initiative—Subrecipient Monitoring Geographic Programs - Great Lakes Restoration Initiative (Assistance Listing number 66.469) Award Numbers Award Years 00E02349 2018 00E02393 2018 00E02456 2019 00E02490 2019 00E02824 2020 00E02975 2021 00E02979 2021 00E03010 2021 03E00712 2022 01E03010 2022 00E03149 2022 00E03250 2022 00E03252 2022 00E03490 2023 00E03486 2023 00E03589 2023 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Natural Resources: The Wisconsin Department of Natural Resources agrees with the audit finding and recommendation.
Criteria or specific requirement: Compliance: 2 CFR §200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City did not furnish all required information to subrecipients at the time the subawards were issued. Context: The City failed to obtain the required Unique Entity Identifier (UEI) from one out of five subrecipients tested and the Federal Award Identification Number (FAIN) from five out of five subrecipients tested in accordance with proper subrecipient monitoring procedures. Questioned costs: None. Cause: The City did not establish effective internal controls and procedures over subrecipient monitoring.Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about program-specific regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in subrecipients’ Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance.Recommendation: The City should review and enhance its internal controls and procedures to ensure that all required information is included in subawards at the time of issuance and maintained in subsequent modifications. Views of responsible officials: The City agrees with this finding. See separate Corrective Action Plan related to this finding.
Program Information: Home Investment Partnerships Program (ALN #14.239) and Coronavirus State and Local Fiscal Recovery Funds (ALN #21.027) Criteria: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332, the subaward is to clearly identify to the subrecipient required information, including identification that the award is a subaward by providing information described in 200.332 (b)(1); all requirements imposed by the Pass-through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations; and the terms and conditions of the award; and any additional requirements that the PTE imposes on the subrecipient. Additionally, per 2 CFR section 200.332 (f), the Organization should verify that a subrecipient is audited as required. Condition: The subawards did not include the required federal provisions or list the assistance listing numbers. The Organization did not obtain the most recently available audit reports of subrecipients. Questioned Costs: None. Context: This condition occurred for 8 out of 8 subawards selected for testing. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: The subrecipients may not be aware of certain award information in order to comply with federal statutes, regulations, and the terms and conditions of the award. Repeat Finding: No
Program Information: Home Investment Partnerships Program (ALN #14.239) and Coronavirus State and Local Fiscal Recovery Funds (ALN #21.027) Criteria: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332, the subaward is to clearly identify to the subrecipient required information, including identification that the award is a subaward by providing information described in 200.332 (b)(1); all requirements imposed by the Pass-through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations; and the terms and conditions of the award; and any additional requirements that the PTE imposes on the subrecipient. Additionally, per 2 CFR section 200.332 (f), the Organization should verify that a subrecipient is audited as required. Condition: The subawards did not include the required federal provisions or list the assistance listing numbers. The Organization did not obtain the most recently available audit reports of subrecipients. Questioned Costs: None. Context: This condition occurred for 8 out of 8 subawards selected for testing. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: The subrecipients may not be aware of certain award information in order to comply with federal statutes, regulations, and the terms and conditions of the award. Repeat Finding: No
Program Information: Home Investment Partnerships Program (ALN #14.239) and Coronavirus State and Local Fiscal Recovery Funds (ALN #21.027) Criteria: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332, the subaward is to clearly identify to the subrecipient required information, including identification that the award is a subaward by providing information described in 200.332 (b)(1); all requirements imposed by the Pass-through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations; and the terms and conditions of the award; and any additional requirements that the PTE imposes on the subrecipient. Additionally, per 2 CFR section 200.332 (f), the Organization should verify that a subrecipient is audited as required. Condition: The subawards did not include the required federal provisions or list the assistance listing numbers. The Organization did not obtain the most recently available audit reports of subrecipients. Questioned Costs: None. Context: This condition occurred for 8 out of 8 subawards selected for testing. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: The subrecipients may not be aware of certain award information in order to comply with federal statutes, regulations, and the terms and conditions of the award. Repeat Finding: No
Program Information: Home Investment Partnerships Program (ALN #14.239) and Coronavirus State and Local Fiscal Recovery Funds (ALN #21.027) Criteria: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.332, the subaward is to clearly identify to the subrecipient required information, including identification that the award is a subaward by providing information described in 200.332 (b)(1); all requirements imposed by the Pass-through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations; and the terms and conditions of the award; and any additional requirements that the PTE imposes on the subrecipient. Additionally, per 2 CFR section 200.332 (f), the Organization should verify that a subrecipient is audited as required. Condition: The subawards did not include the required federal provisions or list the assistance listing numbers. The Organization did not obtain the most recently available audit reports of subrecipients. Questioned Costs: None. Context: This condition occurred for 8 out of 8 subawards selected for testing. Cause: Insufficient internal control and administrative oversight. Effect or Potential Effect: The subrecipients may not be aware of certain award information in order to comply with federal statutes, regulations, and the terms and conditions of the award. Repeat Finding: No
2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that 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 described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that 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 described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that 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 described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that 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 described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.