Finding Text
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the Federal award that provides assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.322 identifies the requirements for all pass‐through entities which including monitoring the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statues, regulations, and the terms and conditions of the subaward; and that the subaward performance goals are achieved.
Condition: During our testing, the Corporation was unable to provide sufficient and appropriate evidence to substantiate a secondary review was completed over the monitoring activities of the subrecipient.
Cause: The Corporation did not have formal policies and procedures over subrecipient monitoring.
Effect or Potential Effect: Insufficient monitoring of subrecipients could result in Federal noncompliance by a subrecipient.
Questioned costs: None
Context: Management was not able to produce sufficient and appropriate evidence that monitoring activities of subrecipients were reviewed.
Repeat finding: No
Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating to the monitoring of subrecipients.
View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation did not maintain sufficient or appropriate evidence that the monitoring activities of the subrecipients were reviewed.