Finding Text
Criteria or specific requirement: According to §200.331 Requirements for pass-through entities of
two CFR Part 200, 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. In addition, the pass-through entity 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 and Context: During our testing, we noted the Organization did not have adequate internal
controls in place to ensure compliance with subrecipient monitoring.
Questioned costs: N/A
Cause: The Organization was unaware of the subrecipient monitoring requirements. Also, the
Organization lacks established internal controls and procedures for monitoring pass-through funds to
subrecipients to ensure compliance with applicable compliance requirements.
Effect: The lack of internal controls over this compliance requirement provides an opportunity for
noncompliance. The auditor noted instances of material noncompliance. Noncompliance results in
possible Federal funds provided to ineligible subrecipients or that the grant funds are not used for
authorized purposes or in line with the grant terms and conditions.
Recommendation: We recommend that the Organization create an internal policy over sub-grant
recipient procedures and create effective internal controls and procedures over subrecipient monitoring
and tracking that allow for compliance with all applicable Federal laws, regulations, and compliance
requirements of various Federal grants
Management Response: Management has accepted the recommendation and will add language to
the existing Grant Funds Tracking Policy and Procedure outlining the Organization’s responsibilities for
establishing effective internal controls and procedures over subrecipient monitoring. The updated policy
will also include reference to the Information to Provide to Every Subrecipient for Each Subaward form.
This form outlines details of the pass-through grant, and subrecipient responsibilities, and will be signed
by each subrecipient prior to any pass-through fund disbursement. Also, the Organization will educate
supervisors on this policy update at an upcoming training meeting no later than October 31, 2024.