Finding Text
Criteria: 2 CFR 200.332 notes, “All pass-through entities must… (d) 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. 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. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward.
Condition: The Organization noted they do not request and review audited financial statements for all subrecipients.
Questioned Costs: N/A
Cause and Effect: Without reviewing audited financial statements, subrecipients may have deficiencies in internal control or compliance which could lead to future unallowable expenditures to be incurred.
Recommendation:
We recommend ACT evaluates policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed.
Views of Responsible Officials and Planned Corrective Actions:
Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.