Finding Text
Finding Number: 2023-007
Repeat Finding: Yes
Type of Finding: Material Weakness in Internal Control and Material Noncompliance
Description: Subrecipient Monitoring and Management
Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella
Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023-
01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3
Questioned Costs: None
How the questioned costs were computed: N/A
Compliance Requirement: Subrecipient Monitoring
Condition: The Organization did not comply with any of the subrecipient monitoring and management
requirements in accordance with 2 CFR Part 200.332.
Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part
200.332 requires the pass-through entity must:
a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and
includes:
1. Federal award identification;
2. All requirements imposed by the pass-through entity on the subrecipient so that the
Federal award is used in accordance with Federal statutes, regulations and the terms
and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient
in order for the pass-through entity to meet its own responsibility to the Federal
awarding agency including identification of any required financial and performance
reports.
4.
(i) An approved federally recognized indirect cost rate negotiated between the
subrecipient and the Federal Government. If no approved rate exists, the passthrough
entity must determine the appropriate rate in collaboration with the
subrecipient, which is either:
1. The negotiated indirect cost rate between the pass-through entity and the
subrecipient;
2. The de minimis indirect cost rate
(ii) The pass-through entity must not require use of a de minimis indirect cost rate if
the subrecipient has a Federally approved rate.
(iii)
5. A requirement that the subrecipient permit the pass-through entity and auditors to
have access to the subrecipient’s records and financial statements as necessary for the
pass-through entity to meet the requirements of this part; and
6. Appropriate terms and conditions concerning closeout of the subaward.
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.
c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as
described in § 200.208.
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 passthrough
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.
e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the
following monitoring tools may be useful for the pass-through entity to ensure proper
accountability and compliance with program requirements and achievement of performance
goals:
1. Providing subrecipients with training and technical assistance on program-related
matters; and
2. Performing on-site reviews of the subrecipient's program operations;
3. Arranging for agreed-upon-procedures engagements as described in § 200.425.
f. 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.
g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring
indicate conditions that necessitate adjustments to the pass-through entity's own records.
h. Consider taking enforcement action against noncompliant subrecipients as described in §
200.339 of this part and in program regulations.
Cause: The Organization’s management was not aware of the subrecipient monitoring and management
requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and
management requirements, resulting in a material noncompliance and a material weakness in internal
controls over compliance.
Recommendation: We recommend the Organization implement systems and procedures to ensure
compliance with the subrecipient monitoring and management compliance requirements.
View of Responsible Officials: Management agrees with the finding and has committed to a corrective
action plan.