Finding Text
Finding 2024-012 – Subrecipient Monitoring (Significant Deficiency and Noncompliance)
Identification of the Federal Program: Community Program to Improve Minority Health, ALN 93.137, Department of Health and Human Services (Minority Health); Community Development Block Grants, ALN 14.218, Department of Housing and Urban Development (CDBG).
Criteria: 2 CFR 200.332 establishes subrecipient monitoring requirements of all pass through entities. These requirements include that every subaward is clearly identified to the subrecipient as a subaward and includes the following information: assistance listings title and number, the dollar amount made available under each federal award, and the assistance listings number at the time of disbursement, etc.
These requirements also include evaluating each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring. Evaluations of a subrecipient's risk should consider the following:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of any federal agency monitoring.
In addition, subrecipient activities must be monitored to ensure compliance with federal statutes, regulations, and terms and conditions of the subaward. Monitoring must include the review of financial and performance reports, ensure that corrective action is taken by the subrecipient on any significant developments impacting the subaward, and resolving findings specifically related to the subaward.
The City has a grants manual in place that includes requirements of subrecipient and contract oversight. The policy includes processes to perform pre-award evaluations, post-award monitoring and closeout reporting to ensure compliance.
Condition: Minority Health – two subawards were tested for monitoring requirements. One of the subaward agreements did not include a required piece of information in the award document. CDBG - two subawards were tested for monitoring requirements. Pre-risk assessment procedures were not documented as performed prior to the subaward date on either subrecipient. In addition, one subrecipient had deficiencies noted in their annual audit. The City did not perform required monitoring duties to ensure the subrecipient took timely and appropriate action on the deficiencies reported.
Cause: Minority Health - the City did not communicate the federal assistance listing number in the subaward document. CDBG - did not document a pre-award risk assessment or follow up of corrective action for reported audit findings for their subrecipients.
Effect: The City did not have proper subrecipient monitoring documentation.
Questioned Costs: None reported.
Recommendation: We recommend the City should strengthen procedures to ensure it complies with federal subrecipient monitoring requirements and its policies and procedures to perform all subrecipient oversight responsibilities to ensure compliance with federal subrecipient monitoring requirements.
Views of Responsible Officials: The City agrees with the finding. See Management’s View and Corrective Action Plan included at the end of the report.