Finding No.: 2022-010
Federal Agency: U.S. Department of the Interior
AL Program: 15.875 Economic, Social, and Political Development of the Territories
Federal Award No.: Compact Sector Grants
Questioned Costs: $74,794
Area: Subrecipient Monitoring
Criteria:
1) Article VI, Section 1(a)(1) of the Fiscal Procedures Agreement (FPA) states that fiscal control
and accounting procedures of RepMar, as well as its Sub-Grantees, shall be sufficient to: (i)
permit the preparation of reports required by the FPA and the Compact, as amended; and (ii)
permit the tracing of funds to a level of expenditures adequate to establish that such funds have
been used in compliance with the provisions of the Compact, as amended, and applicable
agreements. Furthermore, Article VI, Section 1(k)(1) of the FPA states that RepMar shall ensure
that: (i) every Sub-Grant includes any clauses required by the Compact, as amended, the sector
Grant awards, and the FPA; (ii) Sub-Grantees are aware of the requirements imposed upon them
by the Compact, as amended, the sector Grants and the FPA; and (iii) Sub-Grantees can meet
the financial management standards of the FPA.
2) In accordance with applicable subrecipient monitoring requirements, the pass-through entity
(PTE) must follow-up and ensure that the subrecipient takes timely and appropriate action on all
deficiencies detected through audits, on-site reviews, and other means, pertaining to the Federal
awards provided by the PTE to the subrecipient.
Condition 1:
RepMar has not implemented effective policies and procedures over subrecipient monitoring,
including compliance with related Compact provisions. For 4 (or 100%) subrecipients tested,
deficiencies were noted as follows:
Item # Subrecipient Fund # Sub-Grant
1 College of the Marshall Islands 410100 $1,900,328
2 Ebeye Seventh Day Adventist 410150 73,463
3 Queen of Peace 410150 35,005
4 Kwajalein Atoll Joint Utilities Resources 410160 663,930
$2,672,726
Condition 1, continued:
Document (MOFBPS)
monitoring of subrecipient activities was not made available for examination. Consequently, we were
unable to ascertain whether MOFBPS monitored subrecipient compliance with subaward
agreements, Compact Agreement, grant award, and the FPA. No questioned costs are reported for
item #s 1 and 4 since the subrecipients are separately audited. For item #s 2 and 3, the subrecipients
submitted the required financial reports.
Condition 2:
Subrecipient monitoring schedule provided by MOFBPS was incomplete and inaccurate. Condition
1, item # 4, was not included in the schedule.
Condition 3:
RepMar did not perform the required monitoring activities for one subrecipient. The 2021 Single
Audit Report for the College of the Marshall Islands (CMI) dated September 26, 2024 was accepted
by the Federal Audit Clearinghouse on October 10, 2024. Such report included findings and
questioned costs amounting to $74,794 for noncompliance, as follows:
Finding No. Compliance Requirement QC Amount
2021-006 Allowable Costs/Cost Principles $ 4,597
2021-007 Equipment and Real Property Management -
2021-008 Period of Performance 2,107
2021-009 Procurement and Suspension and Debarment 68,090
2021-010 Reporting -
$ 74,794
RepMar did not issue a management decision
Cause:
RepMar lacks effective internal control policies and procedures governing subrecipient monitoring.
Effect:
RepMar is in noncompliance with applicable subrecipient monitoring requirements. The reportable
questioned cost is $74,794.
Identification as a Repeat Finding:
Finding No. 2021-008
Recommendation:
RepMar should comply with the applicable provisions of the FPA and subrecipient monitoring
requirements and should develop and implement effective subrecipient monitoring procedures.
Furthermore, MOFBPS should enforce compliance with subaward agreements, including timely
Single Audits of subrecipients, as applicable.
Views of Responsible Officials:
We agree with the finding and provide details in our Corrective Action Plan.