Finding Text
2024-002 Finding – Federal Award Type: Subrecipient Monitoring – Non-Compliance and Significant Deficiency in Internal Control Over Compliance. (Partial repeat of finding 2023-001) Identification of Federal Program: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, 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 provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Forth Mobility Fund passed through $1,578,580 in funding to subrecipients under Assistance Listing 81.086. During our audit, we noted that Forth Mobility Fund had made improvements to subrecipient monitoring in 2024 by establishing a subrecipient monitoring policy and evaluating for risk of non-compliance for subrecipients prior to engaging in a subcontract on a prospective basis. It was noted that within subaward contracts, required federal contract information was provided and if the subrecipient is subject to 2 CFR Subpart F, the audit for this entity was obtained and reviewed for applicable audit findings. However, while monitoring has improved, as Forth Mobility Fund is having regular meetings to ensure tasks are being completed timely and providing technical assistance when needed, there is no formal documentation of this. Further, while a risk assessment is being made for new subrecipients, past subrecipients have not been evaluated and there is no methodical execution of the results of the risk assessment. Cause: Procedures were not in place to ensure that Forth Mobility Fund is maintaining proper subrecipient monitoring for each federal subrecipient. Effect: Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are prescriptive and being followed. Management’s Response: We agree with the auditor's comments, and effective October 31, 2024, we established procedures for monitoring subrecipients, including obtaining and reviewing their annual audits. We will strengthen these procedures by establishing a monitoring plan based on risk assessment for each subrecipient and formally documenting all monitoring activities by November 30, 2025