Finding Text
2024-004 Finding – Federal Award Type: Reporting (Special Reporting – FFATA / FSRS) – Material Non-Compliance and Material Weakness in Internal Control over Compliance. (Repeat 2023-003) 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. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition / Context: During 2024, Forth Mobility Fund entered into 26 first-tier subawards greater than $30,000. KT tested 4 of these subawards, noting that these were reported under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System. However, 2 of the 4 reports submitted were not made within the required timeframe. The two sampled items without timely reporting were in the beginning of the year under audit, showing that Forth Mobility Fund was correcting this compliance requirement late in the year. Cause: Procedures were not in place to ensure that Forth Mobility Fund is maintaining adequate internal controls over compliance in regards to federal special reporting. Procedures are not in place to track and report first-tier subawards. Effect: Failure to maintain sufficient internal controls and proper procedures, including tracking over reporting firsttier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding first-tier subawards including tracking and proper internal control procedures. Management’s Response: We agree with the auditor's comments, and effective September 30, 2024, we established written policies and procedures for tracking and reporting first-tier subawards. Moving forward, we will add a review step to ensure compliance with federal special reporting requirements, which will help maintain accuracy and consistency.