Finding Text
FINDING 2024-002 Significant Deficiency in Internal Controls Over Compliance, Noncompliance – Subrecipient Monitoring Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002, NR243A750023C003 Criteria: Per 2 CFR Part 200, Subpart D, 200.332(c), the pass-through entity ("PTE") must evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring. Further, in accordance with 2 CFR, Subpart D, Section 200.332(e), the PTE must monitor the activities of the subrecipient including ensuring that the subrecipient takes corrective action on findings. Lastly, per 2 CFR, Subpart D, Section 200.332(g), the PTE must verify that the subrecipient is audited as required by Subpart D. Condition/Context: Through Subrecipient Monitoring testing, we identified 2 subrecipients, both of which were selected for testing. The subrecipients expended $96,462 of federal award funding passed through to them from Ichauway for the year ended December 31, 2024. For both subrecipients, we determined that management did not monitor the subrecipients to ensure the subrecipient took corrective action on any findings nor did management verify that the subrecipient was audited as required by Subpart D. Cause: Management has not updated their subrecipient monitoring procedures to ensure it aligns with federal requirements. Effect: Without formal procedures or documented communications to verify that subrecipients are aware of, have completed, and have addressed any deficiencies identified in required audits, there is a risk that audit findings or compliance issues at the subrecipient level may go undetected or unaddressed. This could result in noncompliance with federal subrecipient monitoring requirements, potentially exposing Ichauway to reputational risk, questioned costs, or other adverse consequences in the event of a review or audit. Questioned Costs: None. Recommendation: Management should develop and implement formal procedures for subrecipient monitoring. This should include documented communications to verify that subrecipients are aware of audit requirements, have completed required audits, and have addressed any identified deficiencies in a timely manner. Views of Responsible Officials: See Corrective Action Plan.