Finding Text
Noncompliance with Subrecipient Monitoring Requirements and Material Weakness in Internal Control over Subrecipient Monitoring Assistance Listing Number: 21.027 Name of Federal Program or Cluster: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury Name of Pass-Through Entities: State of Wisconsin Department of Administration Subrecipient Monitoring 2 CFR§200.332 requirements for pass-through entities: The Code of Federal Regulations (CFR) Section 200.332(e) requires a pass-through entity must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521. (4) Resolve audit findings specifically related to the subaward. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The organization did not perform subrecipient monitoring procedures as listed in the criteria above for the subrecipient of the COVID-19: Coronavirus State and Local Fiscal Recovery Funds. In addition, the Organization’s internal controls over subrecipient monitoring did not prevent or detect noncompliance with subrecipient monitoring requirements. The Organization did, however, confirm with SAM.gov that the subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal Funds; included the required information in the subaward agreement, and performed the required risk assessment. The Organization has policies and procedures related to subrecipient monitoring in its fiscal procedures manual. However, management did not monitor to ensure that the requirements listed in its policies and procedures manual as well as the Uniform Guidance are being followed. Failure to adequately monitor subrecipients may result in the subrecipient not properly administering the federal program in accordance with laws, regulations, and the grant agreement. Recommendation: We recommend that Organization management monitor their compliance with their subrecipient monitoring procedures to ensure that the required subrecipient monitoring is occurring. No WRTP has reviewed the organization’s fiscal policy manual including all subsections regarding monitoring responsibilities. Additional training has been provided and completed by management and staff. Management has reviewed all monitoring with the subrecipient in good faith efforts.