Finding Text
Finding number 2024-005, material weakness in internal controls over compliance – subrecipient monitoring Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: 2 CFR 200.332(a)(1) requires pass-through entities to clearly identify the federal award to the subrecipient, including the FAIN and ALN, in the subaward documents. 2 CFR 200.332(b)-(d) requires pass-through entities to evaluate each subrecipient’s risk of noncompliance to determine appropriate monitoring and to verify that subrecipients expending $750,000 or more are audited as required by the Uniform Guidance. Condition: During our review of subrecipient agreements, we noted that the agreements did not include the Federal Award Identification Number (FAIN) and the Assistance Listing Number (ALN) as required. Additionally, the pass-through entity did not adequately document its risk assessment of subrecipients or verify whether subrecipients were subject to the Single Audit and, if so, whether the required audit was completed and reviewed. Cause: Inadequate procedures to ensure that all required information was included in subrecipient agreements. Inadequate procedures were not followed to perform and/or document subrecipient risk assessments and audit verifications. Effect: Failure to include all required information in subrecipient agreements increases the risk that subrecipients may not be aware of or comply with federal requirements, which could result in noncompliance with federal statutes, regulations and the terms and conditions of the award. This deficiency may also impair the pass-through entity’s ability to properly monitor subrecipient activities and fulfill its responsibilities under the Uniform Guidance. Such omissions may result in audit findings, questioned costs and potential enforcement actions by federal agencies. Questioned Costs: None Recommendation: We recommend that management implement procedures to ensure that all subrecipient agreements include the information required by 2 CFR 200.332. This should include a standardized checklist or template for subaward agreements and periodic reviews to verify compliance. We further recommend the entity implement and document procedures to (1) perform and retain evidence of subrecipient risk assessments and (2) verify and document whether subrecipients are subject to the Single Audit and, if so, obtain and review the audit reports for findings related to the federal program Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.