Finding Text
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, 10.443 and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 A0242501X443G026 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Direct Award Periods: August 1, 2022 through July 31, 2027, September 1, 2023 through February 28, 2025, September 29, 2022 through September 30, 2027, September 27 2024 through September 26, 2027 and September 27, 2022 through June 30, 2026 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota-March 1, 2022 through February 28, 2025, April 1, 2023 through March 31, 2025, and September 1, 2020 through August 31, 2025; Board of Regents of the University of Wisconsin System-January 1, 2022 through December 31, 2026 and September 1, 2018 through August 31, 2024. Criteria or Specific Requirement: In accordance with 2 CFR § 200.331(a) (now 2 CFR § 200.332), a passthrough entity must make a case-by-case determination whether each agreement it makes for the disbursement of Federal funds casts the party receiving the funds in the role of a subrecipient or a contractor. This determination must be based on the substance of the relationship and not the form of the agreement. Condition: During the audit, we noted that the Organization has not established or implemented a formal process to determine whether entities receiving federal funds are subrecipients or contractors. There was no documentation or consistent methodology in place to support classification decisions for entities engaged under federal awards. Cause: The Organization has not developed or adopted policies and procedures to comply with the requirements under Uniform Guidance for distinguishing between subrecipients and contractors. Effect or Potential Effect: Without a formal and documented determination process, there is a risk that entities may be misclassified, leading to inappropriate application of monitoring procedures. For example, entities functioning as subrecipients may not be subject to required subrecipient monitoring, potentially resulting in noncompliance with federal regulations and increased risk of misuse of federal funds. Repeat Finding: No Recommendation: The Organization should develop and implement written policies and procedures to ensure proper determination and documentation of subrecipient versus contractor relationships in accordance with Uniform Guidance. Staff involved in federal program administration should be trained on how to apply these criteria consistently. Views of Responsible Officials: Management agrees with the finding and will implement and train on written policies and procedures to document the determination of subrecipient versus contractor.