Finding Text
Criteria: Under Uniform Guidance and an entity must verify that subrecipients meet eligibility requirements established by the federal program, applicable regulations, and term and conditions of the award, maintain documentation to support subrecipient eligibility determinations, and ensure that subawards are issued only to eligible entities. Statement of Condition: During testing of compliance of eligibility, the Company was unable to provide documentation evidencing which subrecipients were approved under the contract due to the expiration of the entity’s document retention period and employee turnover, which resulted in the loss of institutional knowledge about the controls performed during the award period. Cause of Condition: The entity did not maintain documentation of subrecipient eligibility beyond the minimum required retention period and did not have processes in place to preserve institutional knowledge during employee turnover. As a result, supporting records necessary for compliance over eligibility of federal awards were no longer available. Effect of Condition: As a result of the missing documentation, the auditee is not in compliance with federal requirements related to subrecipient eligibility, there is an increased risk that funds may have been awarded to ineligible subrecipients, the pass-through entity cannot demonstrate that it carried out required oversight responsibilities under the Uniform Guidance, and eligibility errors may go unidentified, increasing the risk of future noncompliance. Questioned Costs: Questioned costs total $213,005, representing the subawards where documentation of eligibility could not be provided. Recommendation: We recommend that management (1) implement formal procedures for reviewing and documenting subrecipient eligibility prior to awarding funds, (2) develop a standardized eligibility checklist and require supporting documentation to be retained in a centralized file, (3) provide training to grants management staff on Uniform Guidance eligibility requirements, and (4) periodically monitor subrecipient files to ensure eligibility documentation is complete and retained in accordance with Uniform Guidance. Identification of Repeat Finding: This is a new finding. Views of Responsible Officials: Management understands and accepts the recommendation as outlined in the Corrective Action Plan.