Finding Text
Finding 2025 - 001 Lack of Subrecipient Monitoring Procedures – Subrecipient Risk Assessments Federal Agencies: U.S. Department of State and U.S. Agency for International Development Federal Programs: Bureau of Population, Refugees and Migration Overseas Refugee Assistance Programs East Asia; Foreign Assistance for Programs Overseas Assistance Listing Numbers:19.523 and 98.001 Pass-through Entities: JSI Research & Training Institute, Inc. and RTI International Award Identification Number and Year: SPRMCO24CA0083, 2024; 7200AA22CA00011, 2022 and 72066923CA00003, 2023 Criteria or Specific Requirement: According to 2 CFR § 200.332(c), pass-through entities are required to: “Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.” This risk assessment must consider factors such as the subrecipient’s prior experience with similar awards, results of previous audits, new personnel or systems, and the extent of Federal monitoring. Condition: BRAC USA did not adequately document the results of it's risk assessment procedures of its subrecipients prior to issuing subawards, as required by 2 CFR § 200.332(c). During our review of two subawards issued during the audit period, we noted that management did not formally document any evaluation of subrecipient risk related to program compliance, financial stability, or internal controls. Cause: The entity had not developed or implemented formal procedures to adequately document subrecipient risk prior to making subawards. Management was not aware of the documentation requirement or had not prioritized its implementation. Effect or Potential Effect: Without documenting subrecipient risk assessments, BRAC USA cannot ensure that the level of subrecipient monitoring is appropriate to mitigate risks of noncompliance or misuse of Federal funds. This increases the likelihood of unallowable costs, noncompliance with Federal regulations, and potential questioned costs. Questioned Costs: Costs associated with qualitative monitoring measures are not identifiable. Context: During our audit, we examined subawards for two subgrantees for which total expenditures aggregated $1,683,098 (approximately 67% of the total Federal expenditures passed through to subrecipients). Identification as a Repeat Finding, if applicable: Not a repeat findingRecommendation: The entity should establish and implement written procedures to perform and document subrecipient risk assessments prior to awarding Federal funds. The procedures should include standardized criteria—such as prior audit results, experience with similar programs, financial stability, and management capacity—to determine risk levels and guide monitoring activities.