Finding Text
2025-003 Lack of Formal Subrecipient Monitoring Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Subrecipient Monitoring Criteria: According to 2 CFR §200.332 (Requirements for Pass-Through Entities), a pass-through entity must monitor the activities of subrecipients as necessary to ensure that federal funds are used for authorized purposes and in compliance with applicable statutes, regulations, and terms and conditions of the Federal award. Required monitoring includes, but is not limited to, the following: a. Reviewing financial and programmatic reports; b. Performing risk assessments of subrecipients; c. Following up on deficiencies identified through audits or reviews; and d. Ensuring subrecipients have required audits under 2 CFR §200.501. Lack of documented subrecipient monitoring constitutes noncompliance with Uniform Guidance. Condition: During our walkthrough and review of the Organization’s grant management processes, we noted that the Organization does not have formal subrecipient monitoring policies or procedures in place. While a monitoring memo exists, it documents only an informal process and does not provide structured oversight. Specifically: - No risk assessments, monitoring checklists, or follow-up documentation were maintained. - There is no formalized, structured process or standard for overseeing subrecipient activities. - Required monitoring under 2 CFR §200.332 could not be performed. Cause of Condition: Management has not developed formal policies and procedures for subrecipient monitoring or consistent documentation standards. Potential Effect of Condition: Noncompliance: Failure to monitor subrecipients increases the risk of noncompliance with Uniform Guidance requirements. Questioned Costs: Federal program expenditures passed through to subrecipients may become subject to questioned costs if insufficient oversight results in unallowable or unsupported charges. Financial & Operational Risk: The Organization may be exposed to reputational or financial consequences, including funding restrictions, if the lack of monitoring persists. Questioned Cost: Not quantifiable. Recommendation: We recommend the Organization develop and implement formal policies and procedures for subrecipient monitoring, including: a. Conducting and documenting subrecipient risk assessments; b. Establishing structured monitoring procedures, such as periodic reviews, report evaluations, and follow-ups; c. Maintaining written documentation of all monitoring activities; and d. Implementing policies to ensure consistent oversight of subrecipient performance and compliance. Description of the Nature and Extent of Issues Reported: The Organization did not perform or document any formal subrecipient monitoring activities during the fiscal year. This constitutes noncompliance with 2 CFR §200.332. Management Response: Management concurred with the finding. In the future, the organization will require midyear and year-end impact reports from each grant subrecipient.