Finding Text
Finding: 2024-002 Subrecipient Monitoring (Significant Deficiency) Information on the Federal Programs: ALN #10.937 Partnerships for Climate-Smart Commodities Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Per 2 CFR 200.332 Requirements for pass-through entities: Pass-through entities must clearly identify to subrecipients the award information, including the Assistance Listing number, subrecipient’s UEI, Federal award identification number, and Federal award project title (§200.332(a)(1)). Pass-through entities must evaluate each subrecipient’s risk of noncompliance to determine the appropriate subrecipient monitoring (§200.332(b)). Pass-through entities must monitor the activities of subrecipients as necessary to ensure compliance with Federal statutes, regulations, and the terms and conditions of the subaward (§200.332(d)). Pass-through entities must verify that every subrecipient required to have an audit under 2 CFR 200 Subpart F has one completed, and issue management decisions on findings (§200.332(g)). Condition: During our testing of subrecipient monitoring, we noted several deficiencies: 1. Subaward agreements were structured more like subcontracts rather than subrecipient agreements and did not include all elements required under 2 CFR 200.332(a), such as the subrecipient’s UEI and Assistance Listing number. 2. Subrecipients were required to submit periodic invoices for reimbursement instead of financial reports detailing costs incurred by budget line item, cumulative expenditures, cash receipts, and cash balances. 3. CIF did not verify the subrecipient’s audit requirements in a timely manner as required under 2 CFR 200.332(g). 4. Pre-award risk assessments were completed; however, the assessments were undated, preventing the audit team from verifying that they occurred prior to subaward execution. Additionally, the monitoring procedures described in policy were not clearly linked to assessed risk levels, and in certain instances, subrecipients with no prior Federal grant management experience were assigned a “low risk” classification. Cause: These conditions occurred due to a lack of formalized procedures to align subrecipient agreements, reporting requirements, and monitoring activities with the specific requirements of 2 CFR 200.332. Management relied on existing subcontract templates and internal policies that were not fully updated to reflect Uniform Guidance requirements. Effect or Potential Effect: Failure to properly structure subaward agreements, obtain adequate financial reporting, and timely verify audit requirements, increases the risk that subrecipients may not comply with Federal statutes and regulations. Questioned Costs: N/A Context: We tested a statistically valid sample of subawards charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: N/ARecommendation: We recommend that management: Update subaward agreement templates to include all elements required under 2 CFR 200.332(a). Require subrecipients to submit periodic financial reports by budget line item, cumulative expenditures, cash receipts, and cash balances, rather than invoices alone. Establish procedures to ensure subrecipient audit requirements are verified and documented in a timely manner in accordance with 2 CFR 200.332(g). CIF should document the impact of any subrecipient audit findings on the program and the planned corrective action. Revise pre-award risk assessment procedures to include dating and ensure that results are documented prior to subaward execution. Strengthen policies to ensure monitoring procedures are explicitly linked to risk assessment results, with higher levels of oversight required for subrecipients new to Federal grant management.