Finding Text
Finding 2025-003: Subrecipient Monitoring (Significant Deficiency) Federal Agency: United States Department of Health and Human Services. Federal Program: Unaccompanied Children Program. Assistance Listing Number: 93.676 Pass-through Entity, if applicable: Not applicable. Award Identification Number and Year: All awards and all of 2025 fiscal year. Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): Criteria or specific requirement (including statutory, regulatory, or other citation): Per 2 CFR 200.332 Requirements for pass-through entities: Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Pass-through entities must evaluate each subrecipient’s risk of noncompliance to determine the appropriate subrecipient monitoring (§200.332(b)). Verify that a subrecipient is audited as required. Condition: During our testing of subrecipient monitoring, we noted several exceptions as follows: No process was in place to verify that subrecipients are suspended or debarred from receiving Federal funds. Pre-award risk assessments were not completed. The monitoring procedures were not linked to assessed risk levels. The audited financial statements of the subrecipients were not received in order to assist in the risk assessment process. 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, and obtain adequate financial reporting, increases the risk that subrecipients may not comply with Federal statutes and regulations. Questioned Costs: Costs associated with qualitative monitoring procedures are not identifiable. 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: Not a repeat finding. Recommendation: We recommend that management implement processes and procedures as follows: Establish formalized policies and procedures on subrecipient monitoring; Include a screening of subrecipients against the Federal suspended and debarred list as part of the contracting process; Implement pre-award risk assessments that clearly links monitoring procedures to the level of assessed risk; Document the monitoring procedures that occurred throughout the year in accordance with the established policies and procedures and identified risk assessment for each subrecipient.