Finding Text
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Community Project Funding/Congressionally Directed Spending ‐ Construction Assistance Listing Number: 93.493 Federal Award Identification Number and Year: 6-CE1HS52375-07 - 2023 Award Period: September 30, 2023, through September 29, 2026 Type of Finding: • Material Weakness in Internal Control over Compliance – Cash Management – Subrecipient Payments • Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.305 specifies that payments to subrecipients must minimize the time between the transfer of funds and their disbursement for program purposes. Subrecipients must be able to demonstrate proper use of funds, maintain records, and be subject to audit. Condition: During testing, it was noted that subrecipient payments were being directly remitted to vendors rather than subrecipients. Questioned costs: None. Context: Of the thirteen samples selected for testing, we noted that nine samples were paid directly to the vendor, rather than the subrecipient. Cause: The Association did not have internal controls in place to ensure subrecipient payments were being remitted directly to the subrecipients. Effect: The Association is noncompliant with federal regulations related to the federal award. Subrecipients do not receive or manage the federal funds, undermining their responsibility for programmatic and financial oversight. Repeat Finding: N/A. Recommendation: We recommend that the Association implement formal policies and procedures requiring remittance of federal funds directly to subrecipients, rather than paying vendors on the subrecipient's behalf. Views of responsible officials: There is no disagreement with the audit finding.