Finding 1176968 (2023-002)

Material Weakness Repeat Finding
Requirement
M
Questioned Costs
-
Year
2023
Accepted
2026-03-09
Audit: 390799
Organization: Papa Ola Lokahi (HI)
Auditor: KKDLY LLC

AI Summary

  • Core Issue: The Organization failed to determine if parties receiving Federal funds were subrecipients or contractors, violating monitoring requirements.
  • Impacted Requirements: Noncompliance with Uniform Guidance could lead to issues for both the Organization and the entities receiving funds.
  • Recommended Follow-Up: Update policies to include subrecipient monitoring provisions from 2 CFR §200.331 and 2 CFR §200.332 to ensure compliance.

Finding Text

Material Weakness Finding No. 2023-002: Subrecipient Monitoring U.S. Department of Education Native Hawaiian Education Act Program Federal Assistance Listing Number 84.362A. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” Condition We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors. Cause Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies. Effect The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization. Identification of Repeat Finding This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2022-002. Recommendation We recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards.

Corrective Action Plan

Views of Responsible Officials and Planned Corrective Action While the Organization concurred with the prior year (2022-002) and current year renumbered recommendation (2023-002), the Organization notes the corrective actions that have been implemented, specifically, related to the subrecipient monitoring and management provision of 2 CFR§ 200.331 and 2 CFR §200.332 of the Uniform Guidance, that emphasizes accountability and compliance in managing federal funds and subrecipients, and that have been in practice, from the effective date(s) noted below, to the present period of the report dated March 2, 2026: A. Subrecipient Monitoring and Management. Implemented internal process changes, effective November 1, 2024, specifically, prospectively, and consistently the: 1. Use of a checklist, to comprehensively assess risk of determining subrecipient or contractor classification, before entering into any subrecipient agreement; 2. Provision of identification details such as CFDA number, amount of federal funds obligated, and the award period for determined subrecipient awards; 3. Submission of programmatic and financial reports as specified in the subrecipient agreement; 4. Review of a single audit in accordance with 2 CFR Part 200, Subpart F for subrecipients that expend $750,000 or more in federal funds during a fiscal year, if applicable; and 5. Review of their audit report(s) and addressing any finding(s) related to their federal award(s), including the related appropriate corrective actions, when applicable. B. Retroactive Subrecipient Portfolio Risk Assessment and Correction(s). The Organization performed a risk assessment of the existing subrecipient portfolio to identify risks, for the audit periods July 1, 2022 – June 30, 2023, and July 1, 2023 – June 30, 2024. The objective of this risk assessment was to identify, evaluate, and prioritize risks that could adversely impact the Organization’s ability to achieve its strategic, operational, compliance and quality assurance goals. The completion of the Organization’s portfolio risk assessment resulted in correction of identified non-compliant subrecipient agreement(s). C. Subrecipient Policies and Procedures. By December 31, 2024, the Organization updated and implemented financial policies and procedures aligned to the subrecipient monitoring and management provision of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance, including checklists, flowcharts, samples, data sheets, data sharing agreements, etc.; and the current practices of the Organization to the present period of the report dated March 2, 2026, is consistent with such developed subrecipient policies and procedures.

Categories

Subrecipient Monitoring

Other Findings in this Audit

  • 1176963 2023-002
    Material Weakness Repeat
  • 1176964 2023-003
    Material Weakness Repeat
  • 1176965 2023-004
    Material Weakness Repeat
  • 1176966 2023-005
    Material Weakness Repeat
  • 1176967 2023-006
    Material Weakness Repeat
  • 1176969 2023-003
    Material Weakness Repeat
  • 1176970 2023-004
    Material Weakness Repeat
  • 1176971 2023-005
    Material Weakness Repeat
  • 1176972 2023-006
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.932 NATIVE HAWAIIAN HEALTH CARE SYSTEMS $5.61M
84.362A NATIVE HAWAIIAN EDUCATION $711,178
93.011 NATIONAL ORGANIZATIONS FOR STATE AND LOCAL OFFICIALS $143,172
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $117,660
93.387 NATIONAL AND STATE TOBACCO CONTROL PROGRAM $110,263
93.426 THE NATIONAL CARDIOVASCULAR HEALTH PROGRAM $72,971
93.185 IMMUNIZATION RESEARCH, DEMONSTRATION, PUBLIC INFORMATION AND EDUCATION TRAINING AND CLINICAL SKILLS IMPROVEMENT PROJECTS $56,604
93.859 BIOMEDICAL RESEARCH AND RESEARCH TRAINING $35,481
93.421 STRENGTHENING PUBLIC HEALTH SYSTEMS AND SERVICES THROUGH NATIONAL PARTNERSHIPS TO IMPROVE AND PROTECT THE NATION’S HEALTH $30,763
45.311 NATIVE AMERICAN AND NATIVE HAWAIIAN LIBRARY SERVICES $24,589
93.334 THE HEALTHY BRAIN INITIATIVE: TECHNICAL ASSISTANCE TO IMPLEMENT PUBLIC HEALTH ACTIONS RELATED TO COGNITIVE HEALTH, COGNITIVE IMPAIRMENT, AND CAREGIVING AT THE STATE AND LOCAL LEVELS $9,374