Finding Text
Improper monitoring of subrecipients Information on Federal Programs: Assistance Listing Number: 93.671 Family Violence Prevention and Services/Domestic Violence Shelter and Supportive Services Criteria: 2 CFR 200.232 states “A pass-through entity must: (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complied with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant development negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal ward provided to the subrecipient from the pass- through entity as required by 200.521.(4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that confirm to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending up on the pass-through entity’s assessment of the risk posed by the subrecipient, the following monitoring tools may be useful for the pass- through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient’s program operations; and (3) Arranging for agreed-upon procedures engagements as described in 200.425.” Condition: Auditors noted there was missing documentary evidence of the following subrecipient monitoring requirements: obtain budgets for reasonable expenses from subrecipients, monitoring of quarterly subrecipient reports, subrecipient contract agreements, site visits, and receiving updated audit reports from subrecipients and issuing management decisions over federal award findings for pass through entities. We consider this condition to be a material weakness to the Subrecipient Monitoring compliance requirement and is not a repeated finding. Statistical sampling was not used in making sample selections. Questioned Costs: None Effect: As a result, the Organization was missing documentation relating to subrecipient monitoring requirements for the year ended September 30, 2023. Cause: This is due to ineffective controls over subrecipient monitoring resulting in a lack of documentation, and miscommunications with employee turnover. Recommendation: Auditors recommend that documentation be maintained for subrecipient monitoring and to implement site visits. In addition, the Organization should follow up and obtain audited financial statements each year from subrecipients and issue management decisions for federal award findings for pass through entities. Auditors also recommend implementing written policies and procedures over subrecipient monitoring. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and their response is included with the Corrective Action Plan.