FAC Explorer

Finding 1218247 (2025-002)

Material Weakness Repeat Finding
Requirement
M
Questioned Costs
-
Year
2025
Accepted
2026-06-23
Audit: 404493
Organization: Valorus (CA)
Auditor: FECHTER AND COMPANY CERTIFIED PUBLIC ACCOUNTANTS

AI Summary

  • Core Issue: Subrecipient agreements are missing key required elements, leading to incomplete federal expenditure reporting.
  • Impacted Requirements: Compliance with 2 CFR § 200.332 for subaward agreements and 2 CFR § 200.510(b) for SEFA reporting.
  • Recommended Follow-Up: Create a standardized subaward agreement template and enhance monitoring to ensure compliance with reporting requirements.

Finding Text

Finding 2025-002 – Incomplete Subrecipient Agreements and Inaccurate Subrecipient SEFA Reporting Federal Program: Violence Against Women Formula Grants Assistance Listing Number: 16.588 Compliance Requirement: Subrecipient Monitoring Internal Control Deficiency: Material Weakness - Insufficient controls over subaward agreement content and subrecipient reporting oversight Compliance Finding: Subaward agreements missing required elements; subrecipient failed to report pass-through funds on its SEFA Questioned Costs: None Criteria: Under 2 CFR § 200.332, pass-through entities must ensure that all subaward agreements contain specific federal award information, monitoring expectations, and required terms and conditions. Subrecipients must report federal expenditures on their SEFA in accordance with 2 CFR § 200.510(b). Condition: During our testing of subrecipient monitoring and federal reporting, we noted that subrecipient agreements did not include several elements required under 2 CFR § 200.332(b), (c), and (e)–(i). Specifically, the agreements reviewed were missing one or more of the following required components: • Federal award identification information, including unique entity identifier (UEI), Federal Award Identification Number (FAIN), ALN, award date, and other required identifiers. • Required access-to-records language granting the pass-through entity, auditors, and federal agencies the right to access pertinent records. • Subaward-level closeout requirements, including timelines and documentation expectations. In addition, during compliance testing we noted that the subrecipient did not include the pass-through funds received in its own SEFA, resulting in incomplete federal expenditure reporting. Cause: The deficiencies appear to result from the absence of a standardized subaward agreement template and insufficient review procedures to ensure all Uniform Guidance elements are included. The subrecipient’s SEFA omission appears to stem from a lack of communication and monitoring regarding reporting requirements. Effect: Incomplete subaward agreements increase the risk that subrecipients may not understand federal requirements, may apply incorrect cost principles, or may fail to comply with federal terms. Missing SEFA reporting by the subrecipient results in inaccurate federal expenditure reporting and may affect federal oversight, risk assessments, and audit coverage.Recommendation: Management should implement a standardized subaward agreement template that incorporates all elements required under 2 CFR § 200.332. If any of the required elements are missing, adding a short federal award information/Uniform Guidance appendix and an explicit records-access and closeout article would bring the contracts into compliance. Management should also strengthen monitoring procedures to ensure subrecipients understand and comply with SEFA reporting requirements, including verifying that pass-through funds are properly reported. Management’s Response and Corrective Action Plan is found on page 28-29.

Corrective Action Plan

Finding 2025-002 – Incomplete Subrecipient Agreements and Inaccurate Subrecipient SEFA Reporting Subrecipient agreements were executed based on California’s State Administrator of federal funds (CalOES) requirements applicable to second-tier subawards. Based on guidance provided during Federal Grants Advanced Training and the 2025 CalOES Subrecipient Handbook (page 65), entities receiving pass-through funding from the state are required to follow CalOES second-tier subaward requirements. Accordingly, VALOR’s agreements include the elements required for second-tier subawards. Elements of a Second-Tier Subaward (From the 2025 CalOES Subrecipient Handbook) The following elements must be included in a Second-Tier Subaward: • Name of the Subrecipient Organization and the participating agency/organization, • The titles and contact information for the individuals that will serve as the primary contacts,• The timeframe of the agreement (this must cover the Grant Subaward performance period), • The roles and responsibilities (as they relate to the specific Grant Subaward) of the Subrecipient Organization and the participating agency/organization, • Specific information concerning all non-fiscal resources shared between the Subrecipient Organization and the participating agency/organization, • Reporting requirements necessary for the Subrecipient Organization to meet Cal OES reporting requirements, • Signatures of the chief executive or designee of the Subrecipient Organization and the participating agency/organization, including the dates of those signatures, and • Specific information concerning the transfer of any Grant Subaward funds from the Subrecipient Organization to the participating agency/organization. At a minimum, this information must include the total amount of Grant Subaward funds that will be transferred, the process for transferring the Grant Subaward funds (e.g., monthly invoices, payment based on deliverables), what the Grant Subaward funds will be used for, and any match contribution provided by the participating agency/organization. Any funds included in the Second-Tier Subaward must be clearly designated (not itemized) in the Grant Subaward Budget Pages (Cal OES Form 2-106a or b). Additionally, second tier subrecipients are prohibited from charging indirect costs; therefore, indirect cost provisions were not included in the agreements. Based on the above, management believes the subrecipient agreements substantially complied with applicable CalOES requirements. Any omissions identified were administrative in nature and did not impact program performance, allowability of costs, or oversight of subrecipient activities. To strengthen internal controls and ensure full compliance with all applicable grant requirements, beginning January 1, 2027, VALOR’s Director of Operations, Rosemary Gonzales, will include all required elements identified in the finding in future subrecipient agreements. In addition, VALOR will review subrecipient Single Audit reports to verify that applicable grant funding is properly reported on the SEFA. VALOR will also notify subrecipients of the requirement to include these amounts in their future SEFA reporting. Contracts for the current year, 2026, have already been signed.

Categories

Subrecipient Monitoring

Other Findings in this Audit

  • 1218248 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
16.524 LEGAL ASSISTANCE FOR VICTIMS $365,319
93.497 FAMILY VIOLENCE PREVENTION AND SERVICES/ SEXUAL ASSAULT/RAPE CRISIS SERVICES AND SUPPORTS $254,184
16.588 VIOLENCE AGAINST WOMEN FORMULA GRANTS $250,000
16.582 CRIME VICTIM ASSISTANCE/DISCRETIONARY GRANTS $220,658
16.052 RESTORATIVE PRACTICES TO ADDRESS DOMESTIC VIOLENCE, DATING VIOLENCE, SEXUAL ASSAULT, AND STALKING $205,958
16.556 STATE DOMESTIC VIOLENCE AND SEXUAL ASSAULT COALITIONS $205,491
93.136 INJURY PREVENTION AND CONTROL RESEARCH AND STATE AND COMMUNITY BASED PROGRAMS $150,556
16.529 EDUCATION, TRAINING, AND ENHANCED SERVICES TO END VIOLENCE AGAINST AND ABUSE OF WOMEN WITH DISABILITIES $132,222
16.757 JUDICIAL TRAINING ON CHILD MALTREATMENT FOR COURT PERSONNEL JUVENILE JUSTICE PROGRAMS $50,000
16.526 OVW TECHNICAL ASSISTANCE INITIATIVE $25,064