Finding Text
Finding 2023-012—Subrecipient Monitoring Material Weakness Federal Program: All federal awards. Criteria: Under 2 CFR 200.302(b), the entity must maintain internal controls to ensure tracking, collection, and resolution of amounts owed by subrecipients (e.g., repayments, questioned costs, overpayments, or unallowable costs). In addition, under 2 CFR 200.331(d) and 200.332, pass-through entities must: • Monitor subrecipient activities to ensure federal funds are used for authorized purposes. • Ensure subrecipients take timely and appropriate action on deficiencies, including financial issues. • Review financial and performance reports. Finding 2023-012—Subrecipient Monitoring (Continued) • Verify that subrecipients have audits as required; follow up on any audit findings or amounts due to the pass-through entity. Condition: During our audit of IFDC’s subrecipient monitoring procedures, we identified that IFDC did not provide the support of the subgrantee annual reports and evidence of timely follow up. Cause: IFDC does not have formal written procedures requiring appropriate monitoring procedures to ensure that subrecipients are providing the necessary documentation for appropriate risk assessment and monitoring. Effect: Noncompliance with 2 CFR 200.331. In addition, there is weak oversight of federal funds passed through to subrecipients and potential material misstatement of subrecipient expenditures on the Schedule of Expenditures of Federal Awards (SEFA). Questioned costs: None noted. Context: IFDC passed through approximately $5 million to 25 subrecipients during the fiscal year and there was no evidence of timely receipt of the annual audits of each subrecipient. Management provided emails showing there was communication but there is no formal policy to require timely follow up and appropriate documentation. Repeat Finding: No Recommendation: IFDC should establish formal policies and procedures for subrecipient risk assessment and monitoring under 2 CFR 200.331. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.