Finding Text
Federal Award Identification: 2023-70417-39322 Federal Program: American Rescue Plan Technical Assistance Investment Program Assistance Listing: 10.234 Federal Agency: U.S. Department of Agriculture Pass-through Entity: Not applicable - direct award Award Period Audited: Fiscal year ended December 31, 2025 Criteria: 2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring. In addition, 2 CFR 200.332(e) requires pass through entities to monitor subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the subaward, including review of financial and performance information and follow up on identified issues. Condition: During the audit, it was determined that for all (2) subrecipients tested, the Organization did not document subrecipient risk assessments and, for one subrecipient tested, did not demonstrate that elevated risks were used to determine or adjust the nature, timing, or extent of subrecipient monitoring. Management identified one subrecipient as having recurring federal award findings, including material weaknesses reported in prior Single Audits. Despite this known elevated risk, the Organization applied the same baseline subrecipient monitoring procedures to all (2) subrecipients under the major program. Context: The deficiency was identified during audit testing of subrecipient monitoring controls and inquiry of management. Cause: The deficiency resulted from the absence of formal policies and procedures requiring documentation of subrecipient risk assessments and requiring that identified risks be used to determine and document the appropriate level of subrecipient monitoring. Effect: This significant deficiency in internal control over compliance created a reasonable possibility that material noncompliance with subrecipient monitoring requirements would not be prevented or detected on a timely basis. However, no instances of noncompliance were identified. Although no questioned costs were identified, the deficiency increased the risk that noncompliance could occur and remain undetected. Known Questioned Costs: None. Repeat Finding Status: This is a new finding for the year ended December 31, 2025. Recommendation: The Organization should implement formal, documented policies and procedures for risk-based subrecipient monitoring to ensure that monitoring activities are tailored based on subrecipient risk levels. This should include documented consideration of subrecipient audit results and retention of documentation supporting the performance and results of enhanced monitoring procedures for higher risk subrecipients. Views of Responsible Officials: Management agrees with the finding. Management acknowledges that subrecipient risk assessments were not formally documented and that monitoring activities were not adjusted based on identified risk levels. Management has indicated that corrective actions will be taken to implement a documented, risk based approach to subrecipient monitoring.