Finding Text
2024–004—Subrecipient Monitoring Processes and Controls Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.479 – Good Health and Wellness in Indian Country Award #: 5 NU58DP006727-03-00 Award Period: 09/30/2019 – 09/29/2024 Estimated Questioned Costs: N/A Compliance Requirement: Subrecipient Monitoring Statement of Condition For the year ended September 30, 2024, the AAIHB did not maintain effective controls over subrecipient monitoring related to the Good Health and Wellness in Indian Country program. Required subrecipient financial and performance reporting support was not consistently obtained in a timely manner, often resulting in payment of subrecipient invoices occurring 3 to 7 months after the end of the period. Auditors also noted that required subrecipient audit reports were not present in the subaward files and no evidence of review could be provided. No evidence of any formal corrective actions could be provided. AAIHB personnel indicated that subrecipients did not always submit reimbursement requests and required reports timely, and that payment of invoices was withheld until support was provided; however, AAIHB did not consistently document follow-up actions, escalation, or enforcement of subaward reporting requirements to ensure timely and complete subrecipient reporting Criteria Title 2 CFR §200.331 requires pass-through entities to monitor subrecipient activities to ensure that subrecipients comply with federal statutes, regulations, and the terms and conditions of subawards, including the timely receipt and review of required financial and performance reports. Effect Required subrecipient reporting, monitoring, and follow-up were not consistently performed and documented. As a result, AAHB lacked reasonable assurance that subrecipients complied with subaward terms and that subrecipient expenditures and performance information used for AAIHB reporting were allowable, supported, timely, and reliable. Given that subrecipient activity is material to the administration of AAIHB’s major program, these conditions increase the risk that unsupported or noncompliant subrecipient activity may not be identified and corrected timely. Such conditions may require additional corrective actions or increased scrutiny by grantor or oversight agencies. Cause AAIHB did not design and/or consistently perform a formal subrecipient monitoring process, including (1) a standardized tracking and follow-up protocol for late or missing submissions and (2) documented escalation and corrective action when subrecipients do not comply. As a result, subrecipient oversight relied largely on voluntary compliance by subrecipients, without sufficient AAIHB review, enforcement, or documentation of monitoring activities. Recommendation We recommend AAIHB: • Develop and implement written subrecipient monitoring policies and procedures that clearly define reporting requirements and submission deadlines. • Track subrecipient report due dates and document follow-up efforts for late or missing reports. • Provide training to staff responsible for subrecipient oversight to strengthen monitoring and compliance. View of Responsible Officials and Corrective Action Plan The AAIHB acknowledges that its subrecipient related practices could be improved upon. The AAIHB will review and revise its internal processes and procedures and implement the auditor’s recommendations to ensure compliance with subrecipient requirements. Corrective Action Plan Timeline Prior to the audit finding, the AAIHB already had one meeting with key personnel involved in the administration and oversight of subawards to begin implementing improvements to our subrecipient monitoring practices. The AAIHB is actively working to update subrecipient monitoring practices and anticipates having policies and procedures in place by the beginning of the next fiscal year. In addition, the GHWIC program has found our internal administrative assistance portal that was developed to optimize admin workflow has been helpful because it has also optimized the processing of subaward invoices. Furthermore, the GHWIC program is in the process of developing a sub awardees data portal for invoicing and reporting purposes to streamline the subaward process and ensure payment in a timely manner. Designation of Employee Position Responsible for Meeting Deadline Executive Director, Finance, Program Managers/Directors/Coordinators, Grants & Contracts Specialist