Finding Text
Federal Program/Award Identification: 10.525 Farm and Ranch Stress Assistance Network (FRSAN) Federal Award Project Number: 2020-70028-32729, 2023-70028-41283, and 2024-70028-43314 Federal Award Project Year: 2020 through 2026 Name of Federal Agency: United States Department of Agriculture Name of the Applicable Pass-Through Entity: National Institute of Food and Agriculture Criteria: The Organization is required to evaluate the risk of subrecipient noncompliance and monitor the subrecipient’s activities, to ensure the federal funds are being used for their authorized purpose. Condition: We noted that management did not re-evaluate the subrecipient risks of noncompliance during the year ended December 31, 2024, nor did management test that the expenses being requested for reimbursement from the subrecipients were aligned with the activities and costs allowed under the federal program. Cause: The Organization had significant turnover during the year ended December 31, 2024, causing certain aspects of the system of internal controls to not operate effectively throughout the year. In addition, the Organization does not have a policy in place regarding subrecipient monitoring. Effect or Potential Effect: Subrecipients could have used funds for activities or costs that are unallowed by the federal program. Questioned Costs: None Context: UHY requested the risk assessments and evidence of the detailed review of expenses submitted to the Organization by the subrecipients to test the Organization’s monitoring, and no evidence was provided related to updated risk assessments or detailed testing of each expense included in the expense reimbursement submission. However, all reimbursement requests did obtain two approvals, as required by the Organization’s policies related to cash disbursements. Recommendation: We recommend the Organization design and implement an internal control to do annual risk assessment for all subrecipients. We also recommend the Organization design and implement an internal control to test a selection of invoices submitted for reimbursement from the subrecipients and document the conclusion regarding the compliance with activities and costs allowed by the program. Views of Responsible Officials and Planned Correction Action: See “Management’s Response and Corrective Action” plan section.