Finding Text
Compliance Requirement M. Subrecipient Monitoring Finding Type Material Weakness in Internal Control Over Compliance and Compliance Finding Federal Agency U.S. Department of Treasury Federal Program Title Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Criteria: M. 2 CFR §200.331 requires pass-through entities to evaluate subrecipient risk, ensure each subaward is properly identified, issue required subaward notifications, verify suspension/debarment status, monitor subrecipient activities, and ensure subrecipients meet audit requirements. Condition: The Organization has not established written procedures to identify, assess, monitor, or accurately account for amounts provided to subrecipients of Coronavirus State and Local Fiscal Recovery Funds funding. The Organization could not provide a complete and accurate accounting of the amounts passed through to a subrecipient during the audit period. Cause: Lack of formal policies and training regarding subaward responsibilities under Uniform Guidance. Effect: The Organization cannot demonstrate compliance with federal subaward requirements. This increases the risk of unallowable costs, subrecipient noncompliance, and misstated SEFA reporting due to the inability to determine and disclose amounts passed through to subrecipients. Questioned Costs: $ 185,000 Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Content: The Organization entered into an agreement with a post-secondary institution to support the development of a Whole Homes Repair workforce through scholarships to eligible students. The Organization considered the post-secondary institution a contractor. However, the guidance in the U.S. Treasury Final Rule states that whether an entity is a subrecipient or a beneficiary is contingent upon the reason why an entity receives Recovery Funds. If an entity receives Recovery Funds for their own benefit, they are a beneficiary. For example, if an entity receives Recovery Funds as a response to the negative economic impact experienced due to the COVID-19 pandemic, they are a beneficiary. If they receive the funds for the purpose of carrying out the program, they are a subrecipient. Recommendation: The Organization should adopt written subrecipient monitoring and tracking policies, perform risk assessments, issue subaward notifications with all required elements, and implement procedures to accurately record and disclose the amounts provided to subrecipients in the general ledger and SEFA. Views of Responsible Officials: The Organization disagrees with this audit finding rationale.