Finding Text
Reportable Finding Considered a Significant Deficiency and Noncompliance Finding – Subrecipient Monitoring Compliance Agency: U.S. Department of State, Bureau of Population, Refugees, and Migration (PRM) Program: U.S. Refugee Admissions Program ALN# 19.510 Grant Number: SPRMCO25CA0026 and SPRMCO25CA0028 Program Year: 2025 Criteria: 2 CFR §200.332 requires pass-through entities to establish and implement procedures to monitor subrecipients and ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effective internal controls should include documented policies and procedures governing the subrecipient monitoring process. Condition: Community Sponsorship Hub (CSH) did not have formally documented and approved subrecipient monitoring policies and procedures in place during FY2025. Although management performed various monitoring activities, including execution of subaward agreements, review of reimbursement requests, financial and programmatic reporting reviews, and communication with subrecipients, these procedures were not formally documented in a written policy until 2026. Cause: Management had established operational subrecipient monitoring practices but had not formally documented these practices in approved policies and procedures during the period under audit. As a result, monitoring activities were performed based on institutional knowledge rather than a formally established control framework. Effect: The absence of formal written policies and procedures increases the risk that subrecipient monitoring activities may be applied inconsistently, incompletely, or not performed in accordance with Uniform Guidance requirements. This could result in noncompliance by subrecipients not being identified and addressed in a timely manner. Questioned costs: None Perspective: Statistical sampling was not used; however, a nonstatistical sampling approach was applied in accordance with AICPA guidance. The deficiency impacts the design of internal controls over CSH’s subrecipient monitoring process and therefore represents a systemic issue rather than an isolated occurrence. Testing of selected subawards indicated that monitoring activities were generally performed and documented; however, the lack of a formal written policy existed throughout FY2025 and affected all federal programs with subrecipient activity. Repeat finding: This is not a repeat finding. Recommendation: We recommend that management establish, approve, and maintain comprehensive written subrecipient monitoring policies and procedures that comply with 2 CFR §200.332. The policy should clearly define responsibilities, risk assessment procedures, monitoring activities, documentation requirements, follow-up procedures, and compliance review requirements for all subrecipients. Management’s response (unaudited): See Corrective Action Plan