Finding Text
Item: 2026-001 Assistance Listing Numbers: 93.332 Program: Cooperative Agreement to Support Navigators in Federally-Facilitated Exchanges Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: N/A Pass-Through Grantor Identifying Number: N/A Award Year: August 27, 2024 through August 26, 2029 Compliance Requirement: Subrecipient Monitoring Criteria: In accordance with 2 CFR 200.332 (e), (g) and (h) - pass-through entities must monitor subrecipient activity through reviewing financial and performance reports, verifying that subrecipients are audited if they meet the single audit criteria, and ensure that subrecipients take corrective action on single audit findings. Condition: AACHC implemented revised subrecipient monitoring procedures in October 2025 as part of its corrective action plan to address the prior-year finding. The revised procedures were applied to all active and new subrecipient agreements beginning October 2025. However, because certain subrecipient agreements had already concluded before the new procedures were implemented, AACHC did not retrospectively apply the monitoring process to those closed agreements. As a result, AACHC did not obtain and review financial statement audit or Single Audit reports for three subrecipients whose agreements ended prior to implementation of the revised procedures. Questioned Costs: N/A Context: AACHC had thirteen subrecipients subject to testing for subrecipient monitoring during the fiscal year, and all thirteen were selected for testing. Three of the thirteen subrecipients tested had agreements that ended before AACHC implemented revised subrecipient monitoring procedures in October 2025. For these three subrecipients, AACHC did not obtain and review the subrecipients’ audit or single audit reports and, therefore, did not determine whether any single audit findings required follow-up or corrective action. Based on the nature of the control deficiency and the extent of exceptions identified, this matter is considered a material weakness in internal control over compliance. Effect: AACHC did not obtain and review audit or Single Audit reports for certain subrecipients that received federal funding during the fiscal year and, therefore, did not determine whether any audit findings required follow-up or corrective action. As a result, AACHC lacked assurance that federal awards were administered in compliance with applicable federal requirements. Cause: The finding resulted from the timing of implementation of AACHC's revised subrecipient monitoring procedures. The procedures were established and implemented in October 2025 in response to the prior-year audit finding but were not applied to subrecipient agreements that had already ended before implementation. As a result, closed agreements were not evaluated for Single Audit applicability or related financial statement audit findings requiring follow-up. Identification of Repeat Finding: Repeat finding – See 2025-002. Recommendation: AACHC should enhance its subrecipient monitoring procedures to ensure that all subrecipients receiving federal funding during the fiscal year, including those whose agreement end before monitoring activities are performed, are evaluated for single audit applicability, have applicable audit reports obtained and reviewed, and receive appropriate follow-up on any audit findings. Views of responsible officials and planned corrective action: Management of AACHC concurs with the finding. See Corrective Action Plan.