Finding Text
Finding 2025-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance Compliance requirement: Subrecipient monitoring Criteria: In accordance with the Uniform Guidance, a pass-through entity is required to clearly identify to subrecipients the award as a federal subaward and provide the information required by the Uniform Guidance. A pass-through entity is required to evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. A pass-through entity is also required to monitor the activities of the subrecipient based on risk assessment and required monitoring outlined in the Uniform Guidance. Condition: Willamette Health Council did not comply with the subrecipient monitoring requirements applicable to the Federal program. Specifically, Willamette Health Council did not clearly identify the pertinent federal award information and terms and conditions to the subrecipients. Willamette Health Council also did not adequately perform, and did not document performance of, risk assessments for the subrecipients to determine the nature, timing and extent of monitoring procedures. Willamette Health Council performed some monitoring of subrecipients including periodic meetings, review of expenditures, and review of progress reports; however, Willamette Health Council failed to inquire of subrecipients regarding audit requirements and/or request copies of any audits completed for subrecipients. Cause: Willamette Health Council did not identify all required elements of compliance with respect to subrecipient monitoring and did not design and implement adequate internal controls over compliance ensure compliance with the subrecipient award identification, risk assessment and monitoring requirements as outlined in the Uniform Guidance. Effect / Potential Effect: Without properly designed and implemented subrecipient monitoring controls, there is an increased risk that subrecipients may not comply with federal statutes, regulations, and the terms and conditions of subawards, and that noncompliance may not be prevented, detected, or corrected on a timely basis. The deficiencies represent a material weakness in internal control over compliance and resulted in the auditor’s qualified opinion on compliance with respect to subrecipient monitoring. Questioned Costs: None. Context/Perspective: The deficiencies and noncompliance was pervasive. Repeat Finding: Not applicable. There was no prior year audit. Recommendation: We recommend that Willamette Health Council implement and document subrecipient monitoring policies and procedures that, at a minimum: - Require subaward agreements to clearly identify the award as a subaward and include required federal award identification information and applicable requirements and terms. - Require documented subrecipient risk assessments to be performed timely and updated as appropriate to determine risk-based monitoring. - Establish minimum monitoring procedures (for example, review of financial and performance reports, follow-up on significant developments, and documented periodic monitoring) commensurate with assessed risk. - Require verification of subrecipient audit requirements, including obtaining and reviewing applicable audit reports (or other required audit documentation), and documenting follow-up on subaward-related audit findings as applicable. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.