Finding Text
Criteria: In accordance with 2 CFR Part 200.332, pass-through entities are required to evaluate each subrecipient’s fraud risk and risk of noncompliance and determine appropriate monitoring based on that risk. Pass-through entities are also responsible for reviewing applicable audit reports, following up on identified deficiencies or questioned costs, and verifying that subrecipients are eligible to participate in federal programs. Condition: The Organization had not established adequate procedures to monitor 4 of the 9 subrecipients tested receiving federal funds. Documented risk assessments were not performed, applicable audit reports were not consistently obtained and reviewed, and suspension and debarment status was not documented before subawards were issued. Cause: The Organization had not established formal policies governing subrecipient risk assessments, audit report review, suspension and debarment verification, or follow-up procedures. Responsibility for subrecipient monitoring also had not been formally assigned. Effect: The lack of a documented monitoring process increases the risk that noncompliance, audit findings, performance deficiencies, or eligibility issues could occur and remain undetected. Questioned Costs: None noted Repeat Finding: No Recommendation: We recommend that management establish formal subrecipient monitoring procedures that require documented risk assessments, review of applicable audit reports, verification of suspension and debarment status before issuing subawards, and documented follow-up on identified findings. The nature and extent of monitoring should be based on each subrecipient’s assessed risk, with sufficient documentation retained to demonstrate compliance with federal requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding; see corrective action plan.