Finding 1239501 (2025-002)

Finding 2025-002 United States Department of Agriculture - Forest Service Federal Assistance Listing No. 10.727 Inflation Reduction Act (IRA) Baltimore Tree Trust Significant Deficiency in Internal Controls and Noncompliance Over Subrecipient Monitoring Repeat Finding: No Condition: For 1 out 1 subrecipient, the subaward agreement did not identify the unique entity identifier (UEI), the Federal Award Identification Number (FAIN), and Assistance Listing Number (AL) as required. Management also did not establish and implement adequate written policies and procedures for monitoring subrecipients. For 1 out 1 subrecipient, we were unable to substantiate that BTT reported the first-tier subaward made to Blue Water Baltimore in accordance with the applicable Federal award terms. The subaward met the applicable $30,000 Federal funding threshold for reporting; however, BTT was unable to provide sufficient documentation demonstrating that the required subaward reporting was completed. Criteria: In accordance with 2 CFR §200.303, the non-federal entity must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier; and (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the federal award identification including the subrecipient's unique entity identifier, FAIN, identification of whether the award is R&D and indirect cost rate for the federal award. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. (f) Determine whether the PTE has written subrecipient monitoring policies and procedures that address the identification of subawards, assessment of subrecipient risk of noncompliance, and performance of monitoring procedures based on identified risks. (g) Per grant agreement, in accordance with the applicable Federal award terms, unless otherwise exempt, the PTE is required to report each first-tier subaward action that equals or exceeds 30,000 in Federal funds awarded to a non-Federal entity or Federal agency. The non-Federal entity or Federal agency must report each applicable obligating action described in paragraph (g) of the award terms to fsrs.gov. For subaward information, the report must be submitted no later than the end of the month following the month in which the obligation was made Cause: Management did not have adequate written procedures or controls in place to ensure that all required federal award information and applicable requirements were identified and incorporated into subaward agreements. Specifically, management did not have a formal review process to verify the inclusion of the UEI, FAIN, ALN, and applicable federal award requirements before subawards were executed. Effect: BTT was not in compliance with subrecipient monitoring requirements of the grant under the Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that BTT establish and implement written policies and procedures to ensure that all subaward agreements include the required Federal information, including the UEI, FAIN, and ALN. BTT should also establish procedures to ensure that subrecipients are properly monitored and that all first-tier subawards meet the applicable reporting threshold are reported timely and accurately in accordance with Federal requirements. BTT should maintain sufficient documentation to demonstrate that required subaward reporting and monitoring activities were completed. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.