Finding Text
Subrecipient Monitoring Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y- 01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: As a pass-through entity, Nevadaworks is required by 2 CFR 200.332 (Requirements for pass-through entities) to monitor the activities of each subrecipient as necessary to ensure 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 (2 CFR 200.332(d)). WIOA oversight requirements at 20 CFR 683.410 and 683.420 reinforce monitoring of subrecipients and 2 CFR 200.303 requires effective internal control over federal awards. Condition: Audit procedures included selecting 5 of 8 subrecipients that received WIOA funding during fiscal year 2025 and testing management’s monitoring activities. Management was unable to provide evidence that monitoring procedures had been performed for three of the five subrecipients tested. Specifically, no monitoring reports, desk reviews, site visit documentation, risk assessments, corrective action follow-up, or other monitoring evidence was maintained for these subrecipients during the fiscal year. Subsequent inquiries with management identified that no monitoring procedures were performed for the three remaining subrecipients not selected. Although management monitored two subrecipients that remained active throughout the year, no procedures were performed over six subrecipients whose agreements terminated earlier in the fiscal year. As a result, management could not demonstrate that federal funds provided to those organizations were subject to oversight sufficient to ensure compliance with applicable federal requirements. Questioned costs: None. Context: The population consisted of eight subrecipients receiving WIOA funding during fiscal year 2025. Approximately $3.7 million in federal funding was passed through to subrecipients during the fiscal year. Monitoring deficiencies affected six of eight subrecipients, representing a substantial portion of Nevadaworks’ pass-through activity. Cause: Management's subrecipient monitoring process did not include procedures addressing subrecipients whose agreements terminated during the fiscal year. Because several contracts closed early in the year, management did not perform monitoring activities before closeout. In addition, there was no formal monitoring schedule or risk assessment process to ensure monitoring requirements were satisfied regardless of the duration of the award. Effect: Without documented monitoring activities, management lacked adequate assurance that federal funds were expended for authorized purposes, that program performance objectives were achieved, and that subrecipients complied with applicable laws, regulations, and grant requirements. The absence of monitoring procedures constitutes material noncompliance with pass-through entity responsibilities under Uniform Guidance. Repeat Finding: No. Recommendation: Management should establish and implement a formal risk-based subrecipient monitoring program consistent with 2 CFR 200.332. Monitoring activities should include documented risk assessments, periodic reviews of financial and performance information, monitoring procedures for terminated awards, and documented follow-up of identified issues. Monitoring requirements should apply to all subrecipients, including those with short-term agreements or agreements closed during the fiscal year. Views of responsible officials: There is no disagreement with the audit finding. Nevadaworks will implement a formal subrecipient monitoring process that includes documented policies, monitoring procedures applicable to all subrecipients, and monitoring activities incorporated into subaward closeout procedures.