Finding Text
Funding Agency U.S. Department of Health and Human Services Criteria: Title Substance Abuse and Mental Health Services Projects of Regional and National Significance Federal Assistance Listing Number: 93.243 Under 2 CFR § 200.332, a pass-through entity is required to clearly identify Federal awards to subrecipients at the time of the subaward and communicate all applicable Federal award information, terms, and conditions through the subaward agreement. The pass-through entity is also responsible for evaluating each subrecipient’s risk of noncompliance and monitoring subrecipient activities to ensure that Federal funds are used for authorized purposes, in compliance with applicable Federal statutes, regulations, and the terms and conditions of the subaward, and that program performance objectives are achieved. Accordingly, the pass-through entity should maintain adequate documentation supporting its subrecipient relationships, including properly executed subrecipient agreements, applicable amendments, approved budgets when required by the agreement, and other relevant monitoring documentation. Such documentation should be current, executed in a timely manner, and retained for the period during which Federal funds are provided to and administered by the subrecipient. Condition: During our testing of five subrecipients for the fiscal year ended June 30, 2023, we noted the following deficiencies: Three of five subrecipient agreements were executed after the fiscal year end. Therefore, the agreements were not timely executed during the period in which the subrecipients were carrying out activities under the Federal awards. For the remaining two of five subrecipients, amendments applicable to the current fiscal year were not available for audit examination. Accordingly, we were unable to verify the current-year terms, funding amounts, periods of performance, and other applicable provisions of the subaward arrangements. Approved budgets required under the applicable subrecipient agreements were not provided for audit examination. As a result, we were unable to verify that subrecipient expenditures were incurred in accordance with the approved budgets and the terms and conditions of the respective agreements. As a result, the School did not maintain sufficient supporting documentation demonstrating that complete and current subaward agreements, amendments, and required approved budgets were in place and available for monitoring purposes during the fiscal year. Cause: The School did not have adequate procedures in place to ensure that subrecipient agreements and amendments were executed timely and that all required supporting documentation, including approved budgets, was obtained, retained, and available as part of the subrecipient monitoring process. Effect: The School is not in compliance with federal requirements related to subrecipient monitoring. Auditor's Recommendations: We recommend that the School establish and implement formal procedures to ensure that: Subrecipient agreements are fully executed before subrecipients begin performing activities or incurring expenditures under the applicable Federal award; Amendments are prepared and executed timely whenever funding amounts, periods of performance, budgets, or other terms of the agreement change; Approved budgets required by the subrecipient agreements are obtained, formally approved, and retained for each applicable fiscal year; Subrecipient expenditures are periodically compared to the approved budgets as part of the School's monitoring procedures; and All executed agreements, amendments, approved budgets, and other monitoring documentation are centrally maintained and readily available for audit examination.