Finding Text
Agencies: U.S. Department of Health and Human Services Pass-through Agency: Illinois Department of Public Health Federal Program: HIV Prevention Activities - Health Department Based Assistance Listing Number: 93.940 Criteria: The applicable version of 2 CFR § 200.332 requires a pass-through entity to communicate required federal award information to each subrecipient, evaluate each subrecipient’s risk of noncompliance to determine appropriate monitoring, monitor the subrecipient’s activities, follow up on identified deficiencies, and verify compliance with applicable single audit requirements. Condition: For two subrecipients selected, PHIMC maintained executed agreements and performed documented programmatic and fiscal monitoring through administrative site visits. However, PHIMC did not maintain formal, written overarching subrecipient monitoring policies and procedures governing required federal award information, subrecipient risk assessments, risk-responsive monitoring, single audit applicability determinations, follow-up of identified matters, and supervisory review. In addition: • The agreements did not contain all required federal award information, and PHIMC did not provide evidence that the omitted information was otherwise communicated; • PHIMC did not perform or document a risk assessment supporting the nature and extent of monitoring; and • PHIMC did not retain documentation supporting its determination that the subrecipients were not subject to Single Audit requirements. Context: PHIMC provided funding to 14 subrecipients during the year. We selected two subrecipients for testing and identified the conditions described above in both selections. The sample was not, and was not intended to be, statistically valid. PHIMC performed substantial programmatic and fiscal monitoring through documented site visits, including review of financial information, payroll, receipts, program performance, data reporting, and progress toward program objectives. However, this monitoring did not compensate for the absence of required federal award information or documented risk assessments. Cause: PHIMC had not established formal, written overarching subrecipient monitoring policies and procedures or a standardized supervisory review process to ensure that required federal award information, documented risk assessments, Single Audit applicability determinations, and related monitoring documentation were completed and retained. Questioned Costs: No questioned costs were identified. Effect: PHIMC cannot demonstrate that each subrecipient received all required federal award information or that the nature and extent of monitoring was based on an assessment of the subrecipient’s risk of noncompliance. As a result, there is an increased risk that: * Subrecipients may not receive all information needed to administer federal awards in accordance with applicable requirements; • Monitoring may not be appropriately tailored to the risks presented by each subrecipient; • Subrecipients required to undergo a Single Audit may not be timely identified; and • Subrecipient noncompliance may not be prevented, detected, or corrected on a timely basis. No unauthorized expenditures or failures to perform programmatic and fiscal monitoring were identified through the procedures performed. Recommendation: We recommend that PHIMC develop, document, and implement comprehensive subrecipient monitoring policies and procedures that require: • Use of a standardized subaward agreement or checklist containing all required federal award information; • A documented risk assessment for each subrecipient; • Monitoring procedures responsive to the assessed risk; • A documented determination of Single Audit applicability and verification of completion when required; • Documentation of follow-up and resolution of identified monitoring matters; and • Documented supervisory review confirming that all required subrecipient monitoring procedures were completed and retained. PHIMC should provide training to responsible personnel and require a documented supervisory review of each subrecipient file at award execution, during monitoring, and at closeout. Views of Responsible Officials: Management concurs and PHIMC will develop, document, and implement required subrecipient monitoring policies and procedures.