Finding Text
U.S. Department of Health and Human Services Federal Assistance Listing #93.912 Rural Health Network Development Program Subrecipient Monitoring Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria – Under 45 CFR § 75.352, a pass-through entity is required to identify federal awards made to subrecipients, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to provide reasonable assurance that the subaward is used for authorized purposes, complies with applicable federal requirements, and achieves performance goals. Required monitoring includes reviewing financial and performance reports and following up on identified deficiencies, as applicable. In addition, the Health Center did not develop policies to ensure compliance with the various aspects of subrecipient monitoring. Condition – The Health Center did not identify Sakakawea Medical Center (SMC) as a subrecipient of the Rural Health Network Development Program. SMC participated in activities contemplated by the federally funded network workplan and incurred costs associated with those activities, including the purchase of a server and other grant-related expenditures. SMC subsequently submitted the expenditures to the Health Center for reimbursement from the federal award. Because the Health Center did not identify SMC as a subrecipient, the Health Center did not document the applicable pass-through entity requirements, including: •communicating required federal award and subaward information to SMC; •evaluating SMC’s risk of noncompliance with federal requirements; •establishing appropriate monitoring procedures based on the assessed risk; •documenting review of applicable financial and performance information, including the HealthCenter’s required submission of the Federal Funding Accountability and Transparency Act(FFATA) reporting for transactions exceeding $30,000; •verifying and following up on SMC’s compliance with applicable federal requirements, asnecessary. During the year, the Health Center reported $138,859 of federal expenditures passed through to subrecipients under Assistance Listing 93.912, Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Program. Cause – The Health Center considered SMC to be a network partner of the Rural Health Network Development Program rather than a subrecipient. As a result, the Health Center did not apply the subrecipient determination and monitoring requirements to the federal funds used to reimburse SMC for grant-related expenditures. Management had not established formal written policy to ensure subrecipient monitoring requirements were consistently performed, documented, and retained in accordance with Uniform Guidance. Effect – Without identifying SMC as a subrecipient and performing the required monitoring procedures, the Health Center did not document that it fulfilled its responsibilities as a pass-through entity or obtained sufficient assurance that federal funds provided to SMC were used for authorized purposes and in compliance with applicable federal requirements. Questioned Costs – None reported. Context/Sampling – No sampling was done as there was only one subrecipient. Report Finding from Prior Year – No Recommendation – We recommend that the Health Center establish procedures to evaluate each entity receiving federal funds to determine whether the relationship constitutes a subaward or a procurement relationship based on the substance of the arrangement. For entities determined to be subrecipients, the Health Center should implement and document the applicable pass-through entity requirements, including communicating required subaward information and federal requirements, performing and documenting a risk assessment, establishing monitoring procedures responsive to the assessed risk, reviewing applicable financial and performance information, and following up on identified deficiencies. Views of Responsible Officials – Management agrees with the finding. Although the Health Center did not maintain a formal written policy and related documentation, management maintained direct oversight of the subrecipient through common executive leadership and involvement in grant administration activities, reducing the likelihood that significant noncompliance would occur and not be detected.