Finding Text
2022-002 STRIVING READERS COMPREHENSIVE LITERACY/COMPREHENSIVE LITERACY STATE DEVELOPMENT ? SUBRECIPIENT MONITORING ? NONCOMPLIANCE WITH SUBRECIPIENT GRANT AGREEMENT REQUIREMENTS ? ALN 84.371 ? MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE FINDING TYPE: Material Weakness - Material Noncompliance Finding 2022-002 Federal Program: Striving Readers Comprehensive Literacy/Comprehensive Literacy State Development ALN: 84.371 Federal Award Number(s) and Year(s): S371B100031, 2022 Federal Agency: U.S. Department of Education Pass Through Agency: North Dakota Department of Public Instruction Questioned Cost: $0 Condition Devils Lake Public School District did not prepare subrecipient grant agreements that included the elements as outlined in 2 CFR 200.332(a) for the Striving Readers Comprehensive Literacy/Comprehensive Literacy State Development programs. In addition, Devils Lake Public School District did not have procedures in place to ensure subrecipient grant agreements were prepared for all subrecipients and included all the required elements. Context Devils Lake Public School District provided funding to one subrecipient during the audit period. Payments to the subrecipient during fiscal year 2022 totaled $19,838. Where sampling was performed, the audit used a non-statistical sampling method. Effect Devils Lake Public School District may not have complied with all elements of 2 CFR 200.332(a). Therefore, subrecipients may not have been aware of all necessary grant information and requirements. Cause Devils Lake Public School District was not aware of the requirements set forth in 2 CFR 200.332(a) that needed to be included in the grant agreements and therefore did not implement procedures to ensure compliance. Criteria 31 U.S.C 7502(f)(2)(A) states that each pass-through entity shall provide subrecipient the Federal requirements which govern the use of such awards. 2 CFR 200.332(a) states the required information that pass-through entities must disclose. This includes information related to federal award identification and period of performance, approved federally recognized indirect cost rate, requirement that the subrecipient allow access to records, and appropriate terms and conditions concerning closeout of the subaward. 2 CFR 200.303(a) states: "The non-Federal entity must: Establish and maintain effective internal control 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." According to the ?Standards for Internal Control in the Federal Government?, Management develops and maintains documentation of its internal control system. Effective documentation assists in management?s design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel, as well as a means to communicate that knowledge as needed to external parties, such as external auditors. (Green Book, GAO-14-704G para 3.09 and 3.10). Questioned Costs None. Prior Recommendation No. Recommendation We recommend Devils Lake Public School District develop procedures to ensure that all elements as outlined in 2 CFR 200.332(a) are communicated and documented to the subrecipients of the Striving Readers Comprehensive Literacy/Comprehensive Literacy State Development programs. Devils Lake Public School District No. 1?s Response See Corrective Action Plan