Finding 367059 (2023-001)

Finding 2023-001: Sub-recipients Information on the Federal Programs: Assistance Listing Number 20.521 Criteria or Specific Requirement: As noted in 2 CFR 200.331 part (d): Monitor the activities of the sub-recipient as necessary to ensure that the sub-award is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions for the sub-award; and that sub-award performance goals are achieved. Condition: During the audit, we noted that JCA does not have policies and procedures in place for monitoring sub-recipients. Cause: JCA does not have policies and procedures in place to be in compliance with monitoring activities of their sub-recipients. Our audit procedures consisted of substantive testwork over a sample of sub-recipient expenditures that were selected based on a threshold. We consider our sample to representative of the population. Effect or Potential Effect: JCA could inadvertently engage in relationships with sub-recipients of higher risk without the appropriate level of oversight (monitoring) to ensure sub-recipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None Context: JCA failed to adequately perform risk assessment procedures, or document its due diligence with monitoring sub-recipients over each of its sub-recipients. Identification as a Repeat Finding, if Applicable: 2022-002 Recommendation: Accordingly, we concluded that certain enhancements would add value to JCA's due diligence with respect to its monitoring processes, and the following are our recommendations (of activities/documents that should be performed/maintained by JCA: -Create pre-award risk assessment; an evaluation of the financial (and programmatic) risk associated with the intended recipient/grantee for the purpose of determining the expected level of oversight during the period of performance. - Clearly define in the policies and procedures the difference between a sub-recipient versus a sub-contractor. - Evidence of an evaluation process with respect to the identification of the prospective recipient. - A regularly documented review process with respect to periodic financial reports received from grantees. - An evaluation of the need for a periodic site visit. - Receipt of the grantee's annual audit reports, if available (to ensure there are no weaknesses or deficiencies in internal control during the grant period). If there are deficiencies that directly the program, then a corrective action plan be established. - JCA will need to evaluate the FFATA (Federal Funding Accountability and Transparency Act) reporting requirements and comply with the act.