Finding Text
Finding 2022-001: Sub-recipients Federal Programs: Assistance Listing Number 19.124 Criteria: 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 our audit, we noted that the Center does not have updated policies and procedures in place for monitoring sub-recipients to be in compliance with 2 CFR 200.331. We also noted the pre-award risk assessment procedures were not properly documented. Lastly, we noted the Center did not perform the FFATA (Federal Funding Accountability and Transparency Act) reporting requirements. Cause: The Center does not have updated 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: The Center 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 noted. Context: The Center failed to properly document its due diligence with respect to risk assessment procedures and FFATA reporting requirements. Identification as a Repeat Finding, if Applicable: N/A Recommendation: As a result, we concluded that certain enhancements would add value to the Center?s due diligence with respect to its monitoring processes, and the following are our recommendations (of activities/documents that should be performed/maintained by the Center: Enhance pre-award risk assessment; an evaluation and assignment of level of the financial (and programmatic) risk associated with the intended recipient/grantee for the purpose of determining the expected level of oversight and monitoring during the period of performance. Enhance documentation of 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 affect the program, then a corrective action plan be established. The Center will need to evaluate the FFATA reporting requirements and comply with the act.