Finding Text
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.332(a) which provides that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. Required information includes:
• Federal award identification;
• All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award;
• Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports;
• An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient;
• A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and
• Appropriate terms and conditions concerning closeout of the subaward.
Additionally, 2 CFR § 200.332(b) and (d) provide that pass-through entities must 1) evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring and 2) monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.
During fiscal year 2023, the Council did not identify subawards for the Middle Mile ITC Upgrade award to their subrecipients, evaluate each subrecipients’ risk of noncompliance, nor sufficiently monitor the activity of subrecipients. Additionally, the Council did not have sufficient policies and/or procedures over subrecipients.
The Council should evaluate its current control procedures and processes over subrecipients and update them as necessary to reasonably ensure compliance with 2 CFR §200.332. The Council should ensure that subrecipients are properly notified of the subaward along with the requirements imposed by the pass- through entity. The Council should also perform monitoring procedures over subrecipient activity to ensure that the grant requirements are being met.
Without adequate policies and/or procedures in place over subrecipients, there is an increased risk subrecipients may misuse subaward funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funding being imposed by the federal grantor agency. The Council should evaluate its current control procedures and processes over subrecipients and update them as necessary to reasonably ensure compliance with 2 C.F.R. §200.332. The Council should ensure that subrecipients are properly notified of the subaward along with the requirements imposed by the pass- through entity. The Council should also perform monitoring procedures over subrecipient activity to ensure that the grant requirements are being met.