Finding Text
Finding 2023-001: Subrecipient Monitoring (Material Weakness)
Federal Program: U.S Department of the Treasury: ALN 21.027
Criteria or Specific Requirement: As stated in 2 CFR 200.332, the requirements for pass-through
entities include a) ensuring that every subaward is clearly identified to the subrecipient as a subaward;
b) evaluating each subrecipient's risk of noncompliance; c) monitoring the activities of the subrecipient
as necessary to ensure that the subaward is used for authorized purposes; d) performing certain
monitoring activities to ensure proper accountability and compliance with program requirements and
achievement of performance goals depending upon the pass-through entity's assessment of risk
posed by the subrecipient; e) verifying that every subrecipient is audited as required by Subpart F of
the Uniform Guidance; f) determining whether the results of the subrecipient's audits, on-site reviews,
or other monitoring activities indicate conditions that necessitate adjustments to the pass-through
entity's own records; and g) taking enforcement action against noncompliant subrecipients, if
necessary.
Condition: While AHCMC has a process in place for evaluating risk, it does not have a formal
documented subrecipient policy that encompasses all the requirements of the Uniform Guidance.
AHCMC's subrecipient agreements did not clearly identify the Assistance Listing Number (ALN)
related to the subaward. AHCMC did not monitor the activities of the subrecipients in accordance with
the Uniform Guidance.
Cause: AHCMC did not fully adhere to the Uniform Guidance related to requirements for pass-through
entities.
Effect or Potential Effect: AHCMC's subrecipients may not have been aware that they had received
Federal pass-through subawards since the agreements did not clearly indicate the ALN of the
subaward. AHCMC did not perform the appropriate level of monitoring to ensure subrecipients
expended funds in accordance with the provisions and terms of the subaward and the Uniform
Guidance.
Questioned Costs: None noted.
Context: AHCMC did not clearly inform subrecipients that they received Federal pass-through
subawards by including the ALN in the subaward agreements and AHCMC did not perform
subrecipient monitoring in accordance with the Uniform Guidance.
Identification as a Repeat Finding, if Applicable: Not a repeat finding.
Recommendation: AHCMC should ensure that every subaward is clearly identified to the
subrecipient as a Federal pass-through subaward and that the agreement includes the ALN. Based on
the risk assessment for each subrecipient, we recommend that AHCMC assign a risk level to each
subrecipient and then determine the monitoring tools to apply based on these risk levels, such as
requiring subrecipients to submit financial or programmatic reports to demonstrate and ensure
subrecipients are expending funds appropriately. In addition, AHCMC should ensure that
subrecipients obtained a single audit if required by Subpart F of the Uniform Guidance.