Finding 389329 (2023-001)

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF EDUCATION, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CAREER AND TECHNICAL EDUCATION – BASIC GRANTS TO STATES – FEDERAL ALN 84.048 2023-001 Internal Control Over Compliance With Subrecipient Monitoring Requirements Criteria – 2 CFR § 200.332 requires Intermediate District No. 287 (the District) as a pass through entity, to have written subrecipient monitoring policies and procedures that include a written risk assessment of each subrecipient and documentation of the District’s monitoring of the subrecipient. Additionally, as a pass-through entity, the District is required to verify that every subrecipient is audited as required by 2 CFR § 200 Subpart F when it is expected that the subrecipient’s federal awards expended during the respective fiscal year equaled or exceeded the threshold for a federal Single Audit. Condition – During our audit, we noted that the District did have documented written controls to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. The District did not maintain documentation of its evaluation of each subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward, nor did the District maintain documentation of the results of the subrecipients’ Single Audit, if any, for purposes of determining the appropriate subrecipient monitoring. Questioned Costs – Not applicable. Context – The District passed through $451,191 to nine subrecipients during the fiscal year. Repeat Finding – This is a current year finding. Cause – This was an oversight by district personnel. Effect – This could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to subrecipient monitoring for all federal programs. We recommend the District identify subrecipients and maintain documentation of written risk assessments of each subrecipient, that includes a consideration of the subrecipient’s Single Audit results, if any. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District is in the process of reviewing its internal control procedures and updating its written policies and procedures relating to subrecipient monitoring for its federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.