Finding Text
U.S. Department of Transportation, Passed through Nebraska Department of
Transportation
and Iowa Department of Transportation
Highway Planning and Construction
Assistance Listing Number 20.205
Subrecipient Monitoring
Significant Deficiency in Internal Control over Compliance
Criteria: A pass‐through entity (PTE) must:
Evaluate each subrecipient’s risk of noncompliance for purposes of determining the
appropriate subrecipient monitoring related to the subaward (2 CFR section
200.332(b)). This evaluation of risk may include consideration of such factors as the
following:
o The subrecipient’s prior experience with the same or similar subawards;
o The results of previous audits including whether or not the subrecipient
receives single audit in accordance with 2 CFR Part 200, Subpart F, and the
extent to which the same or similar subaward has been audited as a major
program;
o Whether the subrecipient has new personnel or new or substantially
changed systems; and
o The extent and results of federal awarding agency monitoring (e.g., if the
subrecipient also receives federal awards directly from a federal awarding
agency).
Monitor the activities of the subrecipient as necessary to ensure that the subaward
is used for authorized purposes, complies with the terms and conditions of the
subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)).
In addition to procedures identified as necessary based upon the evaluation of
subrecipient risk or specifically required by the terms and conditions of the award,
subaward monitoring must include the following:
o Reviewing financial and programmatic (performance and special reports)
required by the PTE.
o Following‐up and ensuring that the subrecipient takes timely and
appropriate action on all deficiencies pertaining to the federal award
provided to the subrecipient from the PTE detected through audits, on‐site
reviews, and other means
o Issuing a management decision for audit findings pertaining to the federal
award provided to the subrecipient from the PTE as required by 2 CFR
section 200.521.Verify that every subrecipient is audited as required by Uniform Guidance when it is
expected that the subrecipient's Federal awards expended during the respective
fiscal year equaled or exceeded the threshold set forth in § 200.501.
Consider whether the results of the subrecipient's audits, on‐site reviews, or other
monitoring indicate conditions that necessitate adjustments to the pass‐through
entity's own records.
Condition: MAPA is the pass‐through entity for several subrecipients. MAPA does not appear to have a
formal policy to evaluate each subrecipient’s risk of noncompliance for appropriate
subrecipient monitoring. Further, MAPA does not have a formal policy to monitor the
activities of the subrecipients to the extent deemed necessary by the federal government,
including the verification that subrecipients are audited when they reach Uniform Guidance
spending levels and evaluation of those audits.
However, the current procedures require a review of the subrecipients’ invoices, including
all detailed costs by an appropriate individual at MAPA prior to payment. This process helps
reduce risk of inappropriate funding to subrecipients.
Cause: MAPA does not appear have formal policies in place for all of the subrecipient monitoring
requirements.
Effect: MAPA may not have appropriate monitoring levels established for all of its subrecipients
and have awareness of where subrecipient deficiencies may exist.
Questioned
Costs: None reported.
Context: We reviewed two of the five subrecipients within this program that did not appear to have
any formal risk evaluation and monitoring plan in place.
Repeat Finding
From Prior Year: No
Recommendation: The policy should be updated to include all federal requirements for subrecipient
monitoring and updated on a regular basis as those regulations change.
Views of
Responsible
Officials: We agree with the finding.