Finding Text
2022-006 (2019-015) SUBRECIPIENT MONITORING ? Repeated and Modified Federal Agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants ? Public Assistance (Presidentially Declared Disasters) - 97.036 Emergency Management Performance Grants ? 97.042 Fire Management Assistance Grants ? 97.046 Pre-Disaster Mitigation ? 97.047 Homeland Security Grant Program ? 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance (Modified Opinion) Questioned Costs: None Condition: During our testing, we noted the Department did not have adequate internal controls in place to ensure compliance with subrecipient monitoring. ? All o The Department lacked evidence that a risk assessment was performed for subrecipients as relates to the risk of noncompliance for those subawards subject to the Uniform Guidance. o The Department lacked a process for all federal programs to review the audits of subrecipients that would allow the Department to identify any potential deficiencies that would require follow-up. o The Department lacked a process to ensure timely reporting by subgrantees of financial reporting and performance reporting. Also, the Department lacked a process to ensure timely review of reports submitted by subgrantees. Management?s Progress for Repeated Findings: Management failed to implement adequate controls to resolve the finding from the prior years. Criteria: According to ?200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must 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. In addition, the pass-through entity must 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. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) 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 pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 Management Decision. Department Policy No. GRA 418 Sub-Grant Recipient Monitoring effective June 30, 2017 establishes and implements policy and procedures for the Department staff engaged in the Department?s sub-grant recipient monitoring process. For Mitigation Sub-Grant Monitoring, the Mitigation Specialist shall review the local progress quarterly reports due to the Department. For Non-Disaster Sub-Grant Recipient Monitoring, the Program Manager shall review the local progress quarterly reports due to the Department. Specific to Pre-Monitoring Requirements and Considerations, Department Program Staff shall perform risk-based assessments and apply the assessment to all of the Department?s approved sub-recipients for monitoring purposes and risk designation. Effect: The auditor noted instances of material noncompliance. Noncompliance results in possible federal funds provided to ineligible subrecipients. Also, the lack of internal controls over this compliance requirement provides an opportunity for noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall effective project management at the subrecipient level. Cause: The program staff continue to not operate under the Sub-Grant Recipient Monitoring effective June 30, 2017. The Department continues to lack established internal controls and procedures over financial grant management to ensure compliance with applicable compliance requirements.