Finding 478162 (2023-003)

Federal Funding Accountability and Transparency Act (FFATA) Criteria: The pass-through entity [Snowy Mountain Development Corporation] must ensure that the terms of all loan agreements and subgrants that borrowers and subgrantees comply with 2 CFR Part 170, Reporting Subaward and Executive Compensation under FFATA set forth in the General Conditions of the pass-through entity’s agreement with EPA entitled “Reporting Subawards and Executive Compensation.” Condition: The Organization was not aware of this reporting requirement and did not submit any reports for FFATA during the audit period. Context: No reports under FFATA were submitted. Effect: The Organization is not following the terms of the grant award for reporting requirements. Questioned Costs: None. Cause: The Organization was unaware of this requirement. Auditor Recommendation: We recommend the Organization continue to work with EPA to determine what information is required to be reported by Snowy Mountain Development Corporation, and submit reports as required in the award agreement. Organization Response: Management works closely with our Region VIII EPA Officer to implement the terms and conditions of its Cooperative Agreement. EPA has been working with its subgrantees to provide guidance on the new FFATA subaward system. To date, three (3) EPA grantees nationwide have accessed that system. With EPA's ongoing guidance, Management will continue its implementation of FFATA requirements. Management solicited the feedback of Montana's Certified Regional Development Corporations who are recipients of the same Federal program funds with the same terms and conditions set forth in their contracts. No auditor of these 10 other nonprofit economic development organizations has ever documented an FFATA finding in any of their audits, dating back to 2006. In fact, several executive directors responded that they report their executive compensations on their 990s. Management states that it is the Federal grantors' responsibility to identify grantee failures to meet the terms and conditions of the contracts they hold with the grantees. Management states that all reports submitted to US EPA have been accepted by US EPA as fully compliant with the terms and conditions of the Cooperative Agreement. As such, Management disagrees with this finding. It is important that the organization's Federal grantors understand the full context of this finding.