Finding Text
Finding Number: 2023-001
Internal Control over Compliance and Compliance with the Subrecipient Monitoring
Compliance Requirement, Repeat Finding, Finding No. 2022-001
Identification of the Major Federal Program:
Programs: Government Agency:
Inclusion Across the Nation of Communities of Learners of
Underrepresented Discoverers in Engineering and Science
Assistance Listing Number: 47.076
Award Number: HRD-1834540
Award Years: 09/01/2018 – 02/28/2025
PhysTEC: Building a Solution to the National Physics Teacher
Shortage
Assistance Listing Number: 47.049
Award Number: PHY-1707990
Award Years: 07/01/2017 – 06/30/2023
National Science Foundation (NSF)
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control
designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award.
In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must 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: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 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 PTE detected through audits, on-site reviews, and other means; 3. 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.
Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter
referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of
$30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS).
If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which
the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made.
Conditions – Our examination of the program’s subrecipient monitoring requirements includes the review and approval of financial and performance quarterly reports by the program managers. The
quarterly reports are prepared by APS’ grants administrator with inputs provided by the subrecipient submitted to the program managers.
Of the program’s twenty (20) subrecipients, we examined eight (8) subrecipients and observed that although the respective program managers had monitoring oversight of the various grant’s
financial and programmatic activities, there was no formal evidentiary documentation to support the monitoring oversight process performed by the program managers. Furthermore, our examination of the program’s subrecipient monitoring requirements includes
follow-ups by APS to ensure the subrecipients take timely and appropriate action on all deficiencies pertaining to federal awards provided to the subrecipients which have been detected
through reviews of audits, on-site reviews, and other means. We selected six (6) subrecipients for testing and noted that for two (2) samples selected APS was unable to provide evidence that
it monitored the subrecipients through review of its single audit reports, on-site reviews, and other means.
We also tested a sample of three (3) subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000
or more in federal funds timely and on one (1) of the sub awards reported, the contract award amount reported is less than the actual expenditures incurred by the subrecipient.
APS began implementation of its corrective action plan on June 5, 2023, and the exceptions identified above is as a result of the fact that APS was still in the implementation process of its corrective action
plan.
Cause - Management does not have adequate internal controls and policies and procedures in place to ensure that a review is performed on the financial and programmatic reports in a timely manner
and to ensure that its subrecipients do not have any audit deficiencies relating to federal award programs and if any deficiencies are detected, that the subrecipients takes timely and appropriate
action to resolve the deficiencies identified. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS
Reporting System resulted in APS’ noncompliance with the reporting requirements.
Effect or potential effect – APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. In addition, failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding.
Questioned Costs – None.
Context – These are conditions identified per review of APS compliance with specified compliance requirements using a statistically valid sample.
Recommendations – BDO recommends that APS continue to apply the implemented policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of
review are documented and maintained.
Furthermore, APS should continue to implement policies to obtain and review single audit reports of its subrecipients in order to ensure compliance with all the required laws, guidelines
and requirement under the award.
BDO recommends that APS continues to implement established policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure
compliance with reporting requirements.
Views of Responsible Officials - APS concurs with this finding. APS’ corrective action is described in the Management’s Corrective Action Plan included below.