Finding Text
Criteria or Specific Requirement:
United States Code of Federal Regulation 2 CFR 200.339 requires the grantee to monitor the activities of the subrecipient 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 (3) Issuing a management decision for applicable audit findings (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings.
Condition:
The City did not monitor subrecipients during the grant enforcement period as required and as stated to be normal practice by the City in the CAPER (Consolidated Annual Performance and Evaluation Report).
Context:
No proof of subrecipient monitoring was provided by the City upon requests by the auditor.
Cause:
The City does not have active subrecipient monitoring procedures.
Effect or Potential Effect:
The City is noncompliant with the subrecipient monitoring requirements of 2 CFR 200.339. The lack of monitoring increases the risk of the misuse of funds by the subrecipient.
Questioned Costs: None.
Recommendation:
The City must create and adhere to formal subrecipient monitoring processes in accordance with the guidelines set forth in 2 CFR 200.339.
Views of Responsible Officials of the Auditee:
The City will devise subrecipient monitoring procedures.