Finding Text
2023-001 Finding – Federal Award
Type:
Subrecipient Monitoring – Non-Compliance and Significant Deficiency in Internal Control Over Compliance. (Partial repeat of finding 2022-02)
Identification of Federal Program:
Research and Development Cluster:
AL Number: 81.086 Conservation Research and Development Program
Criteria / Requirement:
2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients.
Condition / Context:
Forth passed through $1,026,831 in funding to subrecipients under Assistance Listing 81.086. During our audit, we noted that Forth did not have documented written procedures or controls in place to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. Improvements were made to subrecipient monitoring in 2023, and a policy was established in 2024. It was noted that within subaward contracts, required federal contract information was provided. Further, subrecipients are being evaluated for risk of non-compliance, prior to engaging in a subcontract.
While monitoring has improved, as Forth is having regular meetings to ensure tasks are being completed timely and providing technical assistance when needed, it was noted that in the sample of four subrecipients one subrecipient was subject to 2 CFR Subpart F and the audit for this entity was not obtained. Per 2 CFR 200.332(d)(2) & (3), an entity must ensure 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, highlighting the status of action planned or taken to address Single Audit Finding related to the subaward. Further, they must issue a management decision for applicable audit findings.
Cause:
Procedures were not in place to ensure that Forth is maintaining proper subrecipient monitoring for each federal subrecipient.
Effect:
Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non‐compliance with the provisions of applicable requirements of the federal award. Questioned Costs:
None.
Recommendation:
The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed.
Management’s response:
We agree with the auditor’s comments and will implement the following action steps to improve the situation. We will create and document a procedure which ensures we obtain audits on an annual basis from our subrecipients. This procedure will be implemented by October 31, 2024