Finding Text
2024-003 SUBRECIPIENT MONITORING – WOIA
Federal agency: U.S. Department of Labor
Federal Program Title & Assistance Listing Number: Workforce Investment Act Cluster - 17.258, 17.259, 17.578
Award Period: Program Year 2023-2024
Type of Finding: Material Weakness in Internal Control over Compliance; Material Non-compliance
Compliance Areas: Subrecipient Monitoring
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 to such an extent that the Department has a modified opinion
on this federal grant compliance area.
The Department is currently behind on performing monitoring controls such as quarterly desk
reviews, annual on-site evaluations, and remote reviewing and testing of cost documentation.
The Department has not completed fiscal or programmatic monitoring relating to Program Year
2023-2024 activity for any of its subrecipients. Due to staffing vacancies at the beginning of the
fiscal year, as of January 2024, the Department had fallen approximately 2 years behind. By
fiscal year-end for 2024, they had just completed Program Year 2022-2023 monitoring, and are
now beginning the next Program Year.
This program of the Department lacked evidence that sufficient risk assessments of
subrecipients were performed that would allow the Department to identify any potential
deficiencies that would require follow-up. The Department asserted that risk assessments had
been included as attachments to the subgrant agreements, although these were not provided
to us. These attachments were intended to be self-assessments, rather than being performed
by the Department itself. There was no provided evidence of Department scoring or performing
an independent evaluation of these.
Criteria
§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 passthrough
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.
Effect
The lack of internal controls over this compliance requirement provides an opportunity for federal grant
noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall
effective project management at the subrecipient level. There is higher risk of material misstatement,
fraud, noncompliance, or errors. This condition has caused the Department’s audit opinion over this
grant’s compliance area to be modified.
Cause
The Department has not established internal controls and procedures over financial grant management
to ensure compliance with applicable compliance requirements. The Department has experienced
staffing turnover during these time periods and training and monitoring is needed.