Finding Text
2023-004 Finding – Federal Award
Type:
Subrecipient Monitoring – Material Non-Compliance and Material Weakness in Internal Control over
Compliance)
Identification of Federal Program:
AL Number: 64.033 Supportive Services for Veteran Families
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, and 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.
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.
Condition / Context:
CAT passed through $486,835 in funding to subrecipients under AL number 64.033. It was noted during
the audit that CAT did not have documented written procedures or controls in place to ensure compliance
with Uniform Guidance Subrecipient Monitoring requirements. Condition / Context (Continued):
It was noted that within subaward contracts, required federal contract information was provided.
Additionally, CAT is having regular meetings to ensure tasks are being completed in a timely manner and
providing technical assistance when needed. However, for the one subrecipient tested out of three, there
was no documentation of risk assessment of the subrecipient entity and no formal monitoring of the entity.
The subrecipient tested was subject to 2 CFR Subpart F, Single Audit, and the audit for this entity was not
obtained and therefore CAT did not review Single Audit Findings that may be related to the subaward.
Cause:
Procedures and internal controls were not in place to ensure that CAT 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:
Management concurs with the finding and has defined corrective action to address it. Staff have reviewed
policies and procedures already in place to ensure compliance of subrecipient monitoring. The Fiscal
department has subsequently conducted a fiscal desk review of the subrecipient in question for FY 22/23
and no findings were found. Standard Operating Processes were updated to ensure all subrecipients are
fiscally monitored based on the Risk Assessment Determination level. The above identified corrective action
was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a monitoring calendar for
fiscal and Program Director’s will be responsible for ensuring subrecipients are monitored.