Finding Text
Criteria
Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.”
Condition
We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors.
Cause
Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies.
Effect
The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization.
Recommendation
We recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards.
Views of Responsible Officials and Planned Corrective Action
The Organization concurs with the recommendation. As part of our current policies and procedures review and revision process, we plan to incorporate the subrecipient monitoring and management provision of 2 CFR§ 200.331 and 2 CFR §200.332 of the Uniform Guidance to emphasize accountability and compliance in managing federal funds and subrecipients. Specifically and prospectively, effective November 1, 2024, the Organization’s practices will include: 1. Using a checklist for the determination of subrecipient or contractor classification as guidance, perform a comprehensive risk assessment before entering into any subrecipient agreement. 2. Provide identification details such as CFDA number, amount of federal funds obligated, and the award period for determined subrecipient awards. 3. Require subrecipients to submit programmatic and financial reports as specified in the subrecipient agreement. 4. As part of the subrecipient process, ensure subrecipients that expend $750,000 or more in federal funds during a fiscal year undergo a single audit in accordance with 2 CFR Part 200, Subpart F. Review their audit reports and address any findings related to their federal awards, taking appropriate corrective actions. Retroactively, for the audit periods July 1, 2022 – June 30, 2023 and July 1, 2023 – June 30, 2024, the Organization will perform a risk assessment of the existing subrecipient portfolio during this period to identify high-priority risks. The objective of this risk assessment review is to identify, evaluate, and prioritize risks that could adversely impact the Organization’s ability to achieve its strategic, operational, and quality assurance goals, ensuring that all products, services, and processes align with established standards and fulfill processes. The above reflects the current planned practices of the Organization and the overall financial policies and procedures are in the process of being updated to align to the subrecipient monitoring and management provision of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance. The Organization has prioritized the completion and distribution of the updated financial policies and procedures by December 31, 2024.