Finding Text
Finding 2024-001 – Subrecipient Monitoring (Significant Deficiency)
U.S. Department of Health and Human Services
Substance Abuse and Mental Health Service Projects (93.243)
Federal Award Year: 2023-2024
Criteria and Context:
Institutions are required to follow specific subrecipient monitoring requirements to ensure compliance with federal regulations. They must assess the risk level of subrecipients before awarding funds, carefully evaluating factors such as financial stability, prior audit findings, and overall capacity to manage federal funds. Once this evaluation is complete, institutions must establish formal agreements with subrecipients, clearly outlining compliance expectations, reporting requirements, and allowable costs.
In addition to setting these agreements, institutions must engage in continuous monitoring efforts. This includes conducting financial reviews, obtaining OMB reports, performing site visits, and evaluating performance to ensure that funds are being used appropriately. If any issues arise during these monitoring activities, institutions must take corrective actions—whether by providing technical assistance, imposing additional funding conditions, or implementing other necessary measures to maintain compliance.
Furthermore, institutions are responsible for maintaining thorough records of all subrecipient monitoring activities and must report any significant findings to federal agencies. By following these protocols, institutions help ensure that federal funds are properly managed and that subrecipients adhere to all necessary regulations.
Condition:
During our audit, we noted that the University was unable to provide sufficient documentation to demonstrate that it had performed the required ongoing monitoring of subrecipients during the audit period. The absence of such documentation indicates that the University did not fully comply with the federal requirements for subrecipient monitoring.
Cause and Effect:
During the award period, the personnel responsible tor conducting subrecipient monitoring procedures left the University. Following their departure, management was unable to obtain evidence confirming that the required compliance procedure had been performed during the period.
Questioned Costs:
None noted.
Identified as a Repeat Finding:
No
Recommendation:
The University should review and strengthen its policies and procedures related to subrecipient monitoring to ensure continuity and compliance throughout the entire award period. This includes assigning clear responsibilities, implementing cross-training for key personnel, and establishing documentation protocols to ensure that monitoring activities are consistently performed and retained, even during periods of staff transition.
Views of Responsible Officials:
Management acknowledges and agrees with the finding and recommendations. The University has addressed this issue by incorporating a procedure for subrecipient monitoring into their compliance checklist. As a result, monthly reminders will be sent to a designated group within the Finance team to help prevent recurrence.