Finding Text
2024-002 Significant Deficiency in Internal Control and Compliance over Major Programs
Funding Agency: Department of Treasury
ALN: 21.027
Criteria
Internal controls and other compliance knowledge should provide adequate subrecipient monitoring under federal awards. Per 2 CFR 200.332(d), pass-through entities should "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." This would include site monitoring visits during the grant's period of performance.
Condition
The Organization provided funds to subrecipients under its direct award from the Department of Treasury. Payments to subrecipients are made on a reimbursement basis.
Context
During our subrecipient monitoring testing, we noted one of the three subrecipients tested did not receive a site visit during the grant agreement period. Per our discussion with management, the Organization was unable to schedule a monitoring visit during the grant agreement period. The Organization was also unable to provide sufficient documentation that supported adequate monitoring activities were in place during the grant agreement period.
Cause
The error was caused by the Organization's negligence to conduct any monitoring activity during the grant agreement period.
Effect
Unallowable activities or cost principles could be charged to the Department of Treasury.
Repeat Finding
No.Auditor's Recommendation
It is recommended that the Organization reevaluates its internal controls over subrecipient monitoring to ensure that proper monitoring is occurring during the grant agreement period. The Organization should also consider who is responsible for the monitoring activity, and if necessary, assign those responsibilities to an employee who has a more flexible schedule that can accommodate the scheduled monitoring visits.