Finding 573170 (2024-002)

2024-002 - Subrecipient Monitoring - Material Weakness/Noncompliance Federal Program: Assistance Listing #16.812 Second Chance Act Reentry Initiative, Passed Through Pennsylvania Commission on Crime and Delinquency, Pass-Through Entity Identifying Number: 36758 Prior Year Finding Number: N/A Criteria: The Uniform Guidance outlines various requirements for pass-through entities in Section 200.331, including the following items: (a) ensuring all subawards are clearly identify to the subrecipient as a subaward and include certain required information; (b) 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; (c) consider imposing specific subaward conditions upon a subrecipient, if appropriate; (d) 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; (e) depending on the pass-through entity's assessment of risk posed by the subrecipient, perform appropriate monitoring of the subrecipient; (f) verify that every subrecipient is audited as required by Subpart F of the Uniform Guidance; (g) consider whether the results of the subrecipient's audits, on-site reviews or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records and; (h) consider taking enforcement actions against noncompliance subrecipients as described in Uniform Guidance Section 200.338. Condition/Context: While the Organization has informal procedures surrounding the oversight of subrecipients, it does not have a formal risk assessment process in place to determine the extent of subrecipient programmatic oversight as required under the Uniform Guidance, including ensuring that financial information reconciles between the underlying expenditure reports and the subrecipient/Organization audit reports. Questioned Costs: N/A Cause: The Organization has not prepared or adopted the written policies / procedures required by Uniform Guidance and as such, the Organization personnel overseeing subrecipients did not understand their responsibilities in regard to monitoring subrecipients. Effect: The Organization cannot be assured that subrecipients are appropriately understanding and complying with the requirements of the funding stream passed through to them. Recommendation: We recommend that the Organization revisit its policies and procedures related to subrecipient monitoring and ensure that there are formal subaward agreements with all subrecipients, prepare a formal, initial, risk assessment of each potential subrecipient and document its monitoring activities of each subrecipient. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to implement these policies, procedures and activities on a prospective basis.