Finding 575290 (2024-003)

Material Weakness Repeat Finding
Requirement
M
Questioned Costs
-
Year
2024
Accepted
2025-08-29

AI Summary

  • Core Issue: CFSC failed to conduct necessary risk assessments for all subrecipients, leading to a material weakness in internal controls and noncompliance with federal requirements.
  • Impacted Requirements: Compliance with 2 CFR 200.332(d) regarding monitoring subrecipient activities and ensuring authorized use of subawards.
  • Recommended Follow-Up: CFSC should enhance policies and procedures to ensure all required risk assessments and audits of subrecipients are completed and documented properly.

Finding Text

Federal Agency: United States Department of Commerce Federal Program Name: Office for Coastal Management Assistance Listing Number: 11.473 Federal Award Identification Year: 2020 Pass-Through Agency: National Fish and Wildlife Grant Agreement Award Period: 9/1/20-08/02/24 Compliance Requirement Affected: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria: 2 CFR 200.332(d) - establishes that the auditee must 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. Condition: CFSC did not perform risk assessment for all subrecipients selected for testing. CFSC was unable to provide supporting documentation to show that they inquired with the subrecipients about any audits they had undergone or evidence that CFSC received and reviewed audit reports to ensure timely follow ups were made if any findings pertaining to the Federal Award was noted. Context: A nonstatistical sample of 2 out of 4 subrecipients were selected for testing for the Office for Coastal Management program. The condition noted above was identified during our procedures over CFSC’s subrecipients. Effect: CFSC did not perform the following, which increases the risk of noncompliance: -Required risk assessments for the subrecipients, -Review subrecipient audit reports to ensure compliance with Federal Awards or make any necessary follow-ups pertaining to any findings noted, if any. Cause: CFSC’s procedures did not consistently ensure that the required risk assessments were performed. Repeat Finding: The finding is a repeat finding. Recommendation: We recommend that CFSC modify and strengthen its current policies and procedures to ensure that all required risk assessments are performed in accordance with the criteria outlined above. Management’s Views: See separate corrective action plan.

Corrective Action Plan

Management agrees with the finding and is implementing the accompanying corrective action plan. Views of Responsible Officials: Jacy Hyde, Executive Director Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Contact Person: Joel Rusco, Chief Financial and Administrative Officer Jessica Martinez, Deputy Director Corrective Action Plan: In response to FY21 Corrective Action Plan, CFSC implemented an updated Subrecipient Monitoring Policy in June 2024 to ensure compliance with Uniform Guidance, including subrecipient risk assessment and audit review requirements. To further strengthen compliance and eliminate inconsistencies in subrecipient risk assessments, CFSC will implement the following corrective actions: 1. Mandatory Pre‐Award Risk Assessment & Documentation: a. The Grants Manager will ensure that a Subrecipient Risk Assessment Form is completed and documented for all subawards before execution. b. Risk assessment findings will be stored in the subrecipients grant file and reviewed during routine monitoring. c. Any subrecipients classified as high risk will be subject to enhanced monitoring procedures to be carried out by the assigned Grant Specialist, which may include additional financial oversight and/or more frequent reporting. 2. Systematic Audit review & compliance tracking: a. The Grants Manager will be responsible for ensuring timely collection and review of subrecipient audit reports. 3. Quarterly Compliance Audits of Risks Assessments & Audit Reviews: a. The Grants Manager will conduct quarterly internal audits to confirm: i. All subrecipients have undergone documented risk assessments before receiving funds. ii. All subrecipient audits have been collected, reviewed, and properly documented. iii. Any identified audit findings have been addressed with documented corrective actions. Anticipated Completion Date: Corrective actions regarding mandatory pre‐award risk assessment & documentation (item 1) and systematic audit review &compliance tracking (item 2) have been fully implemented as of quarter 2 of FY25. CFSC has begun to implement the quarterly compliance audits (item 3) and will have this fully implemented by the end of FY25.

Categories

Subrecipient Monitoring

Other Findings in this Audit

  • 575289 2024-002
    Material Weakness Repeat
  • 575291 2024-004
    Material Weakness
  • 575292 2024-005
    Significant Deficiency
  • 1151731 2024-002
    Material Weakness Repeat
  • 1151732 2024-003
    Material Weakness Repeat
  • 1151733 2024-004
    Material Weakness
  • 1151734 2024-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
11.473 Office for Coastal Management $1.31M
10.664 Cooperative Forestry Assistance $333,441
10.698 State & Private Forestry Cooperative Fire Assistance $11,044
15.228 Blm Fuels Management and Community Fire Assistance Program Activities $1,746