Finding Text
Department of Treasury, Coronavirus State and Local Fiscal Relief Recover Funds
Federal Financial Assistance Listing # 21.027, Award passed through the Minnesota Department of Human Services
Compliance Requirement: Subrecipient Monitoring
Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Noncompliance
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.332 requires that:
• Pass-through entities ensure every subaward includes certain information at the time of the subaward and the assistance listing number is communicated at the time of disbursement to subrecipients.
• Pass-through entities 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. In addition, the subrecipient monitoring must ensure that the subaward is used for authorized purposes.
Condition: Subawards did not contain all the required information, assistance listing numbers were not communicated at disbursement, an evaluation of each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring was not performed, and monitoring procedures were not performed.
Cause: The Organization did not have adequate internal controls to ensure risk assessment was performed or required information was communicated at the time of disbursement.
Effect: Noncompliance at the subrecipient level may occur and not be detected by the Organization.
Questioned Costs: None reported.
Context/Sampling: A non-statistical sample of three subrecipients out of a population of seven were selected for testing. Subawards were missing required information for all three subrecipients. Risk assessment was not performed for all three subrecipients.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Organization implement internal controls to ensure risk assessment is performed.
Views of Responsible Officials: Management is in agreement with this finding.