Finding Text
Finding # 2022-003 Type: Material Weakness over Subrecipient Monitoring Type: Material Noncompliance Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy Criteria/Requirement: The Organization is required to monitor activities of subrecipients in accordance with federal regulations. Condition: The Organization?s subrecipient agreements did not include the required federal award identification, and the Organization did not provide sufficient financial monitoring. One subrecipient had a single audit finding, and management did not take actions to resolve the findings with the subrecipient. Cause: There are no formal policies for subrecipient monitoring. Effect: Subrecipients could be out of compliance with federal guidelines if the required federal award information was not clearly defined in subaward agreements or if the Organization does not monitor the subrecipient?s use of federal funds. Questioned Costs: None. Recommendation: The Organization should implement a subrecipient monitoring policy that ensure a proper system to monitor, detect and take timely follow-up action on any issues identified in site visits and internal or external audits. Management should evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward and monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes. The Organization should consider on-site reviews of the subrecipient?s operations and formalizing a monitoring report checklist to ensure that all compliance requirements have been considered and documented. Management Response: Management will review the federal subrecipient monitoring and management guidelines and update its policies and procedures to be consistent with federal requirements. Management will issue contract amendments for its subrecipient agreements to ensure the proper federal award identification is documented.