Finding Text
Criteria: 2 CFR section 200.332(d) states: Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200-521. Condition: As the HIV Care Formula Grant is a recurring grant, the Organization requires subrecipients to provide their most recent financial statement and Uniform Guidance audits annually when reapplying for grant funds. For one of three subrecipients tested, the subrecipient provided their 2021 Federal Form 990 when applying for 2022 funding and told the Organization they did not have a financial statement or Uniform Guidance audits. The federal assistance provided by the Organization to the subrecipient was less than $750,000, so this response was consistent with the Organization?s expectation for the subrecipient. However, per our review of the Federal Form 990, the subrecipient disclosed that it was required to undergo an audit under the Single Audit Act and that the audit had not been completed. The Organization did not notice this in the Federal Form 990 and did not follow-up on the delayed audit. The Organization performed quarterly fiscal audits of the subrecipient?s expenses and site visits with no compliance issues identified. Although the Organization was not aware of the financial statement and Uniform Guidance audit requirements and the untimely status of those audits, other effective monitoring procedures were completed. Cause: The Organization was not aware of the subrecipient?s other federal assistance resulting in the subrecipient having a financial statement and uniform guidance audit requirement. Effect or potential effect: Procedures required by 2 CFR section 200.332(d) related to reviewing financial reports of the subrecipient and following-up on deficiencies pertaining to the Federal award could not completed. The Uniform Guidance audit could have noted findings related to compliance with the spending of the federal assistance that would have been unknown to the Organization. Recommendation: We recommend that the Organization require the subrecipient to provide a complete list of all their federal assistance when signing grant agreements. Based on that information received, we recommend that the Organization track all subrecipient with federal assistance over $750,000 and establish a process to ensure the financial statement and Uniform Guidance audits are obtained timely and monitoring procedures required by 2 CFR section 200.332(d) are completed. Views of responsible officials: Management acknowledges this finding and will address remediation in the accompanying corrective action plan in Appendix A.