Finding Text
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 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 PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.