Finding 6906 (2023-005)

Finding 2023-005 Material weakness in internal control over compliance for subrecipient monitoring Federal Agency: United States Department of State Program Titles: Office of Global Women’s Issues Assistance Listing Number: 19.801 Pass-Through Entity: N/A Award Numbers: SLMAQM21CA3275 Award Periods: September 30, 2021 through September 30, 2025 Criteria Internal control requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart F ‐ Section 200.332(d) through (f), policy guide, require that a non‐Federal entity 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. 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 among others include the following: ‐ Reviewing financial and programmatic (performance and special reports) required by the Pass Through Entity (PTE). ‐ 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. ‐ 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. Condition/Context The Organization’s internal controls require review of quarterly financial and programmatic reports for all sub recipients. During our subrecipient monitoring testing, we note that one of the subrecipient’s ceased to provide the Organization with quarterly financial reports since January 2023 and through the year ended June 30, 2023. Cause The Organization’s did not enforce its policies per the subrecipient agreement to ensure that the quarterly reports are provided and reviewed. Effect The Organization’s subrecipient monitoring does not provide reasonable assurance that the subrecipient used the subaward for authorized purposed purposes in compliance with federal regulations. Questioned Costs $90,000 Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that all subrecipients comply with reporting and other terms and conditions of the subrecipient agreements. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.