Finding Text
2023-001 Significant deficiency – Subrecipient Monitoring
Condition: In the current fiscal year, inspections of sub-recipient project sites were completed and documented however, the Organization did not review sub-recipient financial records.
Criteria and effect: Pass-through entities are to provide reasonable assurance that the costs of goods and services charged to federal awards are allowable and charged in accordance with the applicable regulations. The Uniform Guidance requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements.
Without complete and accurate monitoring of sub-recipients expenditures of federal funds, the Organization cannot ensure the costs of goods and services charged to federal awards are allowable and charged in accordance with the applicable regulations.
Cause: Issue was caused by high staff turnover which limited the Organization’s ability to perform fiscal monitoring.
Recommendation: The Organization should ensure it properly monitors sub-recipients according to the requirements required by the Uniform Guidance.
Management response and corrective action plan: Management agrees and will implement the corrective action plan found on page 26 of this report.