Finding Text
Reference Number: 2023-001 – Material Weakness, Subrecipient Monitoring
Criteria: According to 2 CFR sections 200.332 (d) through (f) pass through entities 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.
Condition: During the contract period between August 1, 2022 through September 30, 2023, the Boards subrecipient over enrolled program participants which required the Board to utilize $5,737,560 of 2024 fiscal year CCS program funds to cover 2023 fiscal year obligations.
Cause: The Board has weekly check in meeting with its subrecipient to discuss programmatic goals and results. The subrecipient was directed to continue enrolling program participants however, the budget for the continued enrollment had been exceeded and not identified in a timely manner to the program function. Continued enrollment resulted in grant funds being depleted. The Board sought approval from its funder to use fiscal 2024 funds to cover expenditures already incurred. Over enrollment began in March of 2023 and was not closed until July of 2023. Furthermore, the Board relies on an independent accounting firm to perform agreed upon procedures for fiscal monitoring. These procedures occurred once during the fiscal as of December 6, 2023. The Board did not conduct any additional fiscal monitoring throughout the year.
Effect: The Board did not effectively monitor the budget of its subrecipient, in a timely manner. As a result, its subrecipient over enrolled program participants. The Texas Workforce Commission subsequently reduced the FY 24 award to supplement the FY23 award to account for the over expenditure.
Recommendation: We recommend that the Board improve policies and procedures to ensure communication identifies available funding for program services provided in a timely and efficient manner to the program providers. With respect to monitoring of its subrecipients, policies and procedures should be enhanced to ensure that oversight of its subrecipients is more frequent, timely and responsive to findings.
Management Response: See management’s corrective action plan.