SOUTHWESTERN PENNSYLVANIA COMMISSION

Finding 2021-001: Subrecipient Monitoring and Reporting Program Name: Appalachian Regional Commission, Appalachian Area Development, AL Number: 23.002 (Grant No. PW-19708-IM-302-19) Criteria of Specific Requirement: In accordance with 2 CFR 200.332, a pass-through entity?s (PTE) subrecipient monitoring activities must include verifying that subrecipients are audited as required by 2 CFR Subpart F when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200. The PTE must also follow up and ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the PTE, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. The Federal Funding Accountability and Transparency Act (FFATA) (as codified in 2 CFR 170) requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made. Condition: The Commission has one subrecipient under this award and the total subaward is $1,340,450. The subaward was not reported to the FSRS and no documentation existed to show whether the Commission verified that the subrecipient was audited. Questioned Costs: None Cause: The Southwestern Pennsylvania Commission (Commission) has established formal subrecipient monitoring policies. However, policies regarding single audit report review and compliance issues resolution were not followed. The Commission does not have formal policies in place to identify subawards that require reporting in the FSRS. Effect: A failure to review single audit results for subrecipients could result in noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, as well as adjustments to the Commission?s own records. Lack of controls surrounding FSRS reporting could result in required subaward information not being reported in FSRS or not being reported correctly. Identification as a Repeat Finding: This is not a repeat finding from the prior audit. Recommendation: The Commission should adopt formal policies and procedures for identifying and reporting subawards under FFATA and provide training on its internal control system surrounding subrecipient awards to ensure that monitoring is performed in accordance with the Commission?s internal policies and uniform guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See separate corrective action plan.