North Central New Mexico Economic Development District

2021?001 Subrecipient Monitoring and Subrecipient Award Agreements Type of Finding: (E, F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, Instance of Noncompliance related to Federal Awards Funding Agency: U.S. Department of Health and Human Services Passed through New Mexico State Agency on Aging Titles: DHHS Aging Cluster, National Caregiver Support, Title III, Parts B ? Support Services, C- Nutrition Services, and Part E - National Family Caregiver Support ALN: (Aging Cluster: 93.044, 93.045, 93.053) and 93.052 Statement of Condition During our test work over subrecipient monitoring, we noted 2 out of 20 subrecipients tested did not take timely and appropriate action to clear all their deficiencies. In addition, there was no documentation evidencing additional follow-up by the District to remedy previous subrecipient monitoring deficiencies. Lastly, 2 out of 20 of the subrecipients? audit reports were not received, reviewed. Criteria Per Uniform Guidance, Area Agencies are required to 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 Pass-Through Entity (PTE). 2. Following-up and ensuring 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. Effect There is an increased risk that subrecipients? noncompliance is not reported as required by the federal awarding agencies. Also, deficiencies identified in the subrecipients? audit reports are not consistently addressed, which would include requiring corrective action plans to resolve those deficiencies. Cause It appears there isn?t sufficient oversight to ensure subrecipient monitoring activities. Recommendation The District should implement internal controls to ensure that proper subrecipient monitoring activities and reporting are being followed. View or Responsible Officials Assessment Deficiencies Out of 20 files sampled, the auditor documented 2 deficiencies in subrecipient provider assessments. In one case, documentation was missing from the file but was located and provided to the auditor. In the second case, documentation of follow-up actions could not be located because the employee charged with follow-up resigned from the organization and did not transfer his files to the Assistant Director, as is standard practice. In this second case, verbal follow-up with the subrecipient provider occurred after the provider was assigned to another staff member. The COVID-19 pandemic and State of New Mexico public health order were related to these assessment deficiencies, as follows: 1. No on-site reviews conducted due to the State public health order: From March 2020 through May 2021, the State required senior centers to close to protect vulnerable seniors from the pandemic. During this time period, NMAAA did not conduct on-site assessments due to the public health order. Please note that staff conducted some on-site visits to provide critical technical assistance on an as-needed basis. 2. Staffing shortages among subrecipient providers: During the COVID 19 pandemic, Non-Metro AAA subrecipient providers have suffered from staffing shortages despite a greatly increased workload. The increased workload includes management of new, additional funding sources; changes in service delivery; additional contracting and reporting requirements; and responsibility for vaccination registration and clinics, PPE and food box distribution, and emergency purchases. For the second assessment deficiency, NMAAA reported that the subrecipient provider had not conducted required staff training. The provider has been unable to complete the training on schedule due to this increased workload and inadequate staffing. Audit Deficiencies Out of 20 files sampled, the auditor documented 2 subrecipient audit reports that were not received and reviewed. In both cases, the audits were submitted late to the Assistant Director and were not reviewed by NMAAA by the closing date of the audit. Please note that there are different audit deadlines for the local government and non-profit subrecipient providers with whom NMAAA contracts. Also, some entities have late or delinquent audits and may require additional follow-up outside of standard audit deadlines.

Corrective Action Plan Assessment Deficiencies 1. Beginning in the fall of 2021, NMAAA began to implement measures to ensure that all documentation, including correspondence, is saved in both hard copy and electronic files and is accessible to all NMAAA staff: ? The NMAAA Assistant Director maintains and monitors hard copy and electronic files and conducts regular spot-checks of the files. This provides quality control to ensure that files are complete. ? All assessments are now scheduled on a shared calendar and entered into a standard assessment workbook. The calendar and workbook are saved in shared electronic files which can be accessed by the Director, Assistant Director, and all Provider Specialists. The Executive Director and Finance Director also have access to these files. This ensures that multiple staff members have access to assessment files at all times. ? Subrecipient providers upload all required documents directly into the electronic filing system prior to the assessment. This prevents documents from not being transferred into the shared file if they were emailed to a single individual. 2. NMAAA will implement the following additional corrective actions: ? Peer file review among Provider Specialists. ? Close-out interview with employees who separate from NMAAA to ensure that all files are properly transferred and outstanding issues are conveyed. Audit Deficiencies NMAAA will implement the following corrective actions to ensure that subrecipient audit reports are submitted and reviewed: 1. Provide training to subrecipient providers regarding the audit requirement. 2. Set up calendar reminders for various audit deadlines. 3. Send out Constant Contact reminders to subrecipient providers and follow up via email or phone as needed. 4. Assign and train one or more Provider Specialists to assist the Assistant Director with audit reviews. Corrective Action Plan Timeline: December 1, 2021, through June 30, 2022 Designated Employee Responsible for Corrective Action: Non-Metro Area Agency on Aging Director, Crystal Sanchez Non-Metro Area Agency on Aging Assistant Director, Nancy Arias-Macias

2019-011-SUBRECIPIENT MONITORING AND SUBRECIPIENTS AWARDS AGREEMENTS Type of Finding: E, F Federal program information: Federal Agency: All presented in the Schedule of Expenditures of Federal Awards. Federal Program Name: All presented in the Schedule of Expenditures of Federal Awards. Federal Award Number: All presented in Schedule of Expenditures of Federal Awards. Questioned Costs: None Statement of Condition We tested the monitoring of subrecipients per the federal compliance supplement for the Aging program. Per our testing, we noted the District did not check the annual financial statement audits of its subrecipients for the supplementary schedule of revenues and expenses-aging program as required by the Non-Metro DPS Manual Section 1-6 and Internal Monitoring policies. While the District obtains the audit reports from the subrecipients and keeps track of them, the audits are not checked for the items mentioned above. Also, it was noted that the agreements with subrecipients do not have clear language to specify that they are subrecipient grant awards and not contractual agreements. Criteria Per Non-Metro DPS Manual and Contracts for subrecipients, certain Agencies that spend federal and state amounts over certain thresholds need to include in their audit report a supplementary schedule of administrative and program expenses for each separate title or program (Title IIIB, Title IIIC -I, Title IIIC-II, Title IIID, Title IIIE, etc.) which facilitates reconciliations of these audited costs to the final report. Also, the agencies are required to include the final unit of services provided and final number of persons served by the subrecipients agreements. The subrecipients awards must be clear regarding the purpose of the award, the CFDA number of the award, type of award (subrecipient versus contractor), etc. Effect The subrecipients may not be in compliance with their agreement with the District. Also, the subrecipient award language is unclear and the subrecipients may misclassify their grant award as contract revenue, which would violate federal requirements. Cause The District experienced staff turnover in the positions responsible for subrecipient monitoring tasks. The District?s audit tracker should be updated with all criteria contained in the District policies and federal compliance requirements. Recommendation We recommend the District update its audit tracker to contain all items needed to be monitored by the District. We also recommend the subrecipient agreements be revised to make them clearer and emphasize they are federal sub-awards and prominently disclose the CFDA number on the agreement. View of Responsible Officials and Corrective Action Plan Management agrees with the auditor?s recommendation to update the agency?s audit tracker, begin monitoring the audit reports for the supplementary schedule of administrative and program expenses required by the DPS, and to revise the subrecipient agreements to clarify that the agreements are subrecipient grant awards and not contracts. Corrective Action Plan Timeline: NCNMEDD/Non-Metro AAA is currently updating the audit tracker and will monitor for supplementary schedules by March 31, 2020. Subrecipient agreements for FY 2020 have already been issued; therefore, the revisions to the agreements cannot be made until FY 2021. Revised agreements for FY 2021 will be issued no later than June 30, 2020. Designation of Employee Position Responsible for Meeting Deadline: Community Services Director

2019-011?SUBRECIPIENT MONITORING AND SUBRECIPIENTS AWARDS AGREEMENTS View of Responsible Officials and Corrective Action Plan Management agrees with the auditor?s recommendation to update the agency?s audit tracker, begin monitoring the audit reports for the supplementary schedule of administrative and program expenses required by the DPS, and to revise the subrecipient agreements to clarify that the agreements are subrecipient grant awards and not contracts. Corrective Action Plan Timeline: NCNMEDD/Non-Metro AAA is currently updating the audit tracker and will monitor for supplementary schedules by March 31, 2020. Subrecipient agreements for FY 2020 have already been issued; therefore, the revisions to the agreements cannot be made until FY 2021. Revised agreements for FY 2021 will be issued no later than June 30, 2020. Designation of Employee Position Responsible for Meeting Deadline: Community Services Director Marcia Medina

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