MARYS RIVER WATERSHED COUNCILNon-Profit

Finding #2025-004 Type: Material Weakness over Allowable Costs, Cash Management, Reporting, Subrecipient Monitoring Assisting Listing Number: 11.463 Federal Agency: U.S. Department of Commerce Name of Federal Program: Habitat Conservation Requirement: According to section 200.203 of the Uniform Guidance, the recipient and subrecipient of federal awards must: Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: We identified lack of evidence of controls over compliance at the entity level and over control activities. Controls over compliance may have been occurring but there was no evidence of those controls functioning. Cause: The Organization has limited staffing and experience with federal funds. Effect: Tests of controls over compliance were not able to be performed during our audit which resulted in control risk being assessed at high for all applicable compliance requirements. There is a risk that noncompliance could occur without being detected. Questioned Costs: None noted as no compliance errors were identified. Recommendation: The Organization is in the process of restructuring certain employee responsibilities and we recommend that roles be clearly defined and separation of responsibility be clearly defined. In addition, one individual should be assigned as the program director for each federal grant and that person should be responsible for ensuring compliance in all areas of grant management. Their review of transactions and reports should be documented to provide evidence of the controls. Management Response: Management agrees with the recommendation. Additionally, the appointed program director will receive federal award management training. To provide additional support to the program directors, management also created a Subrecipient Annual Financial Monitoring Policy. In accordance with the policy, Marys River Watershed Council will conduct and document annual reviews of each subrecipient.