18 Miss. Code. R. 8-1.1-8

Current through December 10, 2024

Section 18-8-1.1-8 - Monitoring

Overview

The Division of Monitoring is tasked with ensuring that all subgrants of the Mississippi Department of Human Services (MDHS) are administered in compliance with laws and regulations applicable to Federal financial assistance programs, agency policies and in accordance with the terms of the subgrant agreement and this subgrant manual in its entirety. Monitoring is a review process used in determining a Subgrantee's compliance with the requirements of MDHS and/or Federal programs, adhering to applicable laws and regulations, and measuring progress toward stated results and outcomes. The Division of Monitoring along with the Funding Divisions are responsible for oversight of the development of appropriate monitoring instruments specifically designed to ensure compliance with program requirements, cost principles, and federal regulations.

MDHS monitoring reviews are performed in accordance with 2 C.F.R. §200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and have the following objectives:

1. Ensure accountability and compliance with applicable Federal and State laws applicable to Federal financial assistance programs;

2. Ensure funds awarded to Subgrantees are used for authorized purposes;

3. Ensure compliance with the terms of the subgrant agreement;

4. Identify technical assistance and training needs;

5. Ensure follow-up on issues and implementation of corrective actions;

6. Provide guidance to Subgrantees in establishing and maintaining sound business accounting procedures; and

7. Safeguard federal funds against fraud, waste, and abuse.

In general, the Subgrant monitoring procedures will consist of the following:

1. Notification of a monitoring review via a schedule letter;

2. Entrance Conference;

3. Examination of fiscal and programmatic requirements;

4. Exit Conference;

5. Initial Findings Letter;

6. Corrective Action Response and/or follow up;

7. Final Decision Letter; and

8. Administrative Hearings as required.

Monitoring of fiscal and programmatic requirements includes but is not limited to:

1. Reviewing expenditures to ensure funds are expended in line with the approved budget narrative;

2. Reviewing claims submitted by the Subgrantee;

3. Reviewing documentation supporting expenses reported under MDHS subgrants;

4. Reviewing the Subgrantee's single audit and/or program-specific audit results and evaluating audit findings and the Subgrantee's corrective action plan; and

5. Performing desk and/or on-site reviews of the fiscal and programmatic records and observing Subgrantee operations.

Risk Assessment

As required by 2 C.F.R. § 200.332, Requirements for Pass-Through Entities, the extent of monitoring imposed on each Subgrantee shall be determined on the risk of noncompliance. The following factors are taken into consideration when assessing risk level of Subgrantees:

1. Subgrantee's prior experience with the same or similar sub-awards;

2. Subgrantee's suspension and debarment compliance;

3. Amount of award;

4. Results of previous audits, which includes whether Subgrantee receives a Single Audit in accordance with 2 C.F.R. §200 Subpart F (Audit Requirements) and the extent to which the same or similar sub-award has been audited as a major program;

5. Prior experience of the Subgrantee operating subgrants supported by Federal funds;

6. Results of previous desk and/or on-site fiscal monitoring and programmatic reviews;

7. Significant and/or substantial instances of fraud;

8. Statement of work and deliverables of the Subgrantee;

9. Subgrantee's compliance with property requirements;

10. Whether the Subgrantee has new personnel or the Subgrantee has recently substantially changed systems;

11. Subgrantee's accounting and procurement systems; and

12. The extent and results of Federal awarding agency monitoring.

All Subgrantees who are identified as a new Subgrantee and/or high risk will receive a technical assistance visit from the Division of Monitoring. The visit will be conducted within the first three (3) months of the subgrant period.

Reference 2 C.F.R. § 200.332

Monitoring Reviews for Program and Fiscal Compliance

The Division of Monitoring will conduct on-site and/or desk reviews of MDHS subgrants for programmatic and fiscal compliance. The reviews may be performed on any subgrant at any time and may be repeated as often as deemed necessary by MDHS. Subgrantees will receive a Schedule Letter as notification of the impending monitoring review at a minimum of fourteen (14) calendar days prior to the monitoring review. The Schedule Letter requests information and documentation from the Subgrantee required to complete the monitoring review. MDHS reserves the right to conduct unannounced reviews at its discretion.

Each review will conclude with an exit conference in which the monitor(s) will discuss with the Subgrantee signatory official (or designee) and other appropriate staff whether any documentation remains outstanding and answer any questions.

The Division of Monitoring will issue an Initial Findings Letter after the exit conference. The letter will generally be issued within thirty (30) calendar days of the conclusion of the monitoring visit; however, a longer timeframe may be appropriate based on workload, whether or not additional documentation is received after the exit conference and/or the complexity of issues at hand. The monitoring report will provide a description of each finding of noncompliance, identified questioned costs, and any required corrective action(s) to be taken by the Subgrantee. If the 30^th calendar day falls on the weekend, the report will be issued the following Monday. If due date falls on a State holiday, the report will be issued the following business day.

Corrective Action Procedures

The Initial Findings Letter is provided to the Subgrantee via electronic mail correspondence. The Division of Monitoring uses the current contact information included in the subgrant agreement. It is the responsibility of the Subgrantee to notify the Division of Monitoring if the correspondence should be submitted to a different individual within the Subgrantee organization. Copies of all correspondence submitted to the Subgrantee are also provided to the applicable MDHS Funding Division.

The Subgrantee is required to provide a written response and/or payments for questioned costs to the Division of Monitoring after receipt of the Initial Findings Letter, unless otherwise indicated. Any extensions to provide documentation must be requested in writing and submitted before the final due date. The corrective action plan must be specific and include:

1. A statement of whether the Subgrantee agrees with the finding or not.

2. A detailed plan of how the Subgrantee will correct each individual finding to prevent this or similar finding in the future or justification for the Subgrantee's disagreement with the finding(s).

3. Any Subgrantee documents, forms, policy changes, reports, accounting tools, time sheets, data collection forms, etc. that ensure the Subgrantee has corrected the finding(s)

4. If the Subgrantee disagrees with a finding(s) identified in the report, detailed documentation must also be submitted to refute the questioned finding(s) and/or costs.

5. If the Subgrantee agrees with the findings, the Subgrantee must repay funds identified as questioned costs to MDHS.

6. The corrective action plan must be signed by the Authorized Official or designee. (The designee is the person granted permission to sign the Authorized Official's signature.)

The Division of Monitoring will issue a Final Decision Letter based on the corrective action response received from the Subgrantee. If findings and/or questioned costs remain unresolved in the Final Decision Letter, and the Subgrantee disagrees with the final findings, the Subgrantee can appeal the findings. The Subgrantee must request a Subgrant Administrative Agency Appeal within thirty (30) calendar days from the date of receipt of the Final Decision Letter. Please refer to Title 18 of the Administrative Code, Part 23, Chapter 7, Subgrant Administrative Agency Appeals for more information regarding the appeals process.

Single Audit Requirements

Subgrantees must have a single-audit conducted, in accordance with 2 C.F.R. § 200.514, by an independent auditor if the Subgrantee expends $1,000,000 or more during the non-Federal entity's fiscal year in Federal awards. Total federal grant awards not only include those received from the MDHS, but also those received from any other source.

As part of its subrecipient monitoring functions, the Division of Monitoring reviews the single-audit reports for federal grant subrecipients that receive federal grants from MDHS. This monitoring is done to ensure that federal grants are used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of federal awards, as required by 2 C.F.R. § 200.331. The Subgrantee must submit the audit report to MDHS by the earlier of thirty (30) calendar days after receipt of the auditor's reports or nine (9) months after the end of the audit period.

In compliance with 2 C.F.R. § 200.512, Report Submission, Subgrantees must electronically submit a data collection form and the reporting package directly to the Federal Audit Clearinghouse designated by OMB.

A Subgrantee that expends Federal financial assistance during the subgrant's fiscal year of:

1. Less than $1,000,000 shall be exempt from Federal audit requirements unless the Subgrantee meets a requirement in 2 C.F.R. § 200.503. However, the Subgrantee must make records available for review by the appropriate officials and cannot constrain in any manner such as a Federal or State agency, from carrying out or arranging audits;

2. $1,000,000 or more under only one (1) Federal program and the Federal program's statutes, regulations or the terms and conditions of the Federal award do not require a financial statement audit of the subgrant, may elect to have a program-specific audit in accordance with 2 C.F.R. § 200.507; or

3. $1,000,000 or more under more than one (1) Federal program shall have an organization wide audit performed in accordance with 2 C.F.R. § 200.501(c).

Program-Specific Audit

If the Subgrantee meets the applicable standard for a program-specific audit, it must follow Generally Accepted Government Auditing Standards (GAGAS) and the program specific audit guide. A listing of current program-specific audit guides can be found in the compliance supplement provided on the Office of Management and Budget website. If a current program-specific audit guide is not available, the Subgrantee and auditor must have basically the same responsibilities for the Federal program as they would have for an audit of a major program in a single audit.

Reference 2 C.F.R. § 200.507

Responsibilities of a Subgrantee

The Subgrantee must:

1. Maintain and make records available for review or audit by appropriate officials of the Federal awarding agency, pass-through entity, General Accounting Office (GAO), the State Auditor and/or the Subgrantee's independent auditor, upon request;

2. Procure or otherwise arrange for the audit required by 2 C.F.R. § 200.508 in accordance with 2 C.F.R. § 200.509 (Auditor Selection) and ensure it is properly performed and submitted when due in accordance with 2 C.F.R. § 200.512 (Report Submission);

3. Prepare financial statements that reflect its financial position, results of operations, and, where appropriate, cash flows for the fiscal awards for the period covered by the Subgrantee's financial statements, which shall be prepared in accordance with 2 C.F.R. § 200.510 (Financial Statements);

4. Ensure that audits are conducted and reported in accordance with GAGAS and 2 C.F.R. § 200.514 through § 200.520, as applicable. Additionally, all copies of the auditor's reports, and any management letters issued by the auditors, must be submitted to the Division of Monitoring within the earlier of thirty (30) calendar days after receipt of the auditor's report(s) or nine months after the end of the audit period;

5. Promptly follow-up and take corrective action on all audit findings, including a preparation of a summary schedule of prior audit findings and a corrective action plan in accordance with §200.511 (Audit Findings Follow-up);

6. Provide the Division of Monitoring with access to all personnel, accounts, books, records, supporting documentation, and other information as needed for the monitor to perform the audit as required;

7. Ensure MDHS subgrants are properly identified and audited as part of an organization wide audit. MDHS may request a Subgrantee that is required to have an organization wide audit to have a particular program audited as a major program. Such requests shall be made at least 180 days prior to the end of the fiscal year to be audited. The Subgrantee, after consultation with its auditor, shall inform MDHS whether the program would otherwise be audited as a major program using a risk-based approach and, if not, the estimated incremental costs. MDHS shall then promptly confirm to the Subgrantee whether it wants the program audited as a major program.

8. Prepare a separate schedule of indirect costs. If indirect costs are claimed under any MDHS subgrant (which shall at a minimum include a listing of actual indirect costs incurred during the Subgrantee's fiscal year by line-item), a description and amount of the base used to allocate indirect costs to all of the Subgrantee's programs, and the calculation of an actual indirect cost rate based on the audited amounts must be submitted to MDHS;

9. Complete the MDHS Subgrantee Audit Information Form (MDHS-DOM-002) and submit the form to the Division of Monitoring. The form must be completed within ninety (90) days of the end of the Subgrantee's fiscal year; 10. Submit a copy of the data collection form and the reporting package, which are specified under 2 C.F.R. § 200.512, directly to the Federal Audit Clearinghouse (FAC) The data collection form and reporting package must be submitted electronically through the FAC web address at www.fac.gov.

Management Decision

MDHS is responsible for issuing a management decision within six (6) months of receipt of the audit report. The management decision must clearly state whether or not the audit finding is sustained, the reason for the decision and the expected Subgrantee action to repay disallowed cost, make financial adjustments or take other action. If the Subgrantee has not completed corrective action, a timetable for follow-up should be given. The Subgrantee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report.

Reference 2 C.F.R. § 200.521, 2 C.F.R. § 200.332

Limited Scope of Audits of Specific Compliance Areas

MDHS may engage an independent Certified Public Accountant to perform a Limited Scope Audit of specified MDHS subgrants. The need for this type of review shall be determined on an individual basis and shall be documented by MDHS. The results of this review shall be communicated to the Subgrantee and to the applicable MDHS Funding Division in a written notice.

Non-Compliance

In cases of continued inability or unwillingness to have an audit conducted, MDHS and/or the federal agency will take appropriate action. Please refer to Chapter 10 of this manual for more information regarding Subgrantee noncompliance.

Discovery of Possible Fraud, Mismanagement, or Program Abuse

If an allegation or suspicion of fraud, waste mismanagement, and/or program abuse is discovered while conducting a monitoring review, the Subgrantee will be referred to the Office of Inspector General (OIG) for further investigation. During any active investigation, all payments to the Subgrantee will be paused and the Funding Division will not answer questions about the investigation.

Subgrantees shall report any suspected fraud, waste and/or abuse to the Office of Inspector General. The Office of Inspector General accepts tips and complaints regarding potential fraud, waste and/or abuse in the following ways:

* Phone - 1-800-299-6905;

* Email - fraud@mdhs.ms.gov; and

* MDHS Fraud Tip Form located at https://www.mdhs.ms.gov/report-fraud/.

18 Miss. Code. R. 8-1.1-8

Amended 1/13/2017

Amended 1/14/2018

Amended 1/9/2020

Amended 9/25/2021

Amended 9/8/2022

Amended 10/2/2023

Amended 10/10/2024