Finding 2025-001
significant deficiency
- Program
- YOUTHBUILD (17.274)
- Compliance requirement
- Other
- FAC record
- FY2025 audit on fac.gov
Finding text from the filing
DEPARTMENT OF LABOR
Finding 2025‑001: Assistance Listing Number 17.274 YouthBuild - Significant Deficiency in Internal Control Over Compliance – Failure to Disseminate Grant Requirements and Establish Adequate Policies and Procedures
Criteria
Under 2 CFR 200.303, non‑federal entities must establish and maintain effective internal controls over federal awards. This includes ensuring that:
· Grant agreements and compliance requirements are communicated to appropriate personnel, and
· Policies and procedures are developed to ensure the entity can comply with the terms and conditions of federal awards.
Effective internal control requires that grant documents be reviewed in full, disseminated to responsible staff, and used to establish the control activities necessary for compliance.
Condition
The Organization did not have an established process to ensure that the full grant agreement was reviewed by key management team members and significant program and compliance requirements communicated to the appropriate program and compliance personnel. As a result, key staff responsible for administering the federal award did not receive the complete grant document and were not aware of all applicable requirements. The Organization, therefore, did not develop the necessary policies and procedures to address the full scope of compliance requirements.
Cause
The Organization lacks a formalized grant intake and communication process. There is no documented control requiring management to:
· Review the full grant agreement upon receipt,
· Identify compliance requirements, or
· Disseminate the document to relevant staff and establish corresponding policies and procedures.
Effect
The absence of a structured process for reviewing and distributing grant documents resulted in a control environment that does not provide reasonable assurance that all compliance requirements are identified and addressed. This deficiency is considered a material weakness in internal control over compliance, as it creates a reasonable possibility that material noncompliance could occur and not be prevented or detected in a timely manner.
Questioned Costs
None.
Recommendation
We recommend that the Organization implement a formal grant intake and dissemination process that includes:
· A documented review of the full grant agreement upon receipt.
· Identification of all compliance requirements and assignment of responsibilities.
· Distribution of the complete grant document to all relevant staff.
· Development and implementation of written policies and procedures aligned with the grant’s requirements.
Management should also implement periodic monitoring to ensure that controls remain effective.
Management’s Response and Corrective Action
The Organization is implementing a formal grant intake and review process to ensure all grant agreements are fully reviewed, compliance requirements are identified, and responsibilities are assigned.
Procedures will be established to distribute complete grant documents to relevant staff and to develop written policies and procedures aligned with grant requirements. Management will also implement periodic monitoring to ensure controls operate effectively and any issues are quickly remedied.
These corrective actions are expected to be fully implemented by June 30, 2026.