Workforce Solutions Borderplex, Inc.

Reference Number: 2023-001 – Material Weakness, Subrecipient Monitoring

Criteria: According to 2 CFR sections 200.332 (d) through (f) pass through entities must 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.

Condition: During the contract period between August 1, 2022 through September 30, 2023, the Boards subrecipient over enrolled program participants which required the Board to utilize $5,737,560 of 2024 fiscal year CCS program funds to cover 2023 fiscal year obligations.

Cause: The Board has weekly check in meeting with its subrecipient to discuss programmatic goals and results. The subrecipient was directed to continue enrolling program participants however, the budget for the continued enrollment had been exceeded and not identified in a timely manner to the program function. Continued enrollment resulted in grant funds being depleted. The Board sought approval from its funder to use fiscal 2024 funds to cover expenditures already incurred. Over enrollment began in March of 2023 and was not closed until July of 2023. Furthermore, the Board relies on an independent accounting firm to perform agreed upon procedures for fiscal monitoring. These procedures occurred once during the fiscal as of December 6, 2023. The Board did not conduct any additional fiscal monitoring throughout the year.

Effect: The Board did not effectively monitor the budget of its subrecipient, in a timely manner. As a result, its subrecipient over enrolled program participants. The Texas Workforce Commission subsequently reduced the FY 24 award to supplement the FY23 award to account for the over expenditure.

Recommendation: We recommend that the Board improve policies and procedures to ensure communication identifies available funding for program services provided in a timely and efficient manner to the program providers. With respect to monitoring of its subrecipients, policies and procedures should be enhanced to ensure that oversight of its subrecipients is more frequent, timely and responsive to findings.

Management Response: See management’s corrective action plan.

Reference Number: 2023-002 – Significant Deficiency, Subrecipient Monitoring

Criteria: Pass through entities must clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)).

Condition: The contracts between the Board and its subrecipients did not include all the required elements as prescribed by 2 CFR Section 200.332.

Cause: The Board did not segregate the source of funds between federal and state sources in a timely manner. As a result, the subrecipient did not have timely information of federal Uniform Guidance and Texas Grant Management Standards requirements.

Effect: The Boards subrecipients may not have timely or accurate information to determine the source of federal vs state funding to segregate funds in accordance with the Uniform Guidance and Texas Grant Management Standards.

Management Response: See management’s corrective action plan.