Mississippi Administrative Code › Title 18 - HUMAN SERVICES › Part 8 - MDHS Subgrant Manual › Chapter 1 - Introduction › Rule 18-8-1.1 - Repeal Prior Rules/Manuals › Section 18-8-1.1-7 - Monitoring

Current through June 25, 2024
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 Programmatic 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. A subgrantee's level of risk is
					 assessed by the Division of Monitoring, the applicable Programmatic Funding
					 Division, the Division of Procurement Services, the Division of Property and
					 the Office of Inspector General. 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 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
					 30th  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 Programmatic 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.
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 $750,000 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 from 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 $750,000.00 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. $750,000.00 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. $750,000.00 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.
				  Assure 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
https://facweb.census.gov/uploadpdf.aspx
.
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 Programmatic 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 9 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.
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/
.