Chapter 1.2 Oversight and Monitoring

1.2.2 Types of Recipients and Oversight Responsibilities

Effective date: July 1, 2018

Non-Federal Entity

The Non-Federal Entity means a State, local government, Indian Tribe, institution of higher education, or non-profit organization that carries out a Federal award as a recipient or subrecipient.¹ State of Wisconsin, County of Racine, and Northwest Concentrated Employment Program (CEP), are examples of Non-Federal Entities.

The Non-Federal Entity is responsible for oversight and operations of the Federal award supported activities. The Non-Federal Entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the Non-Federal Entity must cover each program, function, or activity.²

The Non-Federal Entity must submit performance reports as required by the federal awarding agency or pass through entity to best inform improvements in program outcomes and productivity. These reports will include:

1. A comparison of actual accomplishments to the objectives of the Federal award established for the period,
2. The reason(s) why established goals were not met, if appropriate; and
3. Additional Pertinent information including, when appropriate, analysis of cost overruns or high unit costs.³

Events may occur between the scheduled performance reporting dates that have significant impact upon the supported activity. In such cases, the Non-Federal Entity must inform the Federal awarding agency or pass-through entity as soon as the following types of conditions become known:

1. Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the Federal award. This disclosure must include a statement of the action taken or contemplated, and any assistance needed to resolve the situation, and
2. Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipate or producing more or different beneficial results than originally planned.⁴

Pass-Through Entity

A pass-through entity is a non-Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program.⁵ The State of Wisconsin and the Southeast Wisconsin Workforce Development Board are examples of pass-through entities.

Among its responsibilities regarding sub-recipients, a pass through entity must:

1. Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2. Monitor the activities, as necessary, to ensure that the subaward is used for authorized purposes in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.
3. Verify that each subrecipient is audited as required by 2 CFR 200 Subpart F ̶ Audit Requirements when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded $750,000.
4. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicated conditions that necessitate adjustments to the pass-through's own records.
5. Consider taking enforcement action against noncompliant subrecipients as described in 2 CFR §200.338 - Remedies for noncompliance of this part and in program regulations.⁶

Subrecipient

A subrecipient is a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a federal program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency.⁷ Workforce Resource, Inc. and ADVOCAP are examples of subrecipients, as examples of non-Federal entities that receive subawards from their local Workforce Boards.

Subrecipient oversight and monitoring requirements for the Title 1 WIOA received include:

1. Determine that expenditures have been made against the proper cost categories and within the cost limitations specified in the Act and the higher-level regulations and policy.
2. Determine whether there is compliance with other provisions of the Act and the WIOA regulations, to include applicable laws, regulations and policies.
3. Assure compliance with 2 CFR part 200; and
4. Determine compliance with the non-discrimination, disability, and equal opportunity requirements of WIOA Section 188.⁸

Subaward

A subaward is an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a Federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a Federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract.⁹

Contractor

A contractor is an entity that receives a legal instrument (i.e., contract) by which a non-Federal entity purchases property or services needed to carry out the project or program under a Federal award. The term as used in this part does not include a legal instrument, even if the non-Federal entity considers it a contract, when the substance of the transaction meets the definition of a Federal award or subaward.¹⁰ Wisconsin Indianhead Technical College and local Community Based Organizations are examples of Contractors.

Subrecipient / Contractor Determination

The non-Federal entity may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities. Payments received for goods or services provided as a contractor are not federal awards,¹¹ therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. The Federal awarding agency may supply and require recipients to comply with additional guidance to support these determinations provided such guidance does not conflict with this section. ¹²

Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity:

• Determines who is eligible to receive what Federal assistance.
• Has its performance measured in relation to whether objectives of a Federal program were met.
• Has responsibility for programmatic decision making.
• Is responsible for adherence to Federal program requirements specified in the Federal award.
• In accordance with its agreement, uses Federal funds to carry out a program for public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.¹³

Characteristics indicative of a procurement relationship between the non-Federal entity and a contractor are when the non-Federal entity receiving the Federal funds:

• Provides the goods and services within normal business operations.
• Provides similar goods or services to many different purchasers.
• Normally operates in a competitive environment.
• Provides goods or services that are ancillary to the operation of the Federal program.
• Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.¹⁴

In determining whether an agreement between a pass-through entity and another non-Federal entity casts the latter as a subrecipient or a contractor, the substance of the relationship is more important that the form of the agreement. All the characteristics listed above may not be present in all cases, and the pass-through entity must use judgment in classifying each agreement as a subaward or a procurement contract.¹⁵

• ¹2 CFR §200.69
• ²2 CFR §200.328(a)
• ³2 CFR §200.328(b)(2)
• ⁴2 CFR §200.328
• ⁵2 CFR §200.74
• ⁶2 CFR §200.331
• ⁷2 CFR §200.93
• ⁸20 CFR §683.410(a)
• ⁹2 CFR §200.92
• ¹⁰2 CFR §200.22 & 200.23
• ¹¹2 CFR § 200.501(f)
• ¹²2 CFR §200.330
• ¹³2 CFR §200.330(a)
• ¹⁴2 CFR §200.330(b)
• ¹⁵2 CFR §200.330(c)

1.2.3 DWD-DET Coordinated Monitoring

Effective date: July 1, 2022

The DWD-DET monitoring system must:

1. Provide for annual on-site monitoring reviews of each local area to ensure compliance with 2 CFR part 200, as required by WIOA section 184(a)(3), and 20 CFR § 683.410.
2. Ensure that established policies to achieve program quality and outcomes meet the objective of the Act and WIOA regulations.
3. Enable the Governor to determine if subrecipients and contractors have demonstrated substantial compliance with WIOA.
4. Enable the Governor to determine whether a local plan will be disapproved for failure to make acceptable progress in addressing deficiencies as required in WIOA section 108(e)(1); and
5. Enable the Governor to ensure compliance with the non-discrimination, disability and equal opportunity requirements of WIOA section 188, including the Assistive Technology Act of 1998 (29 U.S.C. 3003).¹
6. Require that prompt corrective action be taken if any substantial violation of standards is found.
7. Impose the sanctions provided in WIOA Secs. 184(b)-(c) of WIOA in the event of a subrecipients failure to take required corrective action.

The purpose of on-site monitoring is to:

1. Ensure the programs comply with appropriate policies and procedures, and operate within the parameters established by law, regulations, the State WIOA Plan, the Local WIOA Plan, Equal Opportunity and Nondiscrimination policies, and program guidelines, including overall compliance with:
   • Workforce Innovation and Opportunity Act of 2014;
   • Department of Labor Employment and Training Administration Advisories;
   • DWD Policy Updates and Administrative Memos;
   • DWD's WIOA Policy Guidance;
   • Uniform Guidance 2 CFR Part 200 and 2 CFR Part 2900; and
   • Nondiscrimination and Equal Opportunity provisions contained in Section 188 of WIOA and regulations 29 CFR § 38 applicable to employment and service delivery.
2. Assess the quality of services provided to program participants and employers, and where appropriate, make recommendations for improvement.
3. Evaluate the management and administration of WIOA-funded grants with the Department to determine if program operations are compliant and whether the WDB is on track to achieve grant goals and outcomes.
4. Identify technical assistance needs.
5. Identify system-wide issues requiring policy or program review and resolution.
6. Identify positive practices and share with others in the workforce development system.
7. Assess impacts of workforce programs for customers within the workforce development area.

Scope of Review

Several key items will be reviewed and considered. Items may include, but are not limited to, the following:

1. Governance:

   • Interview with the Executive Director and Board Members.
   • Review of Board Membership List and Conflict of Interest Forms.
   • Review of Board Committee structure.
   • Review of Board governance documents (i.e., By-Laws, Chief Elected Official Agreements, Memorandums of Understanding, etc.)

2. Program:

   • Interview with Board Staff.
   • Interview with the Service Provider Staff.
   • Review of Board policies relating to program operations.
   • Review of Board and Service Provider program monitoring plans, activities and documentation.
   • Review of selected files including: Adult Program, Dislocated Worker Program, and Youth Program participant files.
   • Review of participant files for compliance with Selective Service registration requirements.
   • Review of Job Center Certification requirements.

3. Fiscal:

   • Review of procurement standards to ensure compliance with Uniform Guidance and WIOA.
   • Review of internal controls, written policy and procedures, independent audit, and monitoring of sub-recipients.
   • Review of budget controls and fiscal reporting.
   • Review of cash management and personnel records.
   • Review of the indirect cost rate and/or cost allocation plan.
   • Review of vouchers to ensure costs are allowable and are being allocated properly.
   • Review of credit card statements.

4. Civil Rights Compliance & Equal Opportunity (CRC/EO):

   • Review the local EO Officer's duties and responsibilities for ensuring EO compliance of the Workforce Development Board (WDB) and their subcontractors.
   • Assess the extent to which the WDB and their subcontractors comply with EO notices and communications requirements.
   • Review WDBs subcontracts (includes Work Experience and/or OJT agreements) to determine if they contain the proper assurance language compliant with statutory requirements.
   • Assess the extent the WDB is providing universal access to individuals with limited English proficiency (LEP) and persons with disabilities. This includes demographic analysis, language assistance, and provision of auxiliary aides and services. This includes outreach to groups protected by civil rights statutes.
   • Review compliance with Section 504 and ADA.
   • Assess how the WDB data and information is collected, maintain, and safeguarded.
   • Review subcontractors EO on-site monitoring reports completed by the local EO Officer.
   • Review discrimination and other grievance/complaint policies, procedures, and complaint logs.
   • Review the WDB for voluntary compliance from subcontractors when violations of EO requirements are identified during monitoring reviews.
   • Site visits to review physical accessibility requirements and required information postings. Site visits may be conducted prior to the onsite monitoring, or during the onsite visit.

Schedule

The schedule of annual on-site monitoring and the monitoring guides that DWD-DET will use are available in the Resources box on this page.

Steps in the monitoring process

1. Notification: With the exception of unscheduled reviews, notification of pending reviews will be given at least ten (10) days before each review. DWD-DET is authorized to monitor any entity receiving WIOA funds, and these reviews may include entering sites or premises to examine program and fiscal records, question employees, and interview participants. It reserves the option to conduct unannounced or unscheduled reviews as appropriate.
2. Sampling: Random-sampling and data validation techniques will be used to draw the samples that will be used to review records. The review may include all (100%) of the record universe if the universe is small or problems are identified during the review. Requested records are not to be modified between the time of the records request and the arrival of the onsite monitoring team.
3. Interviews: DWD-DET on-site monitoring will include interviews which may include board members, board staff, service provider staff, and participants.
4. Desk Reviews: DWD-DET will review working papers and documents which will be retained at DWD after review.
5. Report: A report will be issued within 45 business days of the completion of the review. Copies of the report will be dispensed to the following: CEO/Director of the local Workforce Development Board; Workforce Development Board Chair; Local Chief Elected Official; and Coordinated Monitoring Team.
6. Corrective Action: The WDB shall provide a response to the monitoring report within 45 business days that addresses each finding and area of concern identified, and when required by the report, includes a corrective action plan. The corrective action plan, when required, shall include the action(s) the local WDB will take to correct the problem, the estimated date the problem will be resolved, and how the local WDB will be involved in addressing this issue. In the event it is not possible to resolve findings identified during monitoring, a request may be made to DWD-DET for Technical Assistance or referred to the DWD Secretary for alternate resolution.
7. Resolution or Completion: The review is completed or closed if corrective action is not required, or the corrective action plan has been accepted, or there are no further requirements.

Repeat items identified on the monitoring report

DWD-DET will identify Areas of Concern and Findings that appear in two or more consecutive monitoring reports for the WDA. These issues may result in one or more of the following:

• Areas of Concern escalated to Findings.
• Requirement of additional corrective actions.
• Direct notification of specific issues provided to the Chief Elected Official for the WDA.
• Implementation of more frequent monitoring of WDA activities by DWD-DET.
• On-site training of local board staff and/or service provider staff.
• Mandatory DWD-DET provided technical assistance.

In addition to the above, if the local area monitoring report includes findings that appear in three or more consecutive years for the same item, DWD-DET may enforce additional corrective measures, to include any or all of the following:

• Development of a performance improvement plan.
• Development of a modified local plan.
• Requirement for the appointment and certification of a new local WDB.
• Prohibiting the use of eligible providers and one-stop partners that have failed to take appropriate corrective actions.

Report Terminology

Terms utilized will be those identified in the United States Department of Labor's (USDOL) "Ten Steps to Developing an Effective State Monitoring System," and are defined below:

Promising Practice

Used to highlight positive aspects of programs that may be shared with other WDBs to help improve their programs.

Area of Concern

Administrative, management, or programmatic practices that are not specific compliance violations but may have negatively impacted the program and/or could lead to a finding in the future. Area of Concerns may result in either required or recommended actions.

Finding

A violation (condition) of a specific compliance requirement contained in law, regulations, national policies, Funding Opportunity Announcements (FOAs), Uniform Guidance or OMB Circulars, the grant terms and condition, ETA policy guidance, including Training and Employment Guidance Letters (TEGLs), and/or the grant agreement that requires specific corrective (required and /or recommended) action. Findings may result in questioned cost and/or disallowed costs.

Additionally, the following terms utilized in this report are defined by DWD-DET as follows:

Areas of Strength

An aspect of local area activities that is not necessarily innovative, but indicative of high quality WIOA execution, operationalization, and/or management.

Transitional Guidance

During the review, a condition was observed that was

• compliant under law, policy, or guidance in existence at the time. However, based upon new/updated law, policy, or guidance it could be non-compliant; or,
• not compliant under an existing law, policy, or guidance in existence at that time. However, DWD-DET received clarification or was made aware of that law, policy, or guidance after the commencement of program year monitoring.

• ¹20 CFR § 683.410