Audit 300146

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

Assistance Listings number and name: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award number and year: SLFRP1826, May 1, 2021 through December 31, 2026 Federal agency: U.S. Department of the Treasury Compliance requirements: Reporting Questioned costs: N/A Condition—Contrary to federal guidance, the County’s Finance Department (Department) reported inaccurate program information to the federal grantor agency in its 2023 annual project and expenditure report submitted in April 2023. Specifically, the Department reported that it incurred cumulative expenditures totaling the entirety of its $9,031,691 award amount, when it had only spent $3,170,013, resulting in an overstatement of $5,861,678 of the cumulative expenditures reported. Effect—The Department’s reporting inaccurate program information impacts the federal agency's ability to effectively monitor the Department’s program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The County is also at risk that this finding applies to other federal programs that it administers. Cause—The County did not have written policies and procedures requiring the Department to perform and document an independent, detailed review and approval of the program’s report before submitting it to the federal agency. Additionally, although the former County Manager initialed the report as approved, the review was not sufficient enough to detect the nearly $6 million in overstated expenditure reporting errors we identified. Criteria—Federal agency guidance requires the County to verify and confirm that all program information that it reports is accurate and approved before submission, in addition to reporting the total dollar value of cumulative expenditures for the project.1 Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The County should: 1. Develop and implement written policies and procedures requiring all County departments to perform and document an independent, detailed review and approval of all federal reports before submitting them to the federal agency or grantor to ensure the reports are accurate, agree to County records, and contain only allowable expenditures. 2. After developing and implementing the policies and procedures in recommendation 1, train department employees who are responsible for preparing and reviewing federal reports on the information required to be gathered and documented. 3. Adjust or resubmit reports the Department submitted to the federal agency when errors are detected, and inform the federal agency of those errors on previously submitted reports. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 U.S. Department of Education. (2023). Compliance and Reporting Guidance – State and Local Fiscal Recovery Funds. Retrieved 3/19/2024 from SLFRF-Compliance-and-Reporting-Guidance.pdf (treasury.gov).

Assistance Listings number and name: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award number and year: SLFRP1826, May 1, 2021 through December 31, 2026 Federal agency: U.S. Department of the Treasury Compliance requirements: Reporting Questioned costs: N/A Condition—Contrary to federal guidance, the County’s Finance Department (Department) reported inaccurate program information to the federal grantor agency in its 2023 annual project and expenditure report submitted in April 2023. Specifically, the Department reported that it incurred cumulative expenditures totaling the entirety of its $9,031,691 award amount, when it had only spent $3,170,013, resulting in an overstatement of $5,861,678 of the cumulative expenditures reported. Effect—The Department’s reporting inaccurate program information impacts the federal agency's ability to effectively monitor the Department’s program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The County is also at risk that this finding applies to other federal programs that it administers. Cause—The County did not have written policies and procedures requiring the Department to perform and document an independent, detailed review and approval of the program’s report before submitting it to the federal agency. Additionally, although the former County Manager initialed the report as approved, the review was not sufficient enough to detect the nearly $6 million in overstated expenditure reporting errors we identified. Criteria—Federal agency guidance requires the County to verify and confirm that all program information that it reports is accurate and approved before submission, in addition to reporting the total dollar value of cumulative expenditures for the project.1 Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The County should: 1. Develop and implement written policies and procedures requiring all County departments to perform and document an independent, detailed review and approval of all federal reports before submitting them to the federal agency or grantor to ensure the reports are accurate, agree to County records, and contain only allowable expenditures. 2. After developing and implementing the policies and procedures in recommendation 1, train department employees who are responsible for preparing and reviewing federal reports on the information required to be gathered and documented. 3. Adjust or resubmit reports the Department submitted to the federal agency when errors are detected, and inform the federal agency of those errors on previously submitted reports. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 U.S. Department of Education. (2023). Compliance and Reporting Guidance – State and Local Fiscal Recovery Funds. Retrieved 3/19/2024 from SLFRF-Compliance-and-Reporting-Guidance.pdf (treasury.gov).

Assistance Listings number and name: 97.067 Homeland Security Grant Program Award numbers and years: 19-AZDOHS-OPSG-190427-03, June 1, 2022 through May 31, 2023; 20-AZDOHS-OPSG-200431-02, January 1, 2021 through April 30, 2023; 21-AZDOHS-OPSG-210440-01/02, March 1, 2022 through March 31, 2023; and 22-AZDOHS-OPSG-220435-01/02, April 1, 2023 through March 31, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: Arizona Department of Homeland Security Compliance requirements: Reporting Questioned costs: None Condition—Contrary to federal guidance and the County Sheriff’s Office (Sheriff’s Office) State grant award terms, the Sheriff's Office did not prepare and submit timely program information to the Arizona Department of Homeland Security (AZDOHS) for monitoring. Specifically, the Sheriff’s Office submitted 17 of 25 required quarterly reports late, ranging from 5 to 213 days late, averaging 28 days late. Effect—The Sheriff’s Office reporting untimely program information delayed its receiving federal reimbursement for program expenditures and negatively impacts AZDOHS’s ability to effectively monitor the Sheriff’s Office program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The Sheriff’s Office is also at risk that this finding applies to other federal programs that it administers. Cause—The Sheriff’s Office relied on its office manager to prepare quarterly reports and ensure the reports were submitted within 15 days after the quarter’s end. However, the office manager retired during the fiscal year, and the Sheriff’s Office assigned multiple staff who either did not have sufficient time available to prepare these reports timely or were not properly trained on the preparation of these reports. Further, the County and Sheriff’s Office lacked policies and procedures ensuring required reports were submitted timely to the awarding agency. Criteria—The Sheriff’s Office federal award terms require them to submit quarterly financial and programmatic reports to the AZDOHS no later than 15 days after each quarter’s end. Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations— 1. The County and Sheriff’s Office should develop and implement written policies and procedures for federal grant awards, train staff on these policies, and monitor its departments’ required reporting for federal awards by tracking when reports are due to be submitted to ensure reports are completed and submitted on time. 2. The Sheriff’s Office should immediately complete and submit any late or missing federal grant award reports to the AZDOHS. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

2023-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: Dl21-002288 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $116,512 Condition—Contrary to federal regulation, the County’s Workforce Development Department (Department) failed to ensure that it spent the required 75 percent, or $305,536, of WIOA Youth Activities monies earmarked to provide services to out-of-school youth from April 2021 through June 2023. Instead, the Department spent only 46 percent, or $189,024, of the required 75 percent and spent the remaining 29 percent, or $116,512, to provide services to in-school youth, which was an allowable activity because it did not meet the earmarking requirements. Effect—County out-of-school youth did not receive $116,512 in services that the federal program intended. Cause—The Department used a tracking mechanism to report its in-school youth and out-of-school youth spending throughout the fiscal year but did not have written policies and procedures requiring it to properly monitor and adjust its spending to provide in-school and out-of-school youth services to ensure earmarking requirements are met during the fiscal year and throughout the award period. While the Department submitted a waiver to the pass-through grantor to modify the earmarking ratio to address the demographic constraints experienced by the County, the Department lacked sufficient time to implement prior-year audit recommendations during fiscal year 2023 due to the County’s fiscal year 2022 single audit report not being issued until September 29, 2023, nearly 3 months after the end of the County’s 2023 fiscal year-end. Criteria—Federal regulation requires the Department to earmark and spend no less than 75 percent of its WIOA Youth Activities monies on out-of-school youth services. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 CFR §681.410). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 75 percent of its WIOA Youth Activities monies to provide out-of-school youth services. 2. Develop written policies and procedures for its WIOA Youth Activities program to: a. Work with the pass-through grantor to develop an effective strategy to recruit and retain qualified out-of-school youth who will benefit from program services. b. Monitor its out-of-school services spending throughout the fiscal year and award period. c. Adjust spending to meet the earmarking requirement if out-of-school youth participation is lower than expected. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022.

Assistance Listings number and name: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award number and year: SLFRP1826, May 1, 2021 through December 31, 2026 Federal agency: U.S. Department of the Treasury Compliance requirements: Reporting Questioned costs: N/A Condition—Contrary to federal guidance, the County’s Finance Department (Department) reported inaccurate program information to the federal grantor agency in its 2023 annual project and expenditure report submitted in April 2023. Specifically, the Department reported that it incurred cumulative expenditures totaling the entirety of its $9,031,691 award amount, when it had only spent $3,170,013, resulting in an overstatement of $5,861,678 of the cumulative expenditures reported. Effect—The Department’s reporting inaccurate program information impacts the federal agency's ability to effectively monitor the Department’s program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The County is also at risk that this finding applies to other federal programs that it administers. Cause—The County did not have written policies and procedures requiring the Department to perform and document an independent, detailed review and approval of the program’s report before submitting it to the federal agency. Additionally, although the former County Manager initialed the report as approved, the review was not sufficient enough to detect the nearly $6 million in overstated expenditure reporting errors we identified. Criteria—Federal agency guidance requires the County to verify and confirm that all program information that it reports is accurate and approved before submission, in addition to reporting the total dollar value of cumulative expenditures for the project.1 Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The County should: 1. Develop and implement written policies and procedures requiring all County departments to perform and document an independent, detailed review and approval of all federal reports before submitting them to the federal agency or grantor to ensure the reports are accurate, agree to County records, and contain only allowable expenditures. 2. After developing and implementing the policies and procedures in recommendation 1, train department employees who are responsible for preparing and reviewing federal reports on the information required to be gathered and documented. 3. Adjust or resubmit reports the Department submitted to the federal agency when errors are detected, and inform the federal agency of those errors on previously submitted reports. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 U.S. Department of Education. (2023). Compliance and Reporting Guidance – State and Local Fiscal Recovery Funds. Retrieved 3/19/2024 from SLFRF-Compliance-and-Reporting-Guidance.pdf (treasury.gov).

Assistance Listings number and name: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award number and year: SLFRP1826, May 1, 2021 through December 31, 2026 Federal agency: U.S. Department of the Treasury Compliance requirements: Reporting Questioned costs: N/A Condition—Contrary to federal guidance, the County’s Finance Department (Department) reported inaccurate program information to the federal grantor agency in its 2023 annual project and expenditure report submitted in April 2023. Specifically, the Department reported that it incurred cumulative expenditures totaling the entirety of its $9,031,691 award amount, when it had only spent $3,170,013, resulting in an overstatement of $5,861,678 of the cumulative expenditures reported. Effect—The Department’s reporting inaccurate program information impacts the federal agency's ability to effectively monitor the Department’s program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The County is also at risk that this finding applies to other federal programs that it administers. Cause—The County did not have written policies and procedures requiring the Department to perform and document an independent, detailed review and approval of the program’s report before submitting it to the federal agency. Additionally, although the former County Manager initialed the report as approved, the review was not sufficient enough to detect the nearly $6 million in overstated expenditure reporting errors we identified. Criteria—Federal agency guidance requires the County to verify and confirm that all program information that it reports is accurate and approved before submission, in addition to reporting the total dollar value of cumulative expenditures for the project.1 Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The County should: 1. Develop and implement written policies and procedures requiring all County departments to perform and document an independent, detailed review and approval of all federal reports before submitting them to the federal agency or grantor to ensure the reports are accurate, agree to County records, and contain only allowable expenditures. 2. After developing and implementing the policies and procedures in recommendation 1, train department employees who are responsible for preparing and reviewing federal reports on the information required to be gathered and documented. 3. Adjust or resubmit reports the Department submitted to the federal agency when errors are detected, and inform the federal agency of those errors on previously submitted reports. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 U.S. Department of Education. (2023). Compliance and Reporting Guidance – State and Local Fiscal Recovery Funds. Retrieved 3/19/2024 from SLFRF-Compliance-and-Reporting-Guidance.pdf (treasury.gov).

Assistance Listings number and name: 97.067 Homeland Security Grant Program Award numbers and years: 19-AZDOHS-OPSG-190427-03, June 1, 2022 through May 31, 2023; 20-AZDOHS-OPSG-200431-02, January 1, 2021 through April 30, 2023; 21-AZDOHS-OPSG-210440-01/02, March 1, 2022 through March 31, 2023; and 22-AZDOHS-OPSG-220435-01/02, April 1, 2023 through March 31, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: Arizona Department of Homeland Security Compliance requirements: Reporting Questioned costs: None Condition—Contrary to federal guidance and the County Sheriff’s Office (Sheriff’s Office) State grant award terms, the Sheriff's Office did not prepare and submit timely program information to the Arizona Department of Homeland Security (AZDOHS) for monitoring. Specifically, the Sheriff’s Office submitted 17 of 25 required quarterly reports late, ranging from 5 to 213 days late, averaging 28 days late. Effect—The Sheriff’s Office reporting untimely program information delayed its receiving federal reimbursement for program expenditures and negatively impacts AZDOHS’s ability to effectively monitor the Sheriff’s Office program administration and compliance with program requirements, prevent and detect fraud, and evaluate the program’s success. The Sheriff’s Office is also at risk that this finding applies to other federal programs that it administers. Cause—The Sheriff’s Office relied on its office manager to prepare quarterly reports and ensure the reports were submitted within 15 days after the quarter’s end. However, the office manager retired during the fiscal year, and the Sheriff’s Office assigned multiple staff who either did not have sufficient time available to prepare these reports timely or were not properly trained on the preparation of these reports. Further, the County and Sheriff’s Office lacked policies and procedures ensuring required reports were submitted timely to the awarding agency. Criteria—The Sheriff’s Office federal award terms require them to submit quarterly financial and programmatic reports to the AZDOHS no later than 15 days after each quarter’s end. Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations— 1. The County and Sheriff’s Office should develop and implement written policies and procedures for federal grant awards, train staff on these policies, and monitor its departments’ required reporting for federal awards by tracking when reports are due to be submitted to ensure reports are completed and submitted on time. 2. The Sheriff’s Office should immediately complete and submit any late or missing federal grant award reports to the AZDOHS. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.