Audit 322568

FINDING 2023-004 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS - REPORTING Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (ALN Number: 21.027) Federal Agency: Department of Treasury Federal Award Number (or Other Identifying Number): N/A Pass-Through Entity: State Budget Agency Subject – Subrecipient Monitoring – Internal Controls Audit Finding: Significant Deficiency Criteria: Federal regulations 2 CFR section 200.332 (b), (d), (f) and (g) requires the County to: (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. Condition: An effective internal control system was not in place at the County to ensure compliance with requirements related to the grant agreement and the subrecipient monitoring compliance requirement. Questioned Cost: None. Context: During our subrecipient monitoring testing, we saw no formal, documented review of the 2 subrecipient's audit reports selected for testing. Management asserted they reviewed the reports, but there was no formal documented review of the reports noted. The audit reports sampled for testing contained no findings in the reports that would require the County to follow up on. Effect: The failure to establish an effective internal control system placed the County at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Cause: Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the compliance requirements listed above for the full period under audit. Repeat Finding: No. Recommendation: We recommended that the County formally documents their review of the subrecipient audit reports and follow up actions taken on the audit reports as needed. Views of Responsible Officials: Management concurs with this finding. See the corrective action plan.

FINDING 2023-004 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS - REPORTING Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (ALN Number: 21.027) Federal Agency: Department of Treasury Federal Award Number (or Other Identifying Number): N/A Pass-Through Entity: State Budget Agency Subject – Subrecipient Monitoring – Internal Controls Audit Finding: Significant Deficiency Criteria: Federal regulations 2 CFR section 200.332 (b), (d), (f) and (g) requires the County to: (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. Condition: An effective internal control system was not in place at the County to ensure compliance with requirements related to the grant agreement and the subrecipient monitoring compliance requirement. Questioned Cost: None. Context: During our subrecipient monitoring testing, we saw no formal, documented review of the 2 subrecipient's audit reports selected for testing. Management asserted they reviewed the reports, but there was no formal documented review of the reports noted. The audit reports sampled for testing contained no findings in the reports that would require the County to follow up on. Effect: The failure to establish an effective internal control system placed the County at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Cause: Management had not developed a system of internal control that would have ensured compliance with the grant agreement and the compliance requirements listed above for the full period under audit. Repeat Finding: No. Recommendation: We recommended that the County formally documents their review of the subrecipient audit reports and follow up actions taken on the audit reports as needed. Views of Responsible Officials: Management concurs with this finding. See the corrective action plan.