2023-009 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.403 Factors affecting allowability of costs (g), the costs to be allowable must be adequately documented. Furthermore, pursuant to 2 CFR 200.332 Requirements for pass-through entities, the entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: a. Review financial and performance reports. b. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. c. Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. d. Resolve audit findings specifically related to the subaward. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide the complete and accurate documentation for the subrecipient-related expenditures which include the reimbursement package and proof of cash receipts. In relation to project ADEL-21-1-05M/5262, the reported $14,020 subrecipient’s personnel-related expenditure was lifted from the monthly status of expenditures monitoring file with $14,067 verified as grant amount. It was noted that the expenditures were incurred through June 30, 2022, and the related reimbursements were received through June 30, 2023. The audit team vouched the supporting remittance advices provided and identified only $4,720 related to the project. The remaining amount of $9,300 was unverified. As for project ADEL-23-2-05Z/3679, no support related to fiscal year 2023 was received, therefore, the reported amount of $18,253 could not be verified. Cause: The City did not have sufficient subrecipient monitoring policy and record-keeping requirements established. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor was unable to verify the amounts reported related to the City’s subrecipients, resulting in questioned costs and findings of non-compliance. Questioned Costs: $27,553. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its subrecipient monitoring activities and establish a formal record-keeping policy to ensure complete and timely documentation of expenditures. Views of Responsible Officials: Management concurs with the finding.
2023-007 – Internal Control over Reporting Requirements Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-22-1-03K/0175, ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.415 Required Certifications, Subrecipients under the Federal award must certify to the pass-through entity whenever applying for funds, requesting payment, and submitting financial reports. A signature by the responsible official serves as evidence that the reimbursement request has been reviewed and approved in compliance with these requirements. As a subrecipient, the City receives funding on a reimbursement basis. The City prepares the reimbursement package, including all the required supporting documentation. Prior to the submission to the County, the package must be reviewed and approved by the responsible official as evidenced by the signature on the reimbursement request form. Further, pursuant to 2 CFR 200.334 Record retention requirements, the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Condition: During our audit, we noted that one of the reimbursement request forms was submitted to the County without proper signature and certification from the City’s responsible official. Cause: The City does not have adequate internal controls to ensure that reimbursement packages are reviewed and approved by the responsible official prior to submission. Effect or Potential Effect: The absence of certification resulted in noncompliance with the compliance requirement. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City establish internal control procedures to ensure that all reimbursement requests are reviewed and approved by an authorized official prior to submission. Views of Responsible Officials: Management concurs the finding.
2023-008 – Special Tests and Revisions – Internal Control and Compliance over Wage Rate Requirements Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-20-1-03K/0222, ADEL-21-1-03K/0235, and ADEL-22-1-03K/0175 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to 2 CFR 200.334 Record Retention Requirements, the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. Further, in accordance with the 2 CFR 200.303 Internal Controls, the recipient and subrecipient must also establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Programs subject to wage-rate rules (e.g., Davis-Bacon Act or program-specific requirements) must maintain weekly certified payrolls and supporting documentation for all working weeks to demonstrate compliance with prevailing wage requirements. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide a complete listing of construction working weeks. The City provided only ten (10) documents supporting wage-rate compliance testing, representing ten (10) working weeks. However, during the audit, we noted that the reimbursement requests submitted by the City covered the period of July 1, 2022 through April 30, 2023, indicating that the documentation provided did not represent the full population of construction activity for the fiscal year. As a result, the auditor was unable to obtain sufficient documentation to determine whether wage-rate requirements were met for all applicable working weeks. Cause: The City did not have adequate internal controls to ensure that documentation for all construction working weeks was tracked, retained, and made available for audit. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor could not determine whether the City complied with wage rate requirements for the fiscal year. Hence, resulted in non-compliance with wage rate documentation requirements, and internal control deficiency related to retention requirements and compliance monitoring. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its internal control by implementing policies and procedures to track wage rate requirements compliance, and ensure that all certified payrolls and supporting wage-rate documentation are retained. Views of Responsible Officials: Management concurs with the finding.