Audit 390285

Expenses. Criteria – Internal controls over safeguarding assets constitute a process, effected by an entity’s governing body, management and other personnel designated to provide reasonable assurance regarding prevention or timely detection of unauthorized transactions and safeguarding assets from error or misappropriation. Such processes include establishing policies addressing proper authorization of the expense. Expenses should be approved by the Local Workforce Development Board prior to funds being disbursed. Condition – We noted the following regarding the Local Workforce Development Area’s expenses related to the WIOA program: 1) Expenses to the Employer of Record for payroll do not include documentation of review and approval prior to payment being made for 3 of 26 transactions tested. 2) Reimbursements to the Executive Director and expenses for credit card purchases do not include documentation of an independent review prior to payment being made for 3 of 26 transactions tested. Cause – The Local Workforce Development Area’s policies and procedures do not require all expenses be approved by an independent person prior to payment. Effect – Lack of policies and procedures requiring approval could result in unauthorized transactions and the opportunity for misappropriation. Recommendation – The Local Workforce Development Area should adopt written policies and procedures requiring independent approval of all expenses prior to payment being made. Response and Corrective Action Planned – We will review policies and procedures for expenses to ensure that all payments have an evidenced independent review prior to payment. We plan to implement these changes September 1, 2025. Conclusion – Response accepted.

Awards to Subrecipients. Criteria – The Uniform Guidance, Part 200.332 states, “All pass-through entities must: ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of those data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.” Required information includes, in part, identification of whether the award is research and development (R&D), the indirect cost rate for the federal award (including if the de minimis rate is charged) per Part 200.414, the subrecipient unique entity identifier (UEI), the federal award identification number, the federal award date of award to the recipient by the Federal agency, the name of the Federal awarding agency, the Assistance Listing number and Title. Additionally, the Workforce Innovation and Opportunity Act (WIOA) Section 102(b) defines priority of service for veterans and eligible spouses and WIOA Section 502(a) states that no WIOA funds can be spent unless the subrecipient agrees to comply with the Buy American Act. Condition – For subawards, the Local Workforce Development Area did not include identification of whether the award is R&D, the indirect cost rate for the federal award (including if the de minimis rate is charged) per Part 200.414, the subrecipient UEI, the federal award identification number, the federal award date of award to the recipient by the Federal agency, the Assistance Listing number and Title. Additionally, subawards did not include a Veterans Priority or Buy American provision. Cause – The Local Workforce Development Area has not established policies and procedures to ensure all required information is included in the subaward to the subrecipients. Effect – The information required in the subaward to subrecipients was not included due to the lack of policies and procedures. Recommendation – The Local Workforce Development Agency should establish policies and procedures to ensure all required information is included in the subaward to subrecipients as required by Uniform Guidance, Part 200.332 and WIOA. Response and Corrective Action Planned – Going forward, new sub-awards and pass thru grant agreements will have elements specified in the respective agreement as required by Uniform Guidance, Part 200.332 and WIOA. We plan to implement these changes September 1, 2025. Conclusion – Response accepted.

Subrecipient Monitoring. Criteria – The Uniform Guidance, Part 200.332 states in part, “All pass-through entities must: 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.” The Uniform Guidance, Part 200.332 also states, “All pass-through entities must: monitor the activities of the subrecipient 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. Pass-through entity monitoring of the subrecipient must include reviewing financial and performance reports required by the pass-through entity, following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward and issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by Part 200.521.” The Uniform Guidance, Part 200.332 also states, “All pass-through entities must: Verify that every subrecipient is audited as required by Subpart F when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in Part 200.501” and that “All pass-through entities must: 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 – The Local Workforce Development Area did not evaluate the 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. In addition, the Local Workforce Development Area did not evidence the review of the subrecipient’s audit report or have procedures in place to track and monitor the status of audit findings that require follow-up. Cause – The Local Workforce Development Area has not established policies and procedures to ensure compliance with the Uniform Guidance, Part 200.332. Effect – The Local Workforce Development Area is not in compliance with subrecipient monitoring as required by the Uniform Guidance, Part 200.332. Recommendation – The Local Workforce Development Area should establish policies and procedures to ensure compliance with the Uniform Guidance, Part 200.332. Response and Corrective Action Planned – Policies have already been updated, and risk assessments have been completed for subsequent years. Conclusion – Response accepted.