FEDERAL AWARD FINDING: 2025-101 The County did not develop internal control procedures over program reporting and cash management requirements, increasing risk of report errors to awarding agencies and wrongly receiving monies Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings number(s) and name(s): 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number(s) and year(s): IGA DI23-002389 July 1, 2023 through June 28, 2028 IGA DI21-002286 July 1, 2024 through June 30, 2025 Federal agency: U.S. Department of Labor Pass-through grantor(s): Arizona Department of Economic Security Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 21.027 COVID-19—Coronavirus State and Local Fiscal Recovery Funds Award number(s) and year(s): 1505-0271 March 3, 2021 through December 31, 2024 CT-FM-22-149 October 1, 2024 through September 30, 2025 SLFRFP1962 January 5, 2023 through December 31, 2026 CTR069300 January 1, 2024 through December 30, 2026 GTAW-FM-23*123 October 3, 2022 through July 3, 2026 ACJC-VC-25-001A July 1, 2024 through December 31, 2024 Federal agency: U.S. Department of the Treasury Pass-through grantor(s): Stratford Art Works; Arizona Supreme Court; Arizona Housing Coalition, Inc.; Arizona Criminal Justice Commission Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 93.268 Immunization Cooperative Agreements Award number(s) and year(s): CTR062571 July 1, 2022 through June 30, 2025 CTR059891 July 1, 2022 through June 30, 2027 Federal agency: U.S. Department of Health & Human Services Pass-through grantor(s): Arizona Department of Health Services Compliance requirement(s): Cash management and reporting Questioned costs: Not applicable Condition Contrary to federal regulation, the County’s Grants Management and Innovation Department (Department) did not develop, document, or implement internal control procedures to monitor compliance with the programs’ reporting and/or cash management requirements for the Workforce Innovation and Opportunity Act (WIOA) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, and Immunization Cooperative Agreements (ICA) programs. Specifically, for 13 of 17 reports we tested, we found the Department did not perform an independent review and approval of reports prior to submitting them to the federal agency or pass-through grantor to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures for: • 9 of 9 WIOA monthly reconciliation reports we tested. • 3 of 4 SLFRF quarterly project and expenditure reports we tested. • 1 of 4 ICA quarterly contract expenditure reports (CER) we tested. These reports are also used to request reimbursement from the federal agency. For the same 3 SLFRF reports identified above and submitted during fiscal year 2025, we found the Department did not retain documentation, such as system reports, screenshots, or queries, to support the information it reported. Despite lacking internal control procedures, we did not identify inaccurate program information for WIOA and ICA reported to the federal agency or pass-through grantor, and we did not identify any ICA costs incurred prior to requesting reimbursement. In addition, the Department did not prepare and submit timely ICA program information to the federal agency for monitoring. Specifically, for award CTR062571—the Immunization Bridge Access program, the Department failed to submit 3 quarterly CERs by their required due dates in fiscal year 2025 and instead, on August 2, 2025, submitted 1 report that contained information covering all quarterly information for fiscal year 2025. Effect Without effective internal control procedures in place, there is an increased risk that the Department may not prevent or detect and correct errors on reports it submits to federal agency and pass-through agencies, which rely on them to effectively monitor the program administration, including its compliance with program requirements, ability to prevent and detect fraud, and to evaluate the programs’ success. There is also an increased risk that the Department could receive federal monies to which it is not entitled. Further, the Department is at risk that this finding applies to other federal programs it administers. Cause The Department’s management reported that it had sometimes performed independent reviews and approvals of reports but did not maintain documentation of these independent reviews because the Department did not have a formal policy requiring a documented review and approval of its reports. In addition, the Department’s management reported that policies and procedures were not followed to retain documentation for the SLFRF reports. Further, the Department’s management reported it did not have a process to track when each ICA report was required to be completed and did not verify that reports were submitted by the designated due dates. Criteria 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). This would include developing, documenting, and implementing internal control procedures to monitor compliance with federal agency guidelines requiring the Department to report accurate and complete information for the WIOA monthly reconciliation reports, SLFRF quarterly financial reports, and ICA quarterly contract expenditure reports. Also, federal regulation and Department retention policies require the Department to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires the Department to submit financial reports as required by the federal award. Reports submitted quarterly are due no later than 30 calendar days after the reporting period (2 CFR §200.328). Recommendations to the Department 1. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures. 2. Retain detailed documentation, such as system reports, screenshots, or queries related to submitted reports to ensure accurate and complete program information is reported to the federal agency or pass-through grantor for each federal program. 3. Submit ICA reports by their quarterly due dates. 4. Follow its retention policies and procedures and federal regulation requirements to retain all records relating to a federal award for a period of 3 years from the date of its submission of the reports. Develop, document, and implement policies and procedures to monitor compliance with the programs’ reporting requirements to: 5. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency or pass-through grantor to ensure reports are accurate, agree to County records, and contain only allowable expenditures for the applicable fiscal year. 6. Create a tracking mechanism to ensure reports are completed and submitted by their due dates. This finding is similar to prior-year finding 2024-104 that was initially reported in fiscal year 2024. Views of responsible officials County management concurs with this finding. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. 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.