2023-001 Program: Foster Care
Federal Financial Assistance Listing Number: 93.658
Federal Grantor: U.S. Department of Health and Human Services
Pass-Through: California Department of Social Services
Award No. and Year: 2301CAFOST and 2023, 2201CAFOST and 2022
Compliance Requirements: Subrecipient Mo...
2023-001 Program: Foster Care
Federal Financial Assistance Listing Number: 93.658
Federal Grantor: U.S. Department of Health and Human Services
Pass-Through: California Department of Social Services
Award No. and Year: 2301CAFOST and 2023, 2201CAFOST and 2022
Compliance Requirements: Subrecipient Monitoring
Type of Finding: Material Weakness in Internal Control over Compliance and Material Instance of Noncompliance
Criteria:
In accordance with Title 2 U.S. Code of Federal Regulations (CFR) 200.332, pass-through entities must comply with the following:
• 2 CFR Part 200.332(a), Requirements for Pass-Through Entities, states that all pass- through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award.
• 2 CFR 200.332(b) – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. This evaluation of risk may include consideration of such factors listed in 2 CFR 200.332(b)(1) through (4).
• 2 CFR 200.332(d) – 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 the information at 2 CFR 200.332(d)(1) through (4).
• 2 CFR 200.332(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.
The California Department of Social Services further clarifies in its County Fiscal Letter No. 22/23- 91 that Foster Family Agency (FFA), Group Home, and Short Term Residential Therapeutic Programs (STRTP) are “considered subrecipients and subject to the same audit requirements and require the same degree of oversight as other subrecipients”. Further, while there are some licensing and oversight functions performed by the state over FFAs, group homes, and STRTPs, “counties are still ultimately responsible for review of these audits and their findings, any follow- up to ensure compliance, and any other form of monitoring and oversight required by federal and state laws and regulations.”
2 CFR Section 180.300a, Responsibilities of Participants Regarding Doing Business with Other Persons (and repeated in the California Department of Social Services - County Fiscal Letter No. 21/22 – 115) counties are required to verify that recipients or contracts have not been suspended or debarred by using the federal SAM (Systems for Award Management).
Condition:
The Social Services Agency (SSA) did not have any formal controls in place for evaluating each subrecipient’s risk of noncompliance or the purpose of determining the appropriate subrecipient monitoring or for subrecipient monitoring for the Foster Care program. Additionally, the following information was not provided at the time of the subaward for ten (10) of fourteen (14) subawards selected for testing from the SSA’s for the Foster Care program:
• Subrecipient’s unique entity identifier
• Federal award identification number
• Federal award date of award to recipient by the Federal agency
• Subaward period of performance
• Amount of federal funds obligated to the subrecipient
• Amount of federal funds committed to the subrecipient
• Federal award project description
• Name of federal awarding agency
• CFDA/Assistance Listing number
• Identification of whether the award is research and development
• Indirect cost rate
During our testing, we noted for four (4) of fourteen (14) subrecipients selected, SSA did not have documentation that the SAM clearance was performed prior to entering the contract with the subrecipient. The County’s policy was to verify the subrecipient was not suspended or debarred prior to entering the contract, but the County did not retain evidence of this check prior to entering the contract.
Cause:
The SSA’s procedures did not consistently ensure that the required award information and applicable requires were communicated to the subrecipients. The SSA did not follow their procedures to evaluate the risk of noncompliance or monitor the activities of each subrecipient, and the SSA did not maintain documentation of their verification that every subrecipient is
audited, as required. Additionally, the SSA department did not follow their policy to retain documentation of the verification of the information prior to entering the contract.
Effect:
The County’s control policies were not consistently followed which require compliance with the Subrecipient Monitoring requirements in 2 CFR 200.332 and did not comply with subrecipient monitoring requirements related to the program. Additionally, the County’s control policies were not consistently followed, which required documentation of the verification prior to entering the contract.
Questioned Costs:
No questioned costs were identified as a result of our procedures.
Context/Sampling:
A nonstatistical sample of fourteen (14) out of seventy (70) subrecipients were sampled, which included seven (7) FFA, and seven (7) STRTP types. The condition noted above was identified during our procedures related to subrecipient monitoring and was pervasive to the program.
Repeat Findings from Prior Years:
Yes, Finding 2022-002,2022-005 and 2022-006.
Recommendation:
We recommend that the County adhere to their policies and procedures in accordance with 2 CFR 200.332 to ensure compliance with subrecipient monitoring requirements. We recommend that the County adhere to their procedures requiring documentation of the SAM clearance prior to entering the contract.
Management Response and Corrective Action:
Social Services Agency:
1. Person Responsible: Kristi Fiskum, Human Services Deputy Director and Karen Vu,
Procurement Contract Manager, Senior
2. Corrective Action Plan:
SSA has revised its Subrecipient Monitoring Policy in accordance with 2 CFR 200.332 to ensure compliance with subrecipient monitoring requirements and the updated policy was implemented in September 2023. A check list has been developed to track monitoring requirements and was also implemented in September 2023.
3. Anticipated Implementation Date: Fully implemented as of September 2023