Finding 2024-002 | Subrecipient Not Monitored — City of Laredo Across Three Programs Material Weakness in Internal Control over Compliance | Ryan White (93.917) | HOPWA (14.241) | State Services (HHS001317000004) | First-Time Finding Finding Number: 2024-002 Planned Completion Date: June 30, 2025 (r...
Finding 2024-002 | Subrecipient Not Monitored — City of Laredo Across Three Programs Material Weakness in Internal Control over Compliance | Ryan White (93.917) | HOPWA (14.241) | State Services (HHS001317000004) | First-Time Finding Finding Number: 2024-002 Planned Completion Date: June 30, 2025 (retroactive review and system implementation); ongoing thereafter Responsible Official(s): Josafat Saldivar, Finance Director (monitoring schedule and fiscal monitoring); Program Managers — Ryan White, State Services, HOPWA (programmatic coordination); Juan E. Rodriguez, Executive Director (oversight and quarterly review) Agency Response: STDC acknowledges the finding and recognizes the seriousness of the Material Weakness classification. During FY2024, STDC did not conduct the required annual monitoring of the City of Laredo under the Ryan White, State Services, or HOPWA programs. Combined subrecipient expenditures for the City of Laredo across these three programs totaled $1,162,418. STDC concurs that this constitutes a failure to meet the subrecipient monitoring requirements of 2 CFR 200.332 and the applicable contract terms for all three programs. Management acknowledges that the absence of a formal, documented annual monitoring schedule allowed this gap to go undetected. STDC notes that five of six Ryan White and State Services subrecipients and three of four HOPWA subrecipients were monitored during FY2024; the lapse was isolated to the City of Laredo across all three programs. STDC takes seriously its obligation to ensure all subrecipients are monitored on schedule and is committed to implementing a comprehensive corrective action that addresses both the immediate gap and the underlying control deficiency. STDC also notes that subrecipient monitoring policies and procedures were formally developed and adopted as part of the corrective action for Finding 2022-006. The recurrence of a monitoring gap in FY2024 underscores the need for a more structured scheduling and tracking mechanism to ensure those procedures are consistently applied across all programs and subrecipients each grant year. Corrective Actions to Be Implemented: Action 1 (Target: April 30, 2025): Retroactive Monitoring Review — Conduct a desk review of the City of Laredo's FY2024 subrecipient expenditures, financial reports, and compliance documentation under Ryan White (ALN 93.917), State Services (HHS001317000004), and HOPWA (ALN 14.241), using the standardized monitoring tools and checklists established under STDC's existing Subrecipient Monitoring Policy. Document results and retain findings in the City of Laredo subrecipient monitoring files. Action 2 (Target: April 30, 2025): Develop a formal, written Annual Subrecipient Monitoring Schedule at the start of each grant year, covering all active programs and all subrecipients. The schedule will identify: subrecipient name, program(s), subaward amount, assigned monitoring staff, planned monitoring method (desk review or on-site), and planned and actual completion dates. The schedule must be reviewed and approved by the Executive Director. Action 3 (Target: May 15, 2025): Implement a Monitoring Tracking Log consistent with STDC's existing Subrecipient Monitoring Policy to be updated on an ongoing basis and reviewed weekly. The log will track monitoring visit dates, report draft and distribution dates, and status of any corrective actions required of subrecipients. Action 4 (Target: May 31, 2025): Implement a quarterly monitoring progress report to the Executive Director identifying: (a) subrecipients scheduled for monitoring, (b) monitoring completed to date, (c) any past-due monitoring, and (d) findings or corrective actions arising from completed monitoring activities. Action 5 (Target: Ongoing, beginning FY2025): At the start of each grant year, cross-reference the Annual Subrecipient Monitoring Schedule against all active subaward agreements and update the schedule whenever a new subaward is executed or a new subrecipient is added to any program, to ensure no subrecipient is omitted from the monitoring plan. Action 6 (Target: June 30, 2025): Conduct refresher training for all finance and program staff responsible for subrecipient monitoring on the requirements of 2 CFR 200.332, STDC's Subrecipient Monitoring Policy, and the use of the updated annual monitoring schedule and tracking log. Monitoring and Evaluation: Quarterly monitoring progress reports will be submitted to the Executive Director to verify that all subrecipients are monitored according to the annual schedule. The Annual Subrecipient Monitoring Schedule and Monitoring Tracking Log will be maintained in the subrecipient compliance files and available for audit review. Compliance with the Subrecipient Monitoring Policy will be reviewed annually, and any deviations will be addressed through staff corrective action plans as appropriate.