Finding 2024-002 Procurement Policy During our review of the Organization’s procurement policy, we noted that while a general framework exists, the policy does not currently address several key elements required under 2 CFR Part 200 - Uniform Guidance. Specifically, the procurement policy omits critical components related to vendor acceptance, debarment verification, domestic procurement preference, and the detailed processes required for the Simplified Acquisition Threshold. The absence of these elements increases the risk of noncompliance with Federal procurement standards, vendor selection errors, and insufficient documentation in the event of Federal oversight or audit. Federal Agency: Multiple (Various pass-through and direct Federal awards) AL #: Various. Compliance requirement: Audit requirement 2 CFR Part 200 Type of Finding: Noncompliance and significant deficiency in internal control over compliance. Repeat Finding: No. Criteria: According to Uniform Guidance, non-federal entities must establish and follow procurement policies that: Include procedures to verify vendor eligibility through SAM.gov per 2 CFR §200.214. Clearly define procurement methods and thresholds, including the Simplified Acquisition Threshold. Incorporate a domestic preference for procurements per 2 CFR §200.322. Maintain documented procedures for handling procurement disputes, protests, and source evaluations. Cause: The Organization’s procurement policy has not been formally updated to fully incorporate the current Federal requirements as outlined in Uniform Guidance. Effect: Without a fully compliant procurement policy, the Organization is at increased risk of noncompliance with Federal procurement standards, inadvertently contracting with ineligible or debarred vendors and inadequate documentation to support decisions. Questioned Costs: No questioned costs identified. Recommendation: We recommend that management amend and formally update the procurement policy to address the following critical areas: Vendor acceptance and debarment testing, definition and procedures for the Simplified Acquisition Threshold, domestic preference for procurements, procedures for handling procurement issues, and policy governance and version control. Management Response: We appreciate AAFCPAs’ review and agree that our procurement policy requires updates to better align with current federal requirements and internal best practices. To improve clarity, accountability, and regulatory compliance, the Finance Department will work with the Fiscal Sponsorship Department to develop the Organization’s procurement policy going forward. We will ensure the updated policy includes the following: We will formalize procedures to confirm vendor eligibility, including consistent use of the SAM.gov exclusions list prior to entering contracts, and ensure documentation is retained for audit purposes. The updated policy will outline specific steps for procurement activities at various thresholds, particularly mid-range purchases, with requirements for obtaining multiple quotes and documenting price comparisons. In alignment with Federal guidelines, the revised policy will include a provision supporting preference for U.S.-made products and materials when feasible. New sections will be added to address how the Organization will manage vendor selection reviews, disputes, and issue resolution to promote fairness and consistency in the procurement process. To ensure transparency and version control, the policy will include the date of each revision and a process for periodic review. The Fiscal Sponsorship Department will implement the updated policy, coordinate training for programmatic staff, and monitor compliance with the updated procedures. We expect the revised procurement policy to be finalized and implemented by July 31, 2025.
Finding 2024-002 Procurement Policy During our review of the Organization’s procurement policy, we noted that while a general framework exists, the policy does not currently address several key elements required under 2 CFR Part 200 - Uniform Guidance. Specifically, the procurement policy omits critical components related to vendor acceptance, debarment verification, domestic procurement preference, and the detailed processes required for the Simplified Acquisition Threshold. The absence of these elements increases the risk of noncompliance with Federal procurement standards, vendor selection errors, and insufficient documentation in the event of Federal oversight or audit. Federal Agency: Multiple (Various pass-through and direct Federal awards) AL #: Various. Compliance requirement: Audit requirement 2 CFR Part 200 Type of Finding: Noncompliance and significant deficiency in internal control over compliance. Repeat Finding: No. Criteria: According to Uniform Guidance, non-federal entities must establish and follow procurement policies that: Include procedures to verify vendor eligibility through SAM.gov per 2 CFR §200.214. Clearly define procurement methods and thresholds, including the Simplified Acquisition Threshold. Incorporate a domestic preference for procurements per 2 CFR §200.322. Maintain documented procedures for handling procurement disputes, protests, and source evaluations. Cause: The Organization’s procurement policy has not been formally updated to fully incorporate the current Federal requirements as outlined in Uniform Guidance. Effect: Without a fully compliant procurement policy, the Organization is at increased risk of noncompliance with Federal procurement standards, inadvertently contracting with ineligible or debarred vendors and inadequate documentation to support decisions. Questioned Costs: No questioned costs identified. Recommendation: We recommend that management amend and formally update the procurement policy to address the following critical areas: Vendor acceptance and debarment testing, definition and procedures for the Simplified Acquisition Threshold, domestic preference for procurements, procedures for handling procurement issues, and policy governance and version control. Management Response: We appreciate AAFCPAs’ review and agree that our procurement policy requires updates to better align with current federal requirements and internal best practices. To improve clarity, accountability, and regulatory compliance, the Finance Department will work with the Fiscal Sponsorship Department to develop the Organization’s procurement policy going forward. We will ensure the updated policy includes the following: We will formalize procedures to confirm vendor eligibility, including consistent use of the SAM.gov exclusions list prior to entering contracts, and ensure documentation is retained for audit purposes. The updated policy will outline specific steps for procurement activities at various thresholds, particularly mid-range purchases, with requirements for obtaining multiple quotes and documenting price comparisons. In alignment with Federal guidelines, the revised policy will include a provision supporting preference for U.S.-made products and materials when feasible. New sections will be added to address how the Organization will manage vendor selection reviews, disputes, and issue resolution to promote fairness and consistency in the procurement process. To ensure transparency and version control, the policy will include the date of each revision and a process for periodic review. The Fiscal Sponsorship Department will implement the updated policy, coordinate training for programmatic staff, and monitor compliance with the updated procedures. We expect the revised procurement policy to be finalized and implemented by July 31, 2025.
Finding 2024-002 Procurement Policy During our review of the Organization’s procurement policy, we noted that while a general framework exists, the policy does not currently address several key elements required under 2 CFR Part 200 - Uniform Guidance. Specifically, the procurement policy omits critical components related to vendor acceptance, debarment verification, domestic procurement preference, and the detailed processes required for the Simplified Acquisition Threshold. The absence of these elements increases the risk of noncompliance with Federal procurement standards, vendor selection errors, and insufficient documentation in the event of Federal oversight or audit. Federal Agency: Multiple (Various pass-through and direct Federal awards) AL #: Various. Compliance requirement: Audit requirement 2 CFR Part 200 Type of Finding: Noncompliance and significant deficiency in internal control over compliance. Repeat Finding: No. Criteria: According to Uniform Guidance, non-federal entities must establish and follow procurement policies that: Include procedures to verify vendor eligibility through SAM.gov per 2 CFR §200.214. Clearly define procurement methods and thresholds, including the Simplified Acquisition Threshold. Incorporate a domestic preference for procurements per 2 CFR §200.322. Maintain documented procedures for handling procurement disputes, protests, and source evaluations. Cause: The Organization’s procurement policy has not been formally updated to fully incorporate the current Federal requirements as outlined in Uniform Guidance. Effect: Without a fully compliant procurement policy, the Organization is at increased risk of noncompliance with Federal procurement standards, inadvertently contracting with ineligible or debarred vendors and inadequate documentation to support decisions. Questioned Costs: No questioned costs identified. Recommendation: We recommend that management amend and formally update the procurement policy to address the following critical areas: Vendor acceptance and debarment testing, definition and procedures for the Simplified Acquisition Threshold, domestic preference for procurements, procedures for handling procurement issues, and policy governance and version control. Management Response: We appreciate AAFCPAs’ review and agree that our procurement policy requires updates to better align with current federal requirements and internal best practices. To improve clarity, accountability, and regulatory compliance, the Finance Department will work with the Fiscal Sponsorship Department to develop the Organization’s procurement policy going forward. We will ensure the updated policy includes the following: We will formalize procedures to confirm vendor eligibility, including consistent use of the SAM.gov exclusions list prior to entering contracts, and ensure documentation is retained for audit purposes. The updated policy will outline specific steps for procurement activities at various thresholds, particularly mid-range purchases, with requirements for obtaining multiple quotes and documenting price comparisons. In alignment with Federal guidelines, the revised policy will include a provision supporting preference for U.S.-made products and materials when feasible. New sections will be added to address how the Organization will manage vendor selection reviews, disputes, and issue resolution to promote fairness and consistency in the procurement process. To ensure transparency and version control, the policy will include the date of each revision and a process for periodic review. The Fiscal Sponsorship Department will implement the updated policy, coordinate training for programmatic staff, and monitor compliance with the updated procedures. We expect the revised procurement policy to be finalized and implemented by July 31, 2025.
Finding 2024-002 Procurement Policy During our review of the Organization’s procurement policy, we noted that while a general framework exists, the policy does not currently address several key elements required under 2 CFR Part 200 - Uniform Guidance. Specifically, the procurement policy omits critical components related to vendor acceptance, debarment verification, domestic procurement preference, and the detailed processes required for the Simplified Acquisition Threshold. The absence of these elements increases the risk of noncompliance with Federal procurement standards, vendor selection errors, and insufficient documentation in the event of Federal oversight or audit. Federal Agency: Multiple (Various pass-through and direct Federal awards) AL #: Various. Compliance requirement: Audit requirement 2 CFR Part 200 Type of Finding: Noncompliance and significant deficiency in internal control over compliance. Repeat Finding: No. Criteria: According to Uniform Guidance, non-federal entities must establish and follow procurement policies that: Include procedures to verify vendor eligibility through SAM.gov per 2 CFR §200.214. Clearly define procurement methods and thresholds, including the Simplified Acquisition Threshold. Incorporate a domestic preference for procurements per 2 CFR §200.322. Maintain documented procedures for handling procurement disputes, protests, and source evaluations. Cause: The Organization’s procurement policy has not been formally updated to fully incorporate the current Federal requirements as outlined in Uniform Guidance. Effect: Without a fully compliant procurement policy, the Organization is at increased risk of noncompliance with Federal procurement standards, inadvertently contracting with ineligible or debarred vendors and inadequate documentation to support decisions. Questioned Costs: No questioned costs identified. Recommendation: We recommend that management amend and formally update the procurement policy to address the following critical areas: Vendor acceptance and debarment testing, definition and procedures for the Simplified Acquisition Threshold, domestic preference for procurements, procedures for handling procurement issues, and policy governance and version control. Management Response: We appreciate AAFCPAs’ review and agree that our procurement policy requires updates to better align with current federal requirements and internal best practices. To improve clarity, accountability, and regulatory compliance, the Finance Department will work with the Fiscal Sponsorship Department to develop the Organization’s procurement policy going forward. We will ensure the updated policy includes the following: We will formalize procedures to confirm vendor eligibility, including consistent use of the SAM.gov exclusions list prior to entering contracts, and ensure documentation is retained for audit purposes. The updated policy will outline specific steps for procurement activities at various thresholds, particularly mid-range purchases, with requirements for obtaining multiple quotes and documenting price comparisons. In alignment with Federal guidelines, the revised policy will include a provision supporting preference for U.S.-made products and materials when feasible. New sections will be added to address how the Organization will manage vendor selection reviews, disputes, and issue resolution to promote fairness and consistency in the procurement process. To ensure transparency and version control, the policy will include the date of each revision and a process for periodic review. The Fiscal Sponsorship Department will implement the updated policy, coordinate training for programmatic staff, and monitor compliance with the updated procedures. We expect the revised procurement policy to be finalized and implemented by July 31, 2025.
MATERIAL WEAKNESS Finding 2024-001 Procurement Policy Program Affected: ALN 45.164, Promotion of the Humanities Public Programs Compliance Requirement: Procurement, Suspension, and Debarment Criteria: Uniform Guidance requires non-Federal entities to establish and follow procurement policies that: • Include procedures to verify vendor eligibility through SAM.gov (2 CFR §200.214). • Define procurement methods and thresholds. • Incorporate a domestic preference for procurements (2 CFR §200.322). • Establish documented procedures for handling procurement disputes, protests, and source evaluations. Condition: The Center’s procurement policy has not been formally updated to incorporate the current Federal requirements under Uniform Guidance. Cause: Management has not yet revised the policy to reflect recent regulatory updates. Effect: In the absence of a fully compliant procurement policy, the Center is at heightened risk of: • Contracting with ineligible or debarred vendors. • Failing to demonstrate compliance with Federal procurement standards. • Maintaining insufficient documentation to support procurement decisions. Questioned Costs: None identified. Repeat Finding: No. Recommendation: We recommend that management amend and formally update the procurement policy to ensure compliance with Uniform Guidance by addressing: • Vendor verification and debarment testing. • Procurement methods and procedures. • Domestic preference requirements. • Procedures for resolving procurement issues, protests, and evaluations. Management Response: The Center will work with the Board of Directors to establish and implement a formal procurement policy by December 15, 2025. The policy will incorporate procedures for verifying vendor eligibility through the SAM.gov exclusions list, set clear requirements for procurement at different thresholds (including obtaining multiple quotes when necessary), and align with Federal guidelines by prioritizing U.S.-made products when feasible. It will also address vendor selection reviews, dispute resolution, and documentation standards to ensure fairness, transparency, and audit readiness. Management will monitor compliance and include provisions for version control and periodic review of the policy.
Finding No.: 2024-002 Federal Agency: U.S. Department of Treasury Federal Communications Commission AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Requirement: Procurement Questioned Costs: $150,676 Criteria: 2 CFR 200.1, defines State as any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any agency or instrumentality thereof exclusive of local governments. 2 CFR 200.317 requires that when conducting procurement transactions under a Federal award, a State or Indian Tribe must follow the same policies and procedures it uses for procurements with non-Federal funds. If such policies and procedures do not exist, States and Indian Tribes must follow the procurement standards in §§ 200.318 through 200.327. In addition to its own policies and procedures, a State or Indian Tribe must also comply with the following procurement standards: §§ 200.321, 200.322, 200.323, and 200.327. All other recipients and subrecipients, including subrecipients of a State or Indian Tribe, must follow the procurement standards in §§ 200.318 through 200.327. Effective July 1, 2019, GMHA Materials Management Policy and Procedure Manual (Policy No. 4.2) includes the following citations: All supplies, equipment and services purchased by Guam Memorial Hospital Authority (GMHA) shall be in accordance with the provisions of the Guam Procurement Law and GMHA Rules and Regulations as amended. Title 26 of the Guam Administrative Rules and Regulations (GARR) Chapter 16, sets forth as follows: §16308. Methods of Source Selection. Unless otherwise authorized by law, all hospital contracts shall be by competitive sealed bidding, pursuant to §16309 (Competitive Sealed Bidding) of these Regulations, except as provided in: (1) Section 16310 (Procurement from Non Profit Corporations); (2) Section 16311 (Small Purchases); (3) Section 16312 (Sole Source Procurement); (4) Section 16313 (Emergency Procurement); (5) Section 16314 (Competitive Selection Procedures for Services Specified in §16212); (6) Section 16507 (Architect-Engineer and Land Surveying Services); or (7) Section 16315 (Purchase of Drugs by Generic Names). §16309. Competitive Sealed Bidding. (a) Application. The provisions of this section apply to every procurement made by competitive sealed bidding, including multi-step bidding.§16309. Competitive Sealed Bidding. (a) Application. The provisions of this section apply to every procurement made by competitive sealed bidding, including multi-step bidding.§16311. Small Purchases. (1) Application. In accordance with 5 GCA §5213 (Small Purchases) of the GuamProcurement Act, this section is established for procurement of less than five thousand dollars ($5,000) for supplies or services and less than fifteen thousand dollars ($15,000) for construction.(b) Authority to Make Small Purchases. (1) Amount. The Hospital Administrator may use this section if the procurement is to be less than five thousand dollars ($5,000) for supplies or services and less than fifteen thousand dollars ($15,000) for construction. If these methods are not used, the other methods of source selection provided in 5 GCA §5210 (Methods of Source Selection) of the Guam Procurement Act and these Regulations shall apply. Condition: For 2 (or 17%) of 12 items tested, GMHA’s method of procurement did not comply with local procurement regulations. GMHA is considered an instrumentality of the Government of Guam which is included in the definition of a State within 2 CFR 200. Accordingly, as there exists policies and procedures for procurement, such policies and procedures should have been used in conducting procurement transactions under a federal award in accordance with 2 CFR 200.317. Cause: GMHA did not use the same policies and procedures used for procurement of non-federal funds in accordance with 2 CFR 200.317. Effect: GMHA is in noncompliance with the applicable requirement. Recommendation: GMHA should adopt and implement the same policies and procedures for federal funds as those used for non-federal funds in accordance with 2 CFR 200.317. Views of Responsible Officials: Management disagrees with the finding. Management concluded that procurement thresholds is not an aspect of policies and procedures required under 2 CFR 200.317. Management concluded that higher thresholds set in 2 CFR 200.320 Simplified Acquisition Threshold as the applicable requirement. Please refer to GMHA’s views of responsible officials for their detailed response.
Finding 2024-002: Buy America, build America preference provisions Type of Finding: Significant Deficiency Criteria: 2 CFR 200.322(A) requires buy america, build america (BABA), preference provisions be included in subawards, contracts and purchase orders under federal awards. Condition: The City failed to include BABA preference provisions in contract with vendor. Cause: The City vetted the vendor ensuring manufacturing was occuring in the United States of America, but failed to include the required preference provisions in the contract with the vendor. Effect: The City does not have controls ensuring BABA preferences are included in all required contracts. Questioned Costs: None Further Information: There were 2 possible contracts to review for inclusion of BABA preference provisions. We reviewed both contracts, noting the other contract reviewed included BABA provisions. Repeat Finding: No Recommendation: Implement review of contracts prior to execution ensuring BABA provisions are included. Views of Responsible Officals: The City concurs with this audit finding and will implement controls to ensure required provisions are included in all contracts.
Finding 2024-002: Buy America, build America preference provisions Type of Finding: Significant Deficiency Criteria: 2 CFR 200.322(A) requires buy america, build america (BABA), preference provisions be included in subawards, contracts and purchase orders under federal awards. Condition: The City failed to include BABA preference provisions in contract with vendor. Cause: The City vetted the vendor ensuring manufacturing was occuring in the United States of America, but failed to include the required preference provisions in the contract with the vendor. Effect: The City does not have controls ensuring BABA preferences are included in all required contracts. Questioned Costs: None Further Information: There were 2 possible contracts to review for inclusion of BABA preference provisions. We reviewed both contracts, noting the other contract reviewed included BABA provisions. Repeat Finding: No Recommendation: Implement review of contracts prior to execution ensuring BABA provisions are included. Views of Responsible Officals: The City concurs with this audit finding and will implement controls to ensure required provisions are included in all contracts.
Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: USDA School Breakfast Program and National School Lunch Program FAL Number: 10.553 and 10.555 Passthrough: New Mexico Public Education Department Award Year: 2023 Criteria: §200.213 Suspension and debarment. Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, sub awards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. §200.317 Procurements by states. When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with §200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section §200.326 Contract provisions. All other non-Federal entities, including sub recipients of a state, will follow §§200.318 General procurement standards through 200.326 Contract provisions. §200.318 General procurement standards. (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (H) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the government-wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” https://www.sam.gov/portal/public/SAM/ SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Condition: During our testing of single audit disbursements, we identified a vendor which would meet the requirement of verifying that the vendor was not suspended or debarred or otherwise excluded from receiving the contract which was funded through Federal dollars. The vendor received more than $25,000 in payments from the District from Federal grant sources. The vendor is not currently suspended or debarred from receiving Federal contracts; however, the District did not have proper internal controls in place to verify this prior to the purchase. The District did make improvement in this area for all new work during the year. However, these projects were completed in the year under audit before the District became aware of the requirements above and could not retroactively cure the errors. Cause: District personnel did not verify that vendors which meet the $25,000 thresholds are not suspended, debarred, or otherwise excluded from participating in contracts funded through Federal awards due to a misunderstanding of staff personnel regarding this requirement. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. Auditor’s Recommendation: We recommend the District establish a policy and implement procedures regarding large purchases related to Federal grants to insure that no vendors who are suspended, debarred, or otherwise excluded from participating in transactions funded through Federal grants are used. As identified above, there are several methods in which the District can verify vendors are not suspended or debarred. The District may have the vendor provide an annual certification that it is not currently suspended, debarred, or otherwise prevented from receiving Federal dollars. In other occasions in which a single purchase is going to be made, the purchasing procedures should include looking up the vendor on the GSA website, printing a copy of the verification, and placing it in the file with the purchase order. The District has options, and it should establish what method is the least intrusive but also effective in complying with the requirements of the Uniform Grant Guidance. Responsible Official’s Plan: Specific corrective action plan for finding: The Grants Finance Department, Federal Grants Department, Operations Department along with the Purchasing Department will review Vendors that are issued requisitions at each approval level to assist in catching $25K or more for Suspension and Debarment. A printed document from SAM.GOV verifying eligibility for Requisitions over $25K will be attached. Infinite Visions is set up to alert originators entering requisitions over $25,000 to contact Purchasing or Grants Department to check the vendor in SAM.GOV to confirm the vendor is vetted to comply with federal regulations. At the initial setup of new vendors, the Purchasing Department will review vendors in SAM.GOV. A printed document from SAM.GOV verifying eligibility of vendor will be attached to the vendor file. Timeline for completion of corrective action plan: The process was implemented immediately upon awareness of the finding and we are hopeful that all issues have been resolved by FY24. Employee position(s) responsible for meeting the timeline: Grants Specialists, CPO, Finance Specialists, Purchasing Specialist, Federal Grants Coordinator, Federal Grants Specialist
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
Federal Program Information: Funding Agency: U.S. Department of Interior Title: Rangeland Resource Management FAL Number: 15.237 Passthrough: L20AC00454-1-L21AC10556 (2) Award Year: 2023 Criteria: §200.213 Suspension and debarment. Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, sub awards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. §200.317 Procurements by states. When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with §200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section §200.326 Contract provisions. All other non-Federal entities, including sub recipients of a state, will follow §§200.318 General procurement standards through 200.326 Contract provisions. §200.318 General procurement standards. (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (H) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the government-wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” https://www.sam.gov/portal/public/SAM/ SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Questioned Costs: None Condition: During our testing of single audit disbursements, we identified two vendors which would meet the requirement of verifying that the vendor was not suspended or debarred or otherwise excluded from receiving the contract, which was funded through Federal dollars. The vendors received more than $25,000 in payments from the District from Federal grant sources. The vendors are not currently suspended or debarred from receiving Federal contracts; however, the District did not have proper internal controls in place to verify this prior to the payment. Cause: District personnel were unaware of the requirement to ensure vendors receiving more than $25,000 were not on the suspension and debarment listing. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. Auditor’s Recommendation: We recommend the District establish a policy and implement procedures regarding large purchases related to Federal grants to insure that no vendors who are suspended, debarred, or otherwise excluded from participating in transactions funded through Federal grants are used. As identified above, there are several methods in which the District can verify vendors are not suspended or debarred. The District may have the vendor provide an annual certification that it is not currently suspended, debarred, or otherwise prevented from receiving Federal dollars. In other occasions in which a single purchase is going to be made, the purchasing procedures should include looking up the vendor on the GSA website, printing a copy of the verification, and placing it in the file with the purchase order. The District has options, and it should establish what method is the least intrusive, but also effective, in complying with the requirements of the Uniform Grant Guidance. Responsible Official’s Plan: Specific corrective action plan for finding: The procurement Officer of SJSWCD has updated the procurement process on 12/7/2023 that all contractors who will be receiving Federal monies must provide an annual certification that they are not suspended, debarred, inactive, or otherwise excluded from participating in transactions funded through Federal grants. The policy change will be approved at the next board meeting. Timeline for completion of corrective action plan: December 7, 2023 Employee position(s) responsible for meeting the timeline: District Manager/Procurement Officer
K-12 Emergency Relief Funds Assistance Listing Number 84.425D. Pass-through: N.C. Department of Public Instruction. Program Report Code 171 and 181. Grant Period - Year Ended June 30, 2023. Criteria: In accordance with 2 CFR Appendix II, certain provisions are required to be included with all construction contracts which are funded with federal awards, to include Equal Employment Opportunity (Part 200(C)) Davis-Bacon Act, (Part 200 (D)); Contract Work Hours and Safety Standards Act, (Part 200(F)); Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, (2 CFR 200.16; and Domestic Preferences for Procurements (2 CFR 200.322). Condition: Per review of the contract for the renovations to C.M. Eppes Middle School, the required provisions were not included in the contract. Cause: Internal controls over compliance with all direct and material compliance requirements were not adequately implemented to ensure that all construction contracts funded with federal awards include the provisions required by 2 CFR Appendix II. Effect: The grantor agency could disallow expenditures related to the construction contract. Questioned Costs: None. Recommendation: Internal controls over compliance with federal contstruction contract provisions should be designed and implemented so that a member of senior management monitors construction contracts to ensure that those contracts funded by federal awards contain the provisions required by 2 CFR Appendix II, 2 CFR 200.216, and 2 CFR 200.322. Views of responsible officials: Per discussion with Michael Hardy, Chief Finance Officer, on December 19, 2023, management agrees with the finding and will implement corrective action immediately.
K-12 Emergency Relief Funds Assistance Listing Number 84.425D. Pass-through: N.C. Department of Public Instruction. Program Report Code 171 and 181. Grant Period - Year Ended June 30, 2023. Criteria: In accordance with 2 CFR Appendix II, certain provisions are required to be included with all construction contracts which are funded with federal awards, to include Equal Employment Opportunity (Part 200(C)) Davis-Bacon Act, (Part 200 (D)); Contract Work Hours and Safety Standards Act, (Part 200(F)); Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, (2 CFR 200.16; and Domestic Preferences for Procurements (2 CFR 200.322). Condition: Per review of the contract for the renovations to C.M. Eppes Middle School, the required provisions were not included in the contract. Cause: Internal controls over compliance with all direct and material compliance requirements were not adequately implemented to ensure that all construction contracts funded with federal awards include the provisions required by 2 CFR Appendix II. Effect: The grantor agency could disallow expenditures related to the construction contract. Questioned Costs: None. Recommendation: Internal controls over compliance with federal contstruction contract provisions should be designed and implemented so that a member of senior management monitors construction contracts to ensure that those contracts funded by federal awards contain the provisions required by 2 CFR Appendix II, 2 CFR 200.216, and 2 CFR 200.322. Views of responsible officials: Per discussion with Michael Hardy, Chief Finance Officer, on December 19, 2023, management agrees with the finding and will implement corrective action immediately.
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. 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. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. 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. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Reference Number: 2023-006 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Department of Transportation Assistance Listing Number: 20.205 Federal Program Title: Highway Planning and Construction Federal Award Numbers and Years: Q101310; 2023 Q101403; 2023 7500257; 2023 P020177; 2023 8801073; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (a) 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 these 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: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; Federal Award Identification Number (FAIN); iii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; iv. Subaward Period of Performance Start and End Date; v. Subaward Budget Period Start and End Date; vi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; vii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; viii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; ix. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); x. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xii. Identification of whether the award is R&D; and xiii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. 2. All 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 Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; 4. i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; 2. The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Department of Transportation (Caltrans) did not clearly identify subaward agreements made to subrecipients as subawards and did not include all required elements for 5 of 40 subrecipients sampled. Additionally, the monitoring of the 5 of 40 sampled subrecipients was not sufficient to detect whether the subrecipients’ expenditures were properly reported on the respective subrecipients’ schedules of expenditures of federal awards. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause Due to the decentralized administration of federal-aid highway projects, not all subaward agreements are administered in a consistent manner throughout various divisions and district offices. Effect Inadequate subaward communication may result in subrecipients being unaware of all federal laws, statutes and regulations that apply to the funding received and potentially expending the funds in an unallowable manner. Additionally, subrecipients may fail to report the expenditures made pursuant to the subawards of their schedule of expenditures of federal awards. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,222,104,172. Sampled expenditures totaled $14,694,125 and $670,937 of the total sampled expenditures related to the exceptions identified. Recommendation Caltrans should develop and implement a consistent policy and process for all divisions and district offices to use in making and monitoring subawards under the highway planning and construction program to ensure that all required subaward information is communicated to subrecipients at the time of the award and the federal funds disbursed to subrecipients are adequately monitored. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reference Number: 2023-006 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Department of Transportation Assistance Listing Number: 20.205 Federal Program Title: Highway Planning and Construction Federal Award Numbers and Years: Q101310; 2023 Q101403; 2023 7500257; 2023 P020177; 2023 8801073; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (a) 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 these 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: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; Federal Award Identification Number (FAIN); iii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; iv. Subaward Period of Performance Start and End Date; v. Subaward Budget Period Start and End Date; vi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; vii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; viii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; ix. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); x. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xii. Identification of whether the award is R&D; and xiii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. 2. All 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 Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; 4. i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; 2. The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Department of Transportation (Caltrans) did not clearly identify subaward agreements made to subrecipients as subawards and did not include all required elements for 5 of 40 subrecipients sampled. Additionally, the monitoring of the 5 of 40 sampled subrecipients was not sufficient to detect whether the subrecipients’ expenditures were properly reported on the respective subrecipients’ schedules of expenditures of federal awards. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause Due to the decentralized administration of federal-aid highway projects, not all subaward agreements are administered in a consistent manner throughout various divisions and district offices. Effect Inadequate subaward communication may result in subrecipients being unaware of all federal laws, statutes and regulations that apply to the funding received and potentially expending the funds in an unallowable manner. Additionally, subrecipients may fail to report the expenditures made pursuant to the subawards of their schedule of expenditures of federal awards. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,222,104,172. Sampled expenditures totaled $14,694,125 and $670,937 of the total sampled expenditures related to the exceptions identified. Recommendation Caltrans should develop and implement a consistent policy and process for all divisions and district offices to use in making and monitoring subawards under the highway planning and construction program to ensure that all required subaward information is communicated to subrecipients at the time of the award and the federal funds disbursed to subrecipients are adequately monitored. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reference Number: 2023-007 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Community Colleges Chancellor’s Office Assistance Listing Number: 21.027 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Numbers and Years: N/A; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (c) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (d) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) 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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Community Colleges Chancellor’s Office (Chancellor’s Office) did not assess each subrecipients’ risk of potential noncompliance with the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) subaward federal statutes, regulations and terms and conditions and did not adequately monitor its subrecipients (community colleges) to ensure that the community colleges complied with federal statutes, regulations, and terms and conditions of the SLFRF subaward. The SLFRF subawards included specific requirements for eligibility of students receiving SLFRF-funded emergency financial aid, which included a requirement to request eligibility certifications from students, determine if any students that received emergency financial aid were ineligible and instructions to make necessary general ledger entries to ensure any ineligible students’ financial aid was removed from the SLFRF specific funding and assigned to a nonfederal source. The Chancellor’s Office did not request or inspect any documentation from the community colleges to verify that required eligibility certifications and/or necessary general ledger entries were made by the community colleges. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause The Chancellor’s Office did not establish sufficient procedures to assess each community college’s risk, conduct reviews of those community colleges that would be higher risk and validate that the community college expended the SLFRF subaward in accordance with federal statutes, regulations and terms and conditions. Effect Inadequate monitoring of subrecipients may result in funds being expended for ineligible purposes, which may not be detected and corrected in a timely manner. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,218,447,467, of which $150,000,000 was passed through by the Chancellor’s Office. Recommendation The Chancellor’s Office should develop and implement detailed subrecipient monitoring procedures, to include assessing each community college’s risk of noncompliance; conducting a review of supporting documents for those community colleges identified by the risk assessment to be at risk of noncompliance as defined by the Chancellor’s Office’s monitoring procedures; and ensuring corrective action is taken for any deficiencies identified. Regular follow-ups and documented communication efforts should be part of this process to ensure effective oversight of the SLFRF subawards. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Federal Program Information: Funding Agency: U.S. Department of Agriculture Title: USDA School Breakfast Program and National School Lunch Program FAL Number: 10.553 and 10.555 Passthrough: New Mexico Public Education Department Award Year: 2023 Criteria: §200.213 Suspension and debarment. Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, sub awards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. §200.317 Procurements by states. When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with §200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section §200.326 Contract provisions. All other non-Federal entities, including sub recipients of a state, will follow §§200.318 General procurement standards through 200.326 Contract provisions. §200.318 General procurement standards. (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (H) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the government-wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” https://www.sam.gov/portal/public/SAM/ SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Condition: During our testing of single audit disbursements, we identified a vendor which would meet the requirement of verifying that the vendor was not suspended or debarred or otherwise excluded from receiving the contract which was funded through Federal dollars. The vendor received more than $25,000 in payments from the District from Federal grant sources. The vendor is not currently suspended or debarred from receiving Federal contracts; however, the District did not have proper internal controls in place to verify this prior to the purchase. The District did make improvement in this area for all new work during the year. However, these projects were completed in the year under audit before the District became aware of the requirements above and could not retroactively cure the errors. Cause: District personnel did not verify that vendors which meet the $25,000 thresholds are not suspended, debarred, or otherwise excluded from participating in contracts funded through Federal awards due to a misunderstanding of staff personnel regarding this requirement. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. Auditor’s Recommendation: We recommend the District establish a policy and implement procedures regarding large purchases related to Federal grants to insure that no vendors who are suspended, debarred, or otherwise excluded from participating in transactions funded through Federal grants are used. As identified above, there are several methods in which the District can verify vendors are not suspended or debarred. The District may have the vendor provide an annual certification that it is not currently suspended, debarred, or otherwise prevented from receiving Federal dollars. In other occasions in which a single purchase is going to be made, the purchasing procedures should include looking up the vendor on the GSA website, printing a copy of the verification, and placing it in the file with the purchase order. The District has options, and it should establish what method is the least intrusive but also effective in complying with the requirements of the Uniform Grant Guidance. Responsible Official’s Plan: Specific corrective action plan for finding: The Grants Finance Department, Federal Grants Department, Operations Department along with the Purchasing Department will review Vendors that are issued requisitions at each approval level to assist in catching $25K or more for Suspension and Debarment. A printed document from SAM.GOV verifying eligibility for Requisitions over $25K will be attached. Infinite Visions is set up to alert originators entering requisitions over $25,000 to contact Purchasing or Grants Department to check the vendor in SAM.GOV to confirm the vendor is vetted to comply with federal regulations. At the initial setup of new vendors, the Purchasing Department will review vendors in SAM.GOV. A printed document from SAM.GOV verifying eligibility of vendor will be attached to the vendor file. Timeline for completion of corrective action plan: The process was implemented immediately upon awareness of the finding and we are hopeful that all issues have been resolved by FY24. Employee position(s) responsible for meeting the timeline: Grants Specialists, CPO, Finance Specialists, Purchasing Specialist, Federal Grants Coordinator, Federal Grants Specialist
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
2023-101: Verify that Monitoring Plan Includes All Subrecipient Programmatic Activities Applicable to: Department of Social Services Prior Year Finding Number: 2022-015 Type of Finding: Internal Control and Compliance Severity of Deficiency: Significant Deficiency Information System Security Control Family: N/A ALPT or Cluster Name and ALN: Temporary Assistance for Needy Families (TANF) - 93.558 Federal Award Number and Year: 2301VATANF - 2023 Name of Federal Agency: U.S. Department of Health and Human Services Type of Compliance Requirement - Criteria: Subrecipient Monitoring - 2 CFR § 200.332(b); 2 CFR § 200.332(d) Known Questioned Costs: $0 Benefit Programs fiscal year 2023 monitoring plan did not include all subrecipient programmatic activities for the TANF federal grant program. Benefit Programs’ primary programmatic activity for the TANF federal grant program is eligibility determination functions performed by local agencies. However, Benefit Programs also awards various competitive grants to local governments and non-profit organizations to help TANF recipients become self-sufficient. According to 2 CFR § 200.322(b) all pass-through entities are required to 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. Additionally, 2 CFR § 200.332(d) requires the pass-through entity to monitor the activities of the subrecipient as necessary to ensure it uses the subaward for authorized purposes, which comply with federal statutes, regulations, and the terms and conditions of the subaward; and that the subrecipient achieves subaward performance goals. Without including all programmatic activities in the monitoring plan, Benefit Programs cannot provide assurance that subrecipients used TANF federal grant funds for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In response to the prior year’s audit recommendation, Benefit Programs’ management analyzed all its programmatic activities and verified that they were incorporated into its fiscal year 2024 monitoring plan. As part of its corrective action, Benefit Programs’ management mandated that home office staff monitor subrecipients receiving TANF competitive grants once every three years and complete risk assessment procedures in other years to verify that there have not been any changes in the subrecipient’s risk profile. Benefit Programs was unable to fully implement corrective action in fiscal year 2023 because of the efforts involved with creating and implementing a new monitoring plan and dedicating the resources to provide proper oversight. Benefit Programs should continue its corrective action efforts to confirm that it includes all programmatic activities within its monitoring plan and that it conducts monitoring activities in accordance with the monitoring plan. Views of Responsible Officials: Views of responsible officials are in the report related to their agency, which can be found at www.apa.virginia.gov. In summary, the views of responsible officials in the agency report do not express a disagreement with the finding.
Federal Program Information: Funding Agency: U.S. Department of Interior Title: Rangeland Resource Management FAL Number: 15.237 Passthrough: L20AC00454-1-L21AC10556 (2) Award Year: 2023 Criteria: §200.213 Suspension and debarment. Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, sub awards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. §200.317 Procurements by states. When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with §200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section §200.326 Contract provisions. All other non-Federal entities, including sub recipients of a state, will follow §§200.318 General procurement standards through 200.326 Contract provisions. §200.318 General procurement standards. (a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. APPENDIX II TO PART 200—CONTRACT PROVISIONS FOR NON-FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. (H) Debarment and Suspension (Executive Orders 12549 and 12689)—A contract award (see 2 CFR 180.220) must not be made to parties listed on the government-wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part 1989 Comp., p. 235), “Debarment and Suspension.” https://www.sam.gov/portal/public/SAM/ SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. Questioned Costs: None Condition: During our testing of single audit disbursements, we identified two vendors which would meet the requirement of verifying that the vendor was not suspended or debarred or otherwise excluded from receiving the contract, which was funded through Federal dollars. The vendors received more than $25,000 in payments from the District from Federal grant sources. The vendors are not currently suspended or debarred from receiving Federal contracts; however, the District did not have proper internal controls in place to verify this prior to the payment. Cause: District personnel were unaware of the requirement to ensure vendors receiving more than $25,000 were not on the suspension and debarment listing. Effect: The District is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the District to reimburse the program for improper grant distributions. Auditor’s Recommendation: We recommend the District establish a policy and implement procedures regarding large purchases related to Federal grants to insure that no vendors who are suspended, debarred, or otherwise excluded from participating in transactions funded through Federal grants are used. As identified above, there are several methods in which the District can verify vendors are not suspended or debarred. The District may have the vendor provide an annual certification that it is not currently suspended, debarred, or otherwise prevented from receiving Federal dollars. In other occasions in which a single purchase is going to be made, the purchasing procedures should include looking up the vendor on the GSA website, printing a copy of the verification, and placing it in the file with the purchase order. The District has options, and it should establish what method is the least intrusive, but also effective, in complying with the requirements of the Uniform Grant Guidance. Responsible Official’s Plan: Specific corrective action plan for finding: The procurement Officer of SJSWCD has updated the procurement process on 12/7/2023 that all contractors who will be receiving Federal monies must provide an annual certification that they are not suspended, debarred, inactive, or otherwise excluded from participating in transactions funded through Federal grants. The policy change will be approved at the next board meeting. Timeline for completion of corrective action plan: December 7, 2023 Employee position(s) responsible for meeting the timeline: District Manager/Procurement Officer
K-12 Emergency Relief Funds Assistance Listing Number 84.425D. Pass-through: N.C. Department of Public Instruction. Program Report Code 171 and 181. Grant Period - Year Ended June 30, 2023. Criteria: In accordance with 2 CFR Appendix II, certain provisions are required to be included with all construction contracts which are funded with federal awards, to include Equal Employment Opportunity (Part 200(C)) Davis-Bacon Act, (Part 200 (D)); Contract Work Hours and Safety Standards Act, (Part 200(F)); Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, (2 CFR 200.16; and Domestic Preferences for Procurements (2 CFR 200.322). Condition: Per review of the contract for the renovations to C.M. Eppes Middle School, the required provisions were not included in the contract. Cause: Internal controls over compliance with all direct and material compliance requirements were not adequately implemented to ensure that all construction contracts funded with federal awards include the provisions required by 2 CFR Appendix II. Effect: The grantor agency could disallow expenditures related to the construction contract. Questioned Costs: None. Recommendation: Internal controls over compliance with federal contstruction contract provisions should be designed and implemented so that a member of senior management monitors construction contracts to ensure that those contracts funded by federal awards contain the provisions required by 2 CFR Appendix II, 2 CFR 200.216, and 2 CFR 200.322. Views of responsible officials: Per discussion with Michael Hardy, Chief Finance Officer, on December 19, 2023, management agrees with the finding and will implement corrective action immediately.
K-12 Emergency Relief Funds Assistance Listing Number 84.425D. Pass-through: N.C. Department of Public Instruction. Program Report Code 171 and 181. Grant Period - Year Ended June 30, 2023. Criteria: In accordance with 2 CFR Appendix II, certain provisions are required to be included with all construction contracts which are funded with federal awards, to include Equal Employment Opportunity (Part 200(C)) Davis-Bacon Act, (Part 200 (D)); Contract Work Hours and Safety Standards Act, (Part 200(F)); Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, (2 CFR 200.16; and Domestic Preferences for Procurements (2 CFR 200.322). Condition: Per review of the contract for the renovations to C.M. Eppes Middle School, the required provisions were not included in the contract. Cause: Internal controls over compliance with all direct and material compliance requirements were not adequately implemented to ensure that all construction contracts funded with federal awards include the provisions required by 2 CFR Appendix II. Effect: The grantor agency could disallow expenditures related to the construction contract. Questioned Costs: None. Recommendation: Internal controls over compliance with federal contstruction contract provisions should be designed and implemented so that a member of senior management monitors construction contracts to ensure that those contracts funded by federal awards contain the provisions required by 2 CFR Appendix II, 2 CFR 200.216, and 2 CFR 200.322. Views of responsible officials: Per discussion with Michael Hardy, Chief Finance Officer, on December 19, 2023, management agrees with the finding and will implement corrective action immediately.
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. 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. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. 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. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Reference Number: 2023-006 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Department of Transportation Assistance Listing Number: 20.205 Federal Program Title: Highway Planning and Construction Federal Award Numbers and Years: Q101310; 2023 Q101403; 2023 7500257; 2023 P020177; 2023 8801073; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (a) 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 these 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: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; Federal Award Identification Number (FAIN); iii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; iv. Subaward Period of Performance Start and End Date; v. Subaward Budget Period Start and End Date; vi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; vii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; viii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; ix. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); x. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xii. Identification of whether the award is R&D; and xiii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. 2. All 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 Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; 4. i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; 2. The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Department of Transportation (Caltrans) did not clearly identify subaward agreements made to subrecipients as subawards and did not include all required elements for 5 of 40 subrecipients sampled. Additionally, the monitoring of the 5 of 40 sampled subrecipients was not sufficient to detect whether the subrecipients’ expenditures were properly reported on the respective subrecipients’ schedules of expenditures of federal awards. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause Due to the decentralized administration of federal-aid highway projects, not all subaward agreements are administered in a consistent manner throughout various divisions and district offices. Effect Inadequate subaward communication may result in subrecipients being unaware of all federal laws, statutes and regulations that apply to the funding received and potentially expending the funds in an unallowable manner. Additionally, subrecipients may fail to report the expenditures made pursuant to the subawards of their schedule of expenditures of federal awards. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,222,104,172. Sampled expenditures totaled $14,694,125 and $670,937 of the total sampled expenditures related to the exceptions identified. Recommendation Caltrans should develop and implement a consistent policy and process for all divisions and district offices to use in making and monitoring subawards under the highway planning and construction program to ensure that all required subaward information is communicated to subrecipients at the time of the award and the federal funds disbursed to subrecipients are adequately monitored. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reference Number: 2023-006 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Department of Transportation Assistance Listing Number: 20.205 Federal Program Title: Highway Planning and Construction Federal Award Numbers and Years: Q101310; 2023 Q101403; 2023 7500257; 2023 P020177; 2023 8801073; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (a) 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 these 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: 1. Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; Federal Award Identification Number (FAIN); iii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; iv. Subaward Period of Performance Start and End Date; v. Subaward Budget Period Start and End Date; vi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; vii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; viii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; ix. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); x. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xii. Identification of whether the award is R&D; and xiii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. 2. All 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 Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; 4. i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; 2. The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. (b) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Department of Transportation (Caltrans) did not clearly identify subaward agreements made to subrecipients as subawards and did not include all required elements for 5 of 40 subrecipients sampled. Additionally, the monitoring of the 5 of 40 sampled subrecipients was not sufficient to detect whether the subrecipients’ expenditures were properly reported on the respective subrecipients’ schedules of expenditures of federal awards. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause Due to the decentralized administration of federal-aid highway projects, not all subaward agreements are administered in a consistent manner throughout various divisions and district offices. Effect Inadequate subaward communication may result in subrecipients being unaware of all federal laws, statutes and regulations that apply to the funding received and potentially expending the funds in an unallowable manner. Additionally, subrecipients may fail to report the expenditures made pursuant to the subawards of their schedule of expenditures of federal awards. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,222,104,172. Sampled expenditures totaled $14,694,125 and $670,937 of the total sampled expenditures related to the exceptions identified. Recommendation Caltrans should develop and implement a consistent policy and process for all divisions and district offices to use in making and monitoring subawards under the highway planning and construction program to ensure that all required subaward information is communicated to subrecipients at the time of the award and the federal funds disbursed to subrecipients are adequately monitored. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reference Number: 2023-007 Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness and Material Instance of Noncompliance State Administering Department: California Community Colleges Chancellor’s Office Assistance Listing Number: 21.027 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Award Numbers and Years: N/A; 2023 Criteria Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (c) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management §200.322 Requirements for pass-through entities (2 CFR 200.332): (d) 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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) 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: (1) Reviewing financial and performance reports required by the pass-through entity. Condition The California Community Colleges Chancellor’s Office (Chancellor’s Office) did not assess each subrecipients’ risk of potential noncompliance with the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) subaward federal statutes, regulations and terms and conditions and did not adequately monitor its subrecipients (community colleges) to ensure that the community colleges complied with federal statutes, regulations, and terms and conditions of the SLFRF subaward. The SLFRF subawards included specific requirements for eligibility of students receiving SLFRF-funded emergency financial aid, which included a requirement to request eligibility certifications from students, determine if any students that received emergency financial aid were ineligible and instructions to make necessary general ledger entries to ensure any ineligible students’ financial aid was removed from the SLFRF specific funding and assigned to a nonfederal source. The Chancellor’s Office did not request or inspect any documentation from the community colleges to verify that required eligibility certifications and/or necessary general ledger entries were made by the community colleges. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause The Chancellor’s Office did not establish sufficient procedures to assess each community college’s risk, conduct reviews of those community colleges that would be higher risk and validate that the community college expended the SLFRF subaward in accordance with federal statutes, regulations and terms and conditions. Effect Inadequate monitoring of subrecipients may result in funds being expended for ineligible purposes, which may not be detected and corrected in a timely manner. Questioned Costs No questioned costs were identified. Context Expenditures passed to subrecipients totaled $1,218,447,467, of which $150,000,000 was passed through by the Chancellor’s Office. Recommendation The Chancellor’s Office should develop and implement detailed subrecipient monitoring procedures, to include assessing each community college’s risk of noncompliance; conducting a review of supporting documents for those community colleges identified by the risk assessment to be at risk of noncompliance as defined by the Chancellor’s Office’s monitoring procedures; and ensuring corrective action is taken for any deficiencies identified. Regular follow-ups and documented communication efforts should be part of this process to ensure effective oversight of the SLFRF subawards. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the Federal award that provides assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.322 identifies the requirements for all pass‐through entities which including monitoring the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statues, regulations, and the terms and conditions of the subaward; and that the subaward performance goals are achieved. Condition: During our testing, the Corporation was unable to provide sufficient and appropriate evidence to substantiate a secondary review was completed over the monitoring activities of the subrecipient. Cause: The Corporation did not have formal policies and procedures over subrecipient monitoring. Effect or Potential Effect: Insufficient monitoring of subrecipients could result in Federal noncompliance by a subrecipient. Questioned costs: None Context: Management was not able to produce sufficient and appropriate evidence that monitoring activities of subrecipients were reviewed. Repeat finding: No Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating to the monitoring of subrecipients. View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation did not maintain sufficient or appropriate evidence that the monitoring activities of the subrecipients were reviewed.
Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Finding 2022-003 Criteria or Specific Requirement: The Code of Federal Regulations Section 200.322(b) states that the pass-through entity must evaluate the subrecipient's risk of noncompliance with Federal statutes and Section 200.332(d) states that the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subawards is used for authorized purposes. Condition: During our review of subrecipient monitoring, it was noted that no formal written policy is maintained. Cause: The Organization does not have written policies and procedures to monitor subrecipient's activities in accordance with the Uniform Guidance requirements. Effect or Potential Effect: The deficiency increases the risk that subawards could be spent for purposes other than those outlined in the grant agreements. Context: The Organization provides subawards to grant recipients. Its monitoring procedures consist of approvals over the expenditures but lack the requirements set forth by 2 CFR 200.332. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend the Organization's subrecipient monitoring policies and procedures be reviewed and updated for compliance with the Uniform Guidance requirements. Additionally, we recommend the Organization review all policies and procedures annually, or more frequently, if necessary, to reflect changes to laws, regulations, personnel, and/or internal procedures. Views of Responsible Officials: Management agrees with the finding and will implement a process to documents its policies and ensure they meet the subrecipient monitoring requirements.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the Federal award that provides assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.322 identifies the requirements for all pass‐through entities which including monitoring the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statues, regulations, and the terms and conditions of the subaward; and that the subaward performance goals are achieved. Condition: During our testing, the Corporation was unable to provide sufficient and appropriate evidence to substantiate a secondary review was completed over the monitoring activities of the subrecipient. Cause: The Corporation did not have formal policies and procedures over subrecipient monitoring. Effect or Potential Effect: Insufficient monitoring of subrecipients could result in Federal noncompliance by a subrecipient. Questioned costs: None Context: Management was not able to produce sufficient and appropriate evidence that monitoring activities of subrecipients were reviewed. Repeat finding: No Recommendation: We recommend the Corporation establish formal internal controls, and documentation of their performance, relating to the monitoring of subrecipients. View of Responsible Officials: Due to turnover of several key financial executives and personnel and lack of formal documentation of current policies and procedures, the Corporation did not maintain sufficient or appropriate evidence that the monitoring activities of the subrecipients were reviewed.