U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Housing and Urban Development (HUD) AL No. 14.241 Housing Opportunities for Persons with AIDS Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: Yes; 2022-010 Condition: For 3 out of 3 selections, the Federal award identification number (FAIN) and the subrecipient's unique entity identifier (UEI) were not disclosed on the subaward. For 3 out of 3 selections, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 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. Pursuant to 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h), a pass-through entity must identify the award and applicable requirements, evaluate risk, monitor, and ensure accountability of subrecipients. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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. (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Mayor’s Office of Homeless Services (MOHS) did not maintain adequate documentation of the requirements included in Uniform Guidance related to procedures required for subrecipient monitoring. Effect: MOHS was not in compliance with Uniform Guidance. Questioned Costs: Unknown. Recommendation: We recommend that MOHS establish and implement controls for the program and prepare and maintain a written plan to perform risk assessments on potential subrecipients. Additionally, we recommend that MOHS provides training on the Uniform Guidance requirements related to subrecipient monitoring. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated
U.S. Department of Health and Human Services AL No. 93.686 Ending the HIV Epidemic: A Plan for America Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 1 out of 1 selection, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with accounting requirements. For 1 out of 1 selection, we were unable to verify the subrecipient 's active registration on SAM.gov. For 1 out of 1 selection, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 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. (f) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.686 Ending the HIV Epidemic: A Plan for America Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 1 out of 1 selection, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with accounting requirements. For 1 out of 1 selection, we were unable to verify the subrecipient 's active registration on SAM.gov. For 1 out of 1 selection, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 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. (f) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.686 Ending the HIV Epidemic: A Plan for America Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 1 out of 1 selection, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with accounting requirements. For 1 out of 1 selection, we were unable to verify the subrecipient 's active registration on SAM.gov. For 1 out of 1 selection, there was no evidence that the prior year Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 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. (f) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.914 HIV Emergency Relief Project Grants Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 7 out of 7 selections, we were unable to verify the subrecipient's active registration on SAM.gov. For 7 out of 7 selections, there was no evidence that subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: BCHD did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains
U.S. Department of Health and Human Services AL No. 93.914 HIV Emergency Relief Project Grants Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 7 out of 7 selections, we were unable to verify the subrecipient's active registration on SAM.gov. For 7 out of 7 selections, there was no evidence that subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: BCHD did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains
U.S. Department of Health and Human Services AL No. 93.914 HIV Emergency Relief Project Grants Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 7 out of 7 selections, we were unable to verify the subrecipient's active registration on SAM.gov. For 7 out of 7 selections, there was no evidence that subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: BCHD did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains
U.S. Department of Health and Human Services AL No. 93.914 HIV Emergency Relief Project Grants Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 7 out of 7 selections, we were unable to verify the subrecipient's active registration on SAM.gov. For 7 out of 7 selections, there was no evidence that subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: BCHD did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains
U.S. Department of Health and Human Services AL No. 93.914 HIV Emergency Relief Project Grants Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 7 out of 7 selections, we were unable to verify the subrecipient's active registration on SAM.gov. For 7 out of 7 selections, there was no evidence that subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 2 CFR 200.303: Internal Control, 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: BCHD did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD was not in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
U.S. Department of Health and Human Services AL No. 93.940 HIV Prevention Activities Health Department Based Material Weakness in Internal Controls and Noncompliance over Subrecipient Monitoring Repeat Finding: No Condition: For 2 out of 4 selections, management was unable to provide evidence that subrecipient monitoring was performed to ensure compliance with Federal requirements. For 1 out of 4 selections, there was no approval on the subrecipient monitoring report. For 4 out of 4 selections, we were unable to verify the subrecipient’s active registration on SAM.gov. For 4 out of 4 selections, there was no evidence that the subrecipients’ Single Audit Report was reviewed. Criteria: In accordance with 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. In accordance with 2 CFR §25.300: (a) A recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Subrecipients are not required to complete full SAM registration to obtain a unique entity identifier. (b) A recipient must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient has obtained a unique entity identifier as described in paragraph (a) of this section. According to 2 CFR §200.332, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the Federal award identification including the subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), identification of whether the award is R&D and indirect cost rate for the Federal award. (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 (c) 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. (e) Verify that every subrecipient is audited as required by 2 CFR § 200.331 when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Cause: The Baltimore City Health Department (BCHD) did not have proper controls in place to ensure the subrecipient monitoring requirements of the grant were met. Effect: BCHD may not be in compliance with the subrecipient monitoring requirements of the grant. Questioned Costs: Unknown. Recommendation: We recommend the City establish and implement controls to maintain compliance with subrecipient monitoring requirements. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the corrective action plan on current findings in Part V of this report. Auditor’s Conclusion: Finding remains as stated.
Assistance Listing 14.239 Home Investment Partnerships Program Assistance Listing 93.569 Community Services Block Grant Condition: The Office of Homeless Services (OHS) contracted with one subrecipient to provide services for both the Home Investment Partnerships Program (HOME) and Community Services Block Grant (CSBG). OHS did not perform a risk assessment to determine the appropriate monitoring of this subrecipient as required under 2 CFR §200.331(b). Funding for HOME is received from the U.S. Department of Housing and Urban Development. Funding for CSBG is received from the U.S. Department of Health and Human Services and passed through the PA Department of Community and Economic Development. Criteria: OMB’s Uniform Guidance 2 CFR §200.331(b) states that all pass-through entities must evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring to ensure proper accountability and compliance with program requirements. Effect:Without a risk assessment, OHS may not know how to properly plan subrecipient monitoring. They may over-monitor a subrecipient that should be considered low risk or under-monitor a subrecipient that should be considered high risk. Cause: OHS had not implemented policies and procedures to ensure the performance of risk assessments for all subrecipients. Recommendation: OHS should implement policies and procedures to ensure the performance of risk assessments for all subrecipients to determine the appropriate level of subrecipient monitoring. Views of the Responsible Officials and Corrective Action Plan: OHS is in the process of finalizing a risk assessment and a RA policy and procedure to ensure that the RAs are completed timely and inform our monitoring plan. Both will be in compliance with OMB’s Uniform Guidance 2 CFR §200.331(b). PHMC will be the first subrecipient that will be tested. We will provide that risk assessment to your office and our partners at DHCD when it is completed. It is the goal to have this RA finalized and all grant funded program providers assessed for risk by 12/31/2024. Contact Person: Jerome R. Hill, Director of Compliance, Office of Homeless Services, 215-686-0371, 215-520-3556
Assistance Listing 14.239 Home Investment Partnerships Program Assistance Listing 93.569 Community Services Block Grant Condition: The Office of Homeless Services (OHS) contracted with one subrecipient to provide services for both the Home Investment Partnerships Program (HOME) and Community Services Block Grant (CSBG). OHS did not perform a risk assessment to determine the appropriate monitoring of this subrecipient as required under 2 CFR §200.331(b). Funding for HOME is received from the U.S. Department of Housing and Urban Development. Funding for CSBG is received from the U.S. Department of Health and Human Services and passed through the PA Department of Community and Economic Development. Criteria: OMB’s Uniform Guidance 2 CFR §200.331(b) states that all pass-through entities must evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring to ensure proper accountability and compliance with program requirements. Effect:Without a risk assessment, OHS may not know how to properly plan subrecipient monitoring. They may over-monitor a subrecipient that should be considered low risk or under-monitor a subrecipient that should be considered high risk. Cause: OHS had not implemented policies and procedures to ensure the performance of risk assessments for all subrecipients. Recommendation: OHS should implement policies and procedures to ensure the performance of risk assessments for all subrecipients to determine the appropriate level of subrecipient monitoring. Views of the Responsible Officials and Corrective Action Plan: OHS is in the process of finalizing a risk assessment and a RA policy and procedure to ensure that the RAs are completed timely and inform our monitoring plan. Both will be in compliance with OMB’s Uniform Guidance 2 CFR §200.331(b). PHMC will be the first subrecipient that will be tested. We will provide that risk assessment to your office and our partners at DHCD when it is completed. It is the goal to have this RA finalized and all grant funded program providers assessed for risk by 12/31/2024. Contact Person: Jerome R. Hill, Director of Compliance, Office of Homeless Services, 215-686-0371, 215-520-3556
Name of Federal Agency and Pass-Through Agency: U.S. Department of the Treasury Compliance Requirements: Reporting Type of Finding: Significant Deficiency Amount of Questioned Costs: None Identification of Questioned Costs and How Computed: None identified COVID Related: Yes Repeat Finding: Repeat finding of 2022-004. When submitting required quarterly project and expenditure reports, the county improperly identified two entities as being subrecipients instead of contractors. Those responsible for the federal awards did not have a clear understanding of the difference between a subrecipient and a contractor. The reporting guidance was not clear on the definition of a subrecipient versus a contractor and resulted in a misunderstanding. Two entities could potentially be identified as subrecipients and therefore be subject to a single audit when they should not be. Per 2 CFR § 200.331, “a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursements of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” We recommend the county review the requirements for determining whether a disbursement qualifies as a payment to a subrecipient or a contractor and ensure all of those that administer federal funding have an understanding of the terms.
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: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Department of Housing (Department) awarded $4.5 million to 15 subrecipients during fiscal year 2023, or 90 percent of the Department’s $5.0 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Department’s only monitoring procedure during the year consisted of reviewing and approving the subrecipients’ invoices of program expenditures for reimbursement, which we also found to be deficient during a review of 1 nonprofit subrecipient’s reimbursement requests. See financial statement finding 2023-06 and federal award finding 2023-116 for specific issues noted and related recommendations. Further, that procedure alone was insufficient to evaluate whether the subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Department’s failure to perform all required monitoring increased the risk that the $4.5 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Consequently, the Department may be required to return any misspent monies to the federal agency in accordance with federal requirements.1 Cause—The Department did not perform all required monitoring procedures and did not have sufficient policies and procedures. Specifically, the Department did not develop and implement procedures to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Department should monitor until near the end of the grant period in May 2023. Prior to that, the Department had an informal process to identify subrecipients. Also, the Department did not develop and implement procedures to perform subrecipient risk assessments until March 2023 and had not yet resumed other subrecipient monitoring activities during fiscal year 2023, such as conducting on-site reviews and providing training and technical assistance, since suspending these activities starting in fiscal year 2020 due to the COVID-19 pandemic. Additionally, the Department’s written policies and procedures lacked procedures for performing risk assessments; designing monitoring procedures, training, or technical assistance based upon the assessed risk; and verifying that a subrecipient received a single audit if it was expected to meet or exceed the federal expenditure threshold of $750,000 for requiring a single audit. Criteria—Federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the County should monitor (2 Code of Federal Regulation [CFR] §200.331). Additionally, federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. This federal regulation also provides that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §§200.332[b] and [d–f]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Update and follow written policies and procedures to: a. Evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Department should monitor. b. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. c. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. d. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
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: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Department of Housing (Department) awarded $4.5 million to 15 subrecipients during fiscal year 2023, or 90 percent of the Department’s $5.0 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Department’s only monitoring procedure during the year consisted of reviewing and approving the subrecipients’ invoices of program expenditures for reimbursement, which we also found to be deficient during a review of 1 nonprofit subrecipient’s reimbursement requests. See financial statement finding 2023-06 and federal award finding 2023-116 for specific issues noted and related recommendations. Further, that procedure alone was insufficient to evaluate whether the subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Department’s failure to perform all required monitoring increased the risk that the $4.5 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Consequently, the Department may be required to return any misspent monies to the federal agency in accordance with federal requirements.1 Cause—The Department did not perform all required monitoring procedures and did not have sufficient policies and procedures. Specifically, the Department did not develop and implement procedures to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Department should monitor until near the end of the grant period in May 2023. Prior to that, the Department had an informal process to identify subrecipients. Also, the Department did not develop and implement procedures to perform subrecipient risk assessments until March 2023 and had not yet resumed other subrecipient monitoring activities during fiscal year 2023, such as conducting on-site reviews and providing training and technical assistance, since suspending these activities starting in fiscal year 2020 due to the COVID-19 pandemic. Additionally, the Department’s written policies and procedures lacked procedures for performing risk assessments; designing monitoring procedures, training, or technical assistance based upon the assessed risk; and verifying that a subrecipient received a single audit if it was expected to meet or exceed the federal expenditure threshold of $750,000 for requiring a single audit. Criteria—Federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the County should monitor (2 Code of Federal Regulation [CFR] §200.331). Additionally, federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. This federal regulation also provides that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §§200.332[b] and [d–f]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Update and follow written policies and procedures to: a. Evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Department should monitor. b. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. c. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. d. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521).
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. 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.